NDN Blog

Last week the Department of Energy released part of the $25 billion in loans provided for through the Advanced Technology Vehicles Manufacturing Loan Program, included in Section 136 of the Energy Independence and Security Act of 2007. The delay in releasing these funds had been one of the longest running scandals in clean tech policy. Upon taking office, the Obama Administration vowed to expedite their release and Secretary Steven Chu had made finalizing rules needed to administer the program a key priority. In the first installment of the loans, Tesla, the VC-backed California maker of an all-electric sports car, founded by Ebay veterans, will receive $465 million to make its compact, all-electric Model S sedan. Ford will receive $5.9 billion to retool 11 factories across five states to improve the overall fuel efficiency of its fleet.  Finally, Nissan will receive $1.6 billion to retool a factory in Smyrna, Tennessee, to make an electric vehicle that is being developed and initially manufactured in Japan. The remainder of the money will be released next year.

DOE's announcement comes on the heels of the release of its formal $3.9 billion smart grid funding solicitation last week. The Funding Opportunity Announcement spells out the conditions and terms for those seeking funding for smart grid investments under the American Recovery and Reinvestment Act, the offical title of the stimulus bill signed into law earlier this year. These two developments, coming one after the other, are evidence that the DOE is moving rapidly on the President's goal not only of getting money out into the economy to create jobs and drive demand, but also of making investments critical to a clean energy future.

In the case of the auto loans, they could not be more timely. Autos are a capital intensive business and with credit markets still impaired, it would have been very expensive or impossible for Tesla, for example, to borrow this money on its own. However, that does not mean that the loan is not good business for the government and Tesla. CEO Elon Musk indicated he thinks that Tesla may be able to repay the loan ahead of schedule. Tesla, despite some speed bumps in its early phase, is now profitable on a unit basis, meaning the approximately $120,000 price of its sleek sports car -- which has a long waiting list -- exceeds the cost of components.  Having also recently sold a stake to Daimler Benz, the company is now reasonably well capitalized. Recently, investor Steve Wesley indicated that Tesla's sales are on track to pass $100 million, a common bar for conducting an IPO. If Tesla continues on its current track, it may be the first home run of the clean transportation industry. In any case, the DOE funding puts it on track to move from the sports car niche to the mainstream where it hopes to leverage the glamour associated with the roadster. While Ford and Nissan have greater access to the capital markets, these loans -- provided for in the 2007 energy legislation in exchange for a commitment to higher fuel efficiency -- will help achieve that goal.

In the case of the smart grid, the major barrier to moving forward has been undeveloped standards.  Normally, standards evolve slowly as industry players forge alliances and choose standards that already enjoy market adoption. In this case, the desire to stimulate the economy has accelerated this process. Secretary Chu and Commerce Secretary Gary Locke are overseeing an effort led by NIST to fast track standards for the grid to facilitate adoption. The disbursements made by DOE will indeed help establish standards insofar as the money spent will validate standards and increase adoption.

It is important that standards be as open and uniform as possible to create the broadest and fairest playing field for innovators to enter the smart grid technology market.  Because a smart grid is necessary to get clean energy online and also to drive the creation of new energy products and services, this is an area I believe is absolutely critical to determining whether clean technology can live up to its promise. 

While it remains to be seen how the smart grid will develop, these two announcements from DOE show that the Administration is on the case. These developments should be encouraging to anyone concerned about America's clean energy future.

The passage yesterday by the House of legislation to regulate greenhouse gases, impose a renewable electricity standard and carry out a host of other energy reforms represents the first time that either legislative body in the United States has passed climate legislation.  If the Senate now goes on to pass this historic legislation as well, it will demonstrate that the US is serious about saving our climate.  It is hard to underestimate the importance of this bill--that for all the changes made to gain passage--would be one of the most important environmental bills ever passed comparable to the clean water act and other landmark legislation.

Conventional wisdom holds that the bill faces an uphill battle in the Senate.  However, when dealing with historic matters,  the Senate has at key points in history, proven itself unusually far sighted and stepped beyond the calculus of ordinary vote counts as the House did yesterday.   As the summer progresses we shall see.  But certainly, yesterday's action by the House was a major win for the environmental movement and fulfilled the leadership's goal of passsing a bill before July 4th.  This, in and of itself, is a significant accomplishment.  We are that much closer to putting a price on carbon and changing the rules to transform the economy and move America toward a clean, low carbon future.

