A Sustainable Energy Industry Cluster
for Mesa Del Sol

2. Defining Our Terms

What is sustainability? The most widely accepted definition of sustainability, based on the 1987 report of the World Commission on Environment and Development (the "Brundtland Commission," after its chairwoman Gro Harlem Brundtland), is development by which societies today meet their needs, without compromising the ability of future generations to meet their own needs. Too often, people interpret this definition exclusively in biophysical terms, and thus concentrate on the conservation of physical resources, the protection of human health, the maintenance of stable ecosystems, and so on. We prefer a broader interpretation. Achieving sustainability entails balancing the environment, the economy and social equity. To endure on a sustained basis, a society needs fair access to good jobs and economic resources, and it must factor into its economic accounting the consumption and destruction of environmental resources-especially those that are irreplaceable.

What is sustainable energy? Applied to the electric sector, the Brundtland definition implies a system that:

• supplies on an equitable basis and at a fair price the power necessary to maintain and improve quality of life;

• limits pollutants well within healthful levels;

• does not markedly raise the risk of environmental or economic disaster in the future, by producing greenhouse gases, radioactive wastes or other long-lived toxins;

• promotes the long-run availability of those generating technologies that cost the least and present the fewest environmental dangers; and

• prices electricity so as to reflect the true costs-including environmental other external costs-associated with its production.¹

There exists no hard definition of energy technologies that satisfy these criteria. Rather, the loose family of sustainable energy technologies gains and loses members over time and according to perspective. Today, the term usually comprises some of the following: renewable energy, energy efficiency, passive solar architecture, fuel cells, microturbines, and energy storage devices.²

Renewable energy technologies convert into electricity or useful heat the energy available from sources that replenish themselves naturally on human time scales. Example include:

• solar photovoltaics, which turn sunlight into electricity;

• solar thermal-electric systems, which use the heat of the sun to boil a fluid and thereby drive a turbine-generator;

• solar thermal heating systems for water or building space;

• wind-driven turbine generators and wind pumps;

• geothermal power systems, which use the heat of the earth to boil fluids and drive a turbine-generator;

• geothermal heat pumps, which use the earth's heat directly to heat water, or to heat and cool buildings;

• biomass power systems, which either burn plant-derived material directly, or turn it into a combustible gas through subjection to heat and pressure;

• hydropower systems, in which turbine-generators convert the energy of falling or flowing water into electricity, and;

• others.

There also exist related energy sources that rely for their renewal on the ongoing production of human waste, rather than on natural processes. Technologies exploiting these resources therefore are often included alongside the renewables listed above. They include systems to collect and burn in turbine-generators the methane gas emitted by rotting material in landfills, and incinerators outfitted with turbine-generators that burn varieties of municipal solid waste.³

Energy efficiency technologies reduce the energy wasted in commercial and residential buildings, industry and transportation. This rubric is large and loosely defined. Well known and important energy efficiency technologies include:

• compact fluorescent tubes, with associated electronic ballasts and fixtures, which draw less power (and produce less waste heat) in providing the same amount of light as conventional incandescent bulbs;

• low-emissivity windows, which retain heat in the winter and reflect it in the summer;

• sensors, for instance those which automatically turn off lights and other appliances in a room when they fail to detect the heat signature or motion of human occupants;

• High-efficiency boilers for industrial processes;

• High-efficiency motors with adjustable speed drives for industrial purposes;

• Efficient heating, ventilation and air conditioning (HVAC) systems; and

• many, many others.

In addition, the energy efficiency industry includes energy service companies ("ESCOs"). These consultantcies, which combine engineering and financial expertise, contract to manage a firm's energy use; by finding more efficient ways to provide heating, cooling, lighting, electricity and other energy services, the ESCO can save money for its client and make a profit for itself.

Conceptually, passive solar architecture falls somewhere between renewable energy and energy efficiency. It involves the use of building techniques and materials that lower the energy required in a building. Many of these techniques are conceptually quite simple, for example orienting a building to take best advantage of the sun's heat, or installing skylights to maximize the use of daylighting.

Fuel cells represent one of the most exciting energy developments of recent years. Unlike all other fuel-based generation technologies, fuel cells involve no combustion. Rather, they produce electricity through a chemