Some random items, including some administrative housekeeping:
1. If you haven't seen it, it's worth reading DOE Secretary Chu's op-ed on weatherization and all of the governmental support being thrown toward that part of energy efficiency. Heady times for residential and commercial energy efficiency efforts. Side note: The Secretary of Energy is publishing his op-eds in the Huffington Post now? Wow, this Internet thingy might actually be catching on.
2. How the government "picks winners and losers" is a topic of much conversation these days, re: cleantech and otherwise. It's especially a topic given the structure of some of the programs being used to accelerate commercialization and adoption of clean technologies -- such as the DOE loan guarantee program, etc. See, for example, this interesting editorial in the Washington Post that a colleague pointed out to me today, and the very good discussion we had on the PE Hub panel on the topic here in Boston this week (note: link may disappear behind subscriber wall soon). It's tough, though, to come up with strong alternative solutions to what's being done. There are gaps that need to be specifically addressed, especially at the seed / very early stage (where ARPA-E is intended to aim) and at the "first of a kind" project finance stage (which is where the loan guarantee is intended to aim). There isn't enough funding to support every deserving effort, nor would we necessarily want that (define "deserving"?). I've seen proposals to do it more hands-off, by having the money go in some form to private sector investors who would make the decisions, perhaps as matching funds to provide leveraged returns for private LPs in the fund, to fix the risk v. reward imbalance that created the capital gap. Some of these ideas have merit, but even then some government body needs to be determining which funds would receive the leveraging support and which wouldn't. Broader market-based systems (including cap and trade, carbon taxes, ITCs, PTCs, etc.) are more diffuse in impact and harder to target at specific capital gaps. And doing nothing is not an option. So I'll let the debate go on, but my feeling is that you simply have to design the best policy you can, hope the DOE can attract the best decision-makers that they can (and I've seen some really smart people go into the DOE over the past year or so), and accept a necessarily imperfect process. Easy to say, hard to stomach.
3. Speaking of policy issues, a few days back I wrote about a study which examined coal-fired generators in the U.S. and concluded that there could be a relatively low natural limit on carbon prices under a cap and trade scheme. I mentioned a few gaps I saw in the analysis, and for you wonks out there like me, a reader wrote in and pointed out another important one: Elasticity of demand means that some of the costs on the generators will be passed downstream, so that they would require higher carbon prices than indicated in the study before making the decision that shutting down is worth it. Of course, generators would also be able to pass some of the costs upstream as well, in all likelihood. It's still a very intriguing study conceptually, but between failure to address elasticities of demand in the electricity value chain, and the other factors I mentioned in the post, I'm not sure I would want to do any significant investment planning around the specific price limits they indicate.
4. An administrative note: Over the 4+ years of writing this column, I've attempted (not always successfully) to hew to the most rigorous of blogosphere rules regarding notification of self-interest, in that I've tried to note whenever I've mentioned a company in which I have some stake in their success. But in my current position that's becoming impossible, due to the breadth of indirect investment activities involved. I can't reveal self-interest in many cases without possibly revealing some fund's confidential information, and I can't mention some companies and not others because then the occasional obvious failure to mention a deal becomes an indicator by itself. So my choices are either to never mention any companies at all ever again, or simply to ask you all to trust me that I won't too horribly pump up a company or fund where I have a significant self-interest, without noting that. I may still mention self-interest sometimes if I can, but not always. Is that okay? Tough call, and I've wrestled with it for a while. Flames, suggestions, etc. are all welcomed in the comments or via email.
5. Another administrative note: Yes, I know I'm horribly behind on listing deals that get announced in the sector. Apologies, but still, no one seems to have complained yet. Maybe I can stop that practice? Or maybe a smart Sloan student reader wants to help me with it?