Ever since the Waxman Markey American Clean Energy and Security Act or ACESA began congressional hearings this spring, many people have predicted its demise.  Yet the bill which will create a cap and market system in the United States--in preparation for climate discussions early next year in Copenhagen--create a renewable electricity standard and address other climate-related issues has moved steadily forward, first through committee and now to the floor of the House.  Today, President Obama made calls to critical House members whose support is needed to pass the bill. The bill may come to a vote as soon as tomorrow but probably only if Speaker Pelosi and the House leadership believe it has the necessary votes to pass.

This is an important piece of legislation.  As I have argued, this year represents the best chance for passage of a bill to put a price on carbon in many and probably for the forseeable future with a new President in office, Copenhagen coming up next year and with sizable Democratic majorities in both the House and Senate.  As the critical moment of truth approaches, proponents are actively working phones, faxes and email to bring support to bear. 

Polls show that Americans support the bill.  Most major environmental organizations support it as well, though some environmentalists wish it were stronger.  As I have argued, however, one cannot expect perfection in landmark regulation of this nature.  Just getting the principle of limiting greenhouse gas emissiosn on the books would be a historic legislative accomplishment.  On the other side, the American Petroleum Institute and some business groups oppose the legislation.  However, the bill includes substantial incentives to explore carbon capture and additional measures to allow coal producing regions to diversify their economies over the long term.

It remains to be seen if the bill will pass, but it has come a long way and--if past is prologue--will go the distance.

Those interested in trying to push the bill across the goal line can find out what groups are doing here.

A new wave of pessimism seems to be washing over the economy.  Its source is hard to pinpoint but there is no shortage of candidates: rising unemployment (if a declining rate of rise), second thoughts about the recovery of the stock market and even the Administration's rhetoric which in recent days has shifted away from a relentless focus on jobs.  I would like to suggest another potential cause, however.  So far there is little evidence of an igniting factor in the economy, in other words, a new engine of economic growth.  Replacing the tens of thousands of jobs lost in auto manufacturing, finance and construction to this recession will require more than a modest uptick in consumer spending.  It will require new innovation and new industries.  One such igniting factor might be clean technology and infrastructure.  However, green jobs have yet to materialize in substantial numbers so much so that Democratic pollster Stan Greenberg recently called on Democrats to stop talking about green jobs to lower expectations.

I do not share Greenberg's pessism about green jobs.  However, I do believe that to realize their full potential as a job creating machine, enough to power a new wave of prosperity, clean energy and clean technology will require important policy changes, changes that have yet to occur.

Why?  The energy industry, in particular, electricity, at the center of the clean technology promise, remains perhaps the most regulated industry in America. Its very potential as a catalyst for economic growth is a function of its slow rate of adoption of new technology for decades.  Over the last thirty years, a series of industries underwent regulation, including transportation, telecommunications and financial services and all became engines of economic growth.  Energy, in particular electricity, however, remains frozen in a largely transitional state of deregulation that came to an abrupt halt in the 1990s.  Before clean energy can realize its full potential, it is likely to require a new regulatory framework to unlock its economic potential.

One policy reform that many believe can help accelerate adoption of clean, renewable energy and clean technology is putting a price on carbon.  Legislation to do just that in the form of the American Clean Energy and Security Act (ACESA) is now working its way through Congress, however, its impact will not be felt for a number of years.

Another type of policy reform likely to be equally critical is revisiting the state of our electricity network.  Currently, the grid whose very name reflects its creaky status is too often outdated, undersized for today's energy needs and dumb, making inadequte use of information technology.  Legislation to improve security, expand transmission capacity and upgrade the grid's information capability is also making its way through Congress and many provisions are part of the ACESA bill.  However, measures as seemingly straightforward yet critical to creating clean technology jobs as creating a common interface for solar hookups remain controversial.  Congress has yet to pass a national Renewable Electricity standard.

The problem with our highly regulated electricity network is that it leaves the decision to deploy new clean technologies to a small group of buyers, utilities who may in their area be the only customer in town.  Trade in electricity, meanwhile, is hindered by lack of transportation capacity.  While electricity can cross the country in about 1/60th of a second--the same speed as computer bits at the speed of light--it is impossible, currently to buy electricity outside one's immediate area, due to capacity constraints.  Compare that with the global growth unleashed by being able to purchase everything from softballs to software globally.

