Clean energy must become cost-competitive without government subsidies, Adaptive Materials exec says
Adaptive Materials co-founder Michelle Crumm said clean energy products need to become cost competitive with traditional energy competitors.
Lon Horwedel | AnnArbor.com
Michelle Crumm, chief business officer and co-founder of Pittsfield Township-based fuel cell firm Adaptive Materials, said alternative energy companies need to drive down the cost of their products to compete with traditional energy options.
The cost of electric vehicles, for example, needs to come down for them to make a significant impact on the car market.
"Your product has to be as good and a similar cost" as traditional energy options, Crumm said at the Michigan Emerging conference in Dearborn. "I don’t think people in the long-run are going to pay more. I like my automobile the way it us. To pay $12,000 more for the battery, I’m a tough customer to convince that’s a good idea."
Alternative energy products "will have to cost the same to displace" fossil fuels, she added. She said she had some reservations about subsidies and said they have "some disadvantages" by ignoring other companies that aren't fortunate enough to get government help.
Gerald Zack, CEO of the U.S. Renewable Energy Association, who spoke at the same conference, said the government needs to embrace consistency with its clean energy subsides and tax credits.
"The alternative energy industry is in a state of flux as our government leaders gyrate
from all-in on renewable incentives to ‘don’t cash the check until next week Friday,'" he said. "Government incentives come and go -- and often times so do the companies that rely on them."
Crumm's comments come as 10-year-old Adaptive Materials is expected to pass $10 million in revenue in 2010 -- a feat the firm has achieved without accepting equity investment. That means that Crumm and her co-founder, husband Aaron Crumm, and Adaptive Materials employees own 100 percent of the company.
That stands in contrast to many tech firms in the area that have accepted venture capital financing in exchange for giving an ownership slice to investors.
Adaptive Materials, which employs about 60 workers and is seeking a chief operating officer, is trying to navigate rapid growth. The firm's revenue has grown 70 percent year over year since its inception, Crumm said.
"It’s not easy to grow a company that fast. The people that get you to a certain point don’t get you all the way," she said. "Going through that growth has been real challenging for us."
Among its latest challenges: navigating a vexing system of governmental permits required for specific fuel cell operations.
Nonetheless, revenue continues to flow to Adaptive Materials, whose portable fuel cell technology is an attractive alternative to heavy batteries that the military relies on in the battlefield. Most of the firm's revenue comes from the U.S. military.
"We’ve done it the good old-fashioned organic way. We’ve succeeded on one contract, which led to the next contract, which led to the next contract," she said.
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
LarryJ
Sat, Nov 20, 2010 : 12:37 p.m.
Putting a PRICE ON CARBON has to be part of the mix. Sellers and users of CO2-generating energy should pay for polluting our air with CO2. A "free market" that doesn't require polluters to pay is a distorted market.
BobbyJohn
Thu, Nov 18, 2010 : 5:55 p.m.
We should remove all taxpayer subsidies of all energy. Then solar will be used when it is cost competitive w/ other fuels. Subsidies don't really help citizens because we are all still paying for the energy, just indirectly.
Nick
Thu, Nov 18, 2010 : 10:39 a.m.
Golly, perhaps we should also price traditional energy fairly and calculate the value of all the de facto subsidies and externalities; e.g., integrate the true cost of carbon, removal of oil/coal/nuke tax breaks, national defense costs allocated to energy, government incentives, use fair valuation techniques across both renewable and fossil fuel assets... Will this put "clean" energy on par with fossil fuel? Perhaps not, but it will certainly close what is an imperfect gap. Until we do this, we have no idea what we are comparing.
Speechless
Thu, Nov 18, 2010 : 9:38 a.m.