To be sure policy changes must be well considered.  The examples of Enron and the banking crisis on Wall Street show that not every regulatory change is good.  On the other hand, to hold to the past is no answer if it impedes innovation and job creation.

In short, to ignite not only the immediate economy but also the economy of the next ten years, the Administration and Congress need to move forcefully to remove barriers to the clean economy.  Truly green shoots may be the key to truly robust recovery.

Later today, the Senate is likely to consider legislation, already passed by the House to provide about $1 billion to encourage people to trade in old cars for new ones.  If Senator Judd Gregg (R NH) does not prevent its passage, the so-called cash for clunkers bill--at this level of funding, down from the initial request--would take about 250,000 jalopies off the road and replace them with new cars.  Though a 250,000 increase in new car sales will have only a small impact on overall US car sales which have virtually halved from about 18 million cars to under 10 million cars this year, the bill will bring people into showrooms.  In addition, if passed, the bill will improve overall gas mileage and reduce overall emissions.  The cash for clunkers idea is a good one that NDN has long supported.

However, coming on the heels of the bankruptcies of GM and Chrysler and unprecedented government intervention in the auto sector it also serves to underscore the challenges and uncertainty that surround the auto business. Have Americans stopped buying cars because of the financial crisis?  Or does the decline reflect uncertainty following last year's gas spike?  Why are Toyota and AUdi gaining market share from US companies despite higher wages in Japan and Germany? Are all electric, hybrid or batural gas cars the answer to the challenges of climate change and energy security? What will the American and global auto industries look like in the future?  In the last six months, the US government and Wall Street have focused unprecedented attention on the auto industry.  Yet for the most part, no one has answered or even asked these questions. 

With the US auto industry likely to employ about half the people at the end of this year as at the end of last, there are plenty of reasons to be a pessimist.  But, no crisis occurs without opportunity.  When we consider that companies like Apple, Microsoft and Google went from nothing to billion dollar companies employing tens of thousands of people in a decade or less, it is not unreasonable to think that smart people could potentially reinvent the transportation industry in more sustainable form.  Indeed, some innovative companies are working to do just that.

One such company with a potentially transformative vision of the future is Better Place, a Palo Alto startup founded by Shai Agassi, formerly the chief operating officer of the software giant, SAP.  Better Place is not only working with car makers to develop all electric cars, it is also developing the infrastructure to easily charge them and create new leasing models that leverage the ability of car batteries to store power for the grid.  Better Place is one of a number of innovative companies working at the intersection of transportation, smart grid technology and the reinvention of the world's electricity infrastructure.  And it is doing this not only in the United States but around the world in Israel, Denmark, Australia and Japan. 

Just how America and the world address the challenge of the auto industry will be critical not only in determining our economic future but also in how we meet the challenges of climate change and energy security.

To advance discussion of this vital topic, tommorrow, I will have the pleasure of hosting Better Place CEO Shai Agassi at NDN in Washington for a conversation on the future of the global auto industry.  I invite you to attend this special event.

Envisioning the Future of the Global Auto Industry with Shai Agassi
Thursday, June 18, 9:45 a.m.
NDN: 729 15th St. NW, First Floor
A live webcast will begin at 10 a.m. ET

To register for this event, click here.

If you are not in Washington, the event will also be webcast.

Please join me for this important and exciting discussion.

Yesterday, the Obama Administration released a long awaited, definitive government report on the impact of climate change on the United States by region, economic sector and social outcome.  In what might be called an American version of the Stern report, prepared by 13 government agencies, it confirms the large existing body of scientific work on the reality of climate change and then specifically charts the impact on the United States today and far into the future.

Significantly, it argues that climate change has already impacted the US through heavy downpours, rising temperatures and sea levels, thawing permafrost, earlier snowmelt and alterations in river flows.  And change will accelerate in years to come.  Indeed, the report underscores that much of the impact of climate change will be via water.  In some areas, increased precipitation will stress water management resources, leading to flooding.  In others, it will lead to drought.  Changing water paterns will impact agriculture, coastal regions and public health.

If this report cannot drive home the point that the cost of climate change is far greater than the cost of a cap and market regime to address it, nothing may.  The real threat of climate change is that its mechanism for wreaking havoc is so broad: rain, rising rivers, drought and other changes in our overall habitat can seem too diffuse to pin on one cause.  This report shows that there is a cause, however, and it is greenhouse gases.

As the House prepares to debate the American Clean Energy and Security Act (ACES) next week it would do well recognize that the problems of climate change do indeed transcend regional or parochial boundaries and only the political courage to see the big picture, will enable America and the world to take the steps needed to solve this complex problem.

As I have been writing, the time has never been better to pass a climate change bill and if action does not take place this year, the prospects for passage are likely to decline.  Recognizing the threat of a bill passing, opponents have pulled out all the stops, while supporters are making a full court press to gain passage.  With a critical vote in the House coming as early next week, the stakes could not be higher.

Against this backdrop, yesterday, Al Gore's Alliance for Climate Protection released a new ad as part of its Repower America campaign to help rally support for the bill.

The ad shows a farmer talking about the need to do something about dependence on foreign oil.  He has a point.  It was President Nixon who first began to rail about dependence on foreign oil.  In the 40 years since, the problem has only grown worse.  And, of course, we now have to contend as well with the even more serious threat of global climate change. 

Here's the ad:

New York City -- Business Week has a provocative article this week by Michael Mandel on innovation -- or the collapse of it -- in America. According to Mandel, many of our current woes stem from a failure to innovate over the last decade since the glory years of the late 1990s. While most Americans still take pride in our innovation, Mandel provides some sobering statistics: the wages of young college graduates -- precisely the group that should be succeeding in the information economy -- declined 24% between 1998 and 2007. The U.S. trade balance in high tech goods flipped from a $30 billion surplus in 1998 to a $53 billion deficit in 2007. Mortality statistics actually worsened for those 45 to 54, belying talk of medical breakthroughs.

All of this leads to my topic for today: making good on the promise of clean technology. Now one of the hottest areas in Silicon Valley and an area that the Obama Administration believes is key to powering prosperity, clean technology has -- as John Doerr has said -- more potential for wealth creation than information technology. Yet despite numerous technology breakthroughs, the clean energy and technology space has yet to generate the type of home runs on a company level or growth on an economy-wide level needed to reinvigorate the American economy and get wages moving upwards again.

In my view, there is no question that innovation is the key to America's economic future. The wealthiest country in the world cannot compete with low-wages countries on labor costs. To sustain high wages, our people must create new industries in which competition is based on new capabilities and, in effect, scientific magic, not on who can make widgets for less. We have the best scientific infrastructure and system for financing innovation on earth. Nonetheless, as Mandel points out, our system has not delivered on an economy-wide level for the last decade. 

It is tempting to blame this on the policies of the Bush Administration. And the Obama Administration has begun to reverse a reliance on financial engineering, as opposed to real engineering, to get us back in the business of creating new products. However, to really get innovation back into high gear, I believe more steps are needed.

Within clean technology, a very promising area of innovation is the smart grid. However, virtually none of the money for smart grid included in the ARRA bill will go to young entrepreneurs -- burrito-eating Stanford grads, as Doerr once described them. Because of a 50% cost-sharing requirement and large average size for grants, most will go to large regulated utilities. Moreover, the entire clean energy industry is hampered by a key difference between the energy industry and, say the Internet industry: the presence of incumbent players with an interest not in innovation but rather in preserving incumbency.

Many young clean technology companies find themselves in the role of selling to a small group of customers, most heavily regulated and unusually conservative. In a given geographic region, they may therefore have only one customer, creating a so-called monopsomy. Monopsomies, the flip side of monopolies, provide exceptional buying power to a single gatekeeper who can, if desired, not buy a product at all. A real life example of a monopsomist is a coffee buyer in a remote region who may have virtually unlimited power over small growers. Oil companies, similarly, enjoy government tax credits, market power and other incumbent advantages that can work against companies offering alternative technologies. So long as these sorts of gate-keepers and roadblocks to innovation exists, clean energy will fail to realize its promise.

What is the way around roadblocks to innovation in the energy sector? The answer, broadly speaking, is to get the end user or consumer involved.

The consumer is a great arbiter of product quality. Unlike a middleman, incumbent or gatekeeper, the consumer's highest priority is features for money expended. In software, computers, electronics and sectors where the consumer is empowered, the consumer has driven innovation.

Two policy ideas stand out as ways to get the consumer involved in energy decision making. First, the smart grid itself, if developed in an open way, will drive innovation buy allowing software developers, producers of services and others to build products around an open standard. On the other hand, the smart grid, if developed in a closed or proprietary way, will merely perpetuate the market power of insiders. The key is to set a standard that allows plug and play capability so that entrepreneurs can develop products for customers around it. Just as coffee consumers, once informed about fair trade, have begun to buy fair trade coffee, consumers, if given the choice, will buy products and services around the grid based on their preferences.