In the developed world, the more rational countries employ heavy subsidies, often effectively, to move their economies toward desired social goals. When they want a greater percentage of energy to be derived from alternative sources, then they will underwrite some of the costs of clean energy while raising taxes and fees on unsustainable ("dirty') forms of energy production. These subsidies are an important component of what used to be more commonly known as 'industrial policy.' As other comments above have noted, the wrong industries within the energy sector have been receiving subsidies and tax breaks for a very long time, while cleaner forms have been largely ignored. It's appalling how little progress the U.S. has made since the first Earth Day forty years ago. The so-called "free market" will either largely fail to accomplish a transition to cleaner, sustainable forms or energy, or else will require many more decades. A more social-democratic process, by contrast, can far more quickly and efficiently direct energy development in order to protect the environment and promote the affordability of new forms and new products. Social democracy also gives people some say, rather than have decisions made autocratically and almost exclusively inside corporate boardrooms. Assertions like those being made here by Crumm mainly demonstrate the peculiar American attraction to Ayn Rand-ian fantasy worlds. They show a more sophisticated, outwardly corporate manifestation of tea party politics.
kissthecobra
Thu, Nov 18, 2010 : 9:20 a.m.
I would have to disagree w/McGiver, as the marketplace/free market is rigged and government oversight is often needed to regulate, as evidenced in the mortgage crisis and Wall Street's use of derivatives/credit default swaps. Wall Street also has a long history of stacking the deck in it's favor when issuing IPOs. Countries manipulate currencies to favor their industrial base, as we've seen with China capturing the U.S.'s manufacturing base. Many countries also invest in technology and various manufacturers to support their social goals, leaving competing manufacturers in other countries at a disadvantage and unable to compete. "Globalization" has been a scam and has not worked for a very large segment of the world's population, and now, more than ever, the "free market" has fallen from grace and is being viewed with suspicion.
gretta
Thu, Nov 18, 2010 : 9:12 a.m.
After reading the article, I had the same thoughts as Lorie. Gasoline, at the very least, is subsidized in this country. Get rid of that subsidy and then things will even out a bit more.
McGiver
Thu, Nov 18, 2010 : 8:33 a.m.
Great approach to market based innovation. The more the maeketplace picks the winners and not the government, the better the economy progresses, and society benefits.
pseudo
Thu, Nov 18, 2010 : 7:41 a.m.
baloney. The huge amount of government welfare for the more traditional energy companies and utilities should end before we can really have a discussion about what energy really costs based on its source. Tax subsidies, land purchase subsidies, defacto permissions to use land without paying the owner, mining incentives, required hook ups and the bills that go with them, bailouts (yes, those too), structured bankruptcies...um, no- traditional energy companies have gotten way too much tax and infrastructure help for us to even pretend there is an even playing field. Traditional energy creation and delivery needs to be off the dole first and then we might be able to get to a fair comparison. I appreciate where Ms. Crumm is coming from but I think its a bit odd that she doesn't see how much corporate welfare and granted monopolies affect the cost and pricing for the traditional companies.
kissthecobra
Thu, Nov 18, 2010 : 7:39 a.m.
I find it a bit disingenuous of Michelle Crum to express reservations over government subsidies and also saying Adaptive Materials has conducted business the old fashioned way, from contract to contract. Adaptive Materials (AM) has benefited greatly from government subsidies and I would hazard to guess that AM wouldn't even exist if it hadn't received various government grants. The Defense Advanced Research Projects Agency (DARPA), which is an agency of the Defense Department, has given AM at least $32 million in grant money. And Michigan's 21st Century Jobs Fund has awarded AM $6.27 million in grant money to help it develop new products. There are more grants and subsidies also, which I'll omit. Don't know, maybe Michelle is just upset of the $42K list price of the Chevrolet Volt and doesn't want to shell out that kind of $$$ to GM?
KJMClark
Thu, Nov 18, 2010 : 7:15 a.m.
Really, the better way to handle this would have been to add a national excise tax on oil to pay for the Iraq war. Then we'd all be a lot less worried about deficits and everyone would see the logic of electric/PHEV/hybrid vehicles and trains, buses, and bikes.