Second, it is time to revisit the issue of electricity reform to offer greater choice to consumers. Electricity reform began in the 1990s but came to a halt. Since then, we have learned what structures make markets work best and competition should be extended to the consumer level.

Finally, the government should be more flexible in how it supports research and development for clean technologies, to make more money available to smaller, more nimble firms as opposed to entrenched incumbents. While it may be possible for governments playing catch up to to bet on strategic industries, as Japan did after World War II, when it comes to innovation, picking winners should be avoided. No single analyst or committee, no matter how smart, can substitute for trial, error and the verdict of the marketplace.  However, government can encourage open standards and a level playing field to encourage numerous solutions to problems.  And by making money generally available not only to large players but to small ones, it can help rekindle innovation.

These three steps will help accelerate innovation in the clean technology space. And innovation is what is needed to raise wages, create jobs and get America's economic engine hitting on all cylinders once again.  

Note: Today, I am going to take a break from my usual topic of clean technology and the environment to comment on the anniversary of two significant events in the history of freedom and democracy.

New York City -- Twenty years ago today, Poland held the first free elections in Eastern Europe since before World War II. Solidarity, led by former electrician Lech Walesa, crushed its main opposition, the Communist Party to win close to 100% of the vote. Walesa went on to become Poland's president, and Poland has since joined the European Union and NATO and emerged as a significant player in Europe with an economy larger than that of Sweden or Belgium. Led today by Donald Tusk, it is emblematic of the democracies that emerged in Europe in 1989 and 1990 following the withdrawal of the Soviet Union and the great leap forward for Democracy that has occurred more broady since then in much of the world.

Twenty years ago today, however, something quite different happened across the globe in China. The same day that Poles were voting for freedom, on the other side of the globe at Tiannamen Square, the Chinese government decided to quash a several-weeks rebellion that had brought China to a standstill.  The bloody action that followed involved troops firing successive volleys into the crowd in a manner reminiscent of the famous Indian massacre at Jallianwala Bagh that some say marked the end of British moral authority in India. China has since gone on to stage an economic miracle so that by some economic and social indicators it rivals the United States.  While per capital GDP is still a fraction of ours, China today churns out more PhDs, olympic gold medalists and pollution than the United States. The Chinese miracle is indeed more dramatic than that of Japan or any other country in modern history, but it has not led -- contrary to great Western hopes and wishes -- to democracy. Just this week, for example, China censored Twitter, Flickr and Hotmail.

The Polish example -- like that of the Czech Republic and similar states -- is reassuring to those of us in the West. It suggests that without coercion, left to their own devices, people choose democracy and democracy leads to prosperity. You can't have one without the other. Indeed one of the reasons that Gorbachev, Russia and its satellites turned away from Communism in the 1980s toward the American way was that our way seemed not only more enjoyable but so much better at delivering material well-being.

The Chinese example is not so reassuring. While we don't know what would happen without the continuing power of the Communist authorities, the Chinese example suggests that wealth can multiply in the absence of freedom and democracy. Indeed, it suggests that material wealth may act as a substitute instead of a complement to democracy and freedom of expression. 

This is troubling because in the United States we have gotten used to the idea that economic leadership and freedom go hand and hand. Certainly, we have used our economic and military strength to promote -- if imperfectly -- the cause of freedom. Our standard of living, moreover, has been not only an advertisement for our way of life but the draw for many who have chosen democracy.

There is much to validate our point of view in history. With some notable exceptions, free places have been economically and culturally dynamic ones. Ancient writers marveled at Athens' emergence from obscurity in only a matter of years after it embraced democracy and attributed the marvel, including the ferocity with which its people fought -- to their love of freedom. Rome and Carthage, the two most free republics of their day dominated, trade and commerce in the Mediterannean. Venice, a republic dominated trade in the high middle ages, prompting imitation. The Dutch Republic during the 17th century led the world in trade And England during its long sojourn as the world's leading economy was far more democratic than most. All this paved the way for America's experiment with freedom -- the world's greatest -- that has led to unprecdented wealth and prosperity for an unprecedented number as well as unprecedented freedom.

However, there are plenty of civilizations and empires in the world that were simultaneously rich and unfree, from the ancient Assyrian empire to the Incan and Aztec empires in the Americas to the Ottoman empire to the Chinese dynasties. These empires created less excitement and left less of a written record, generally, because they suppressed expression. However, they often generated substantial wealth in gold, decorative art and architecture.

It would be nice if wealth in China leads inexorably to Democracy.  However, we cannot take this for granted.  If China does not embrace the same ideals as the United States, our case will rest on our ability to continue to innovate -- so as to continue to lead economically--and also on our ability to convince the world that freedom has benefits beyond those that are purely economic. 

New York City -- The stock market's sigh of relief yesterday following GM's bankruptcy -- vastly improved at the last minute by a deal with bondholders to permit a pre-packaged filing -- provides yet another indication that the economy may finally be on the mend. Green shoots have been increasingly evident in the technology world with the successful IPO of OpenTable.com in the last week which experienced a pop reminiscent of the dot com boom, a $200 million round of financing for Facebook from a Russian mogul and the decision of Daimler Benz to take a 10% stake in Tesla, maker of the sleek, all-electric Tesla sports car.

Within the technology world, clean technology is now the third largest category of investment after life sciences and software, and according to some of the most savvy investors in Silicon Valley, the hottest category. It is the newest large sector and therefore, presumptively, the one with the greatest promise. The Obama Administration heeded this wisdom in including about $40 billion of money to modernize the grid in the ARRA bill as I and others have advocated. Improving the grid is not only vital to the deployment of renewables but also promises to reinvent the electricity industry itself. Given all the money flooding into smart grid investments and the grid generally, an interesting question at this juncture, therefore, is with the economy looking better, just how are utilities and technology companies in the clean energy sector faring?  The answer is mixed.
 
According to Marketwatch.com, which recently surveyed the sub-sector, utility shares are actually down 9.4% this year (in contrast to the broader market which is roughly even). Small and mid-cap firms have done better. But, it turns out that most of the government money slated for grid investments is still awaiting deployment. The reasons are varied but should not surprise anyone familiar with the pace of government and the regulated nature of the energy sector. Tesla, as one example, has been waiting for years to tap Department of Energy loan guarantees included in the 2007 Energy Act to build a cheaper, sedan version of its electric car. The DOE has yet to release any loans under the program due to back and forth between it and the Office of Management and Budget over rules. DOE Secretary Chu has made accelerating the availability of this money a key priority but even he has to wait for the wheels of government to turn.
 
The impact of the other key piece of the stimulus package, tax incentives, has yet to be felt on a large scale because rules and regs are still being developed and companies do not yet fully know how incentives relate to older rules on depreciation of assets. Smart grid projects, in particular a grant program at DOE for smart grid technology deployment, are at the center of the Administration's clean infrastructure policy. However, before most utilities are comfortable making large investments in the smart grid, they first need clarification on standards. The reason? Investing in the wrong standard can make an investment instantly obsolete.
 
Standards normally evolve gradually over a long time even in the computer world. To solve the standards issue, Secretaries Chu and Locke have begun a full court press to accelerate agreement among utilities, equipment makers and builders of software. At NDN, we have been making the case that smart grid standards should be as open as possible. Only by opening up the playing field to as many players as possible can we secure the maximum level of innovation. And innovation is what is needed to solve America and the world's energy and climate challenges.
 
Clean energy technologies clearly have the potential to be a huge engine of economic growth in coming years and decades. However, for clean technology to make good on that promise and justify the President's faith and commitments, we need to move at the speed of technology.
 
Two things can help America make good on the clean energy opportunity. First, standards that open up the grid to many players and allow people -- including producers of renewables and ancillary services -- to enter the market easily without having to wade through government red tape or regulation will go a long way to
accelerate innovation and the ensuing economic activity. In other words, set the standard and then let the parties innovate and compete. Open standards are particularly important in an industry as regulated and traditionally sleepy as that of electric power if we are to turn it into a field of innovation.
 
Second, it is time to re-examine the extraordinarily complex structure of electricity regulation itself.  Regulation should be as streamlined and efficient as is consistent with safety and security. Markets should be employed where practical to place everyone on an equal footing. The work of electricity reform begun in the 1990s remains unfinished.
 
These may seem like immense challenges. But ultimately, if we are to capture this economic opportunity, we need to create rules and systems to allow innovation to flourish. I am confident that America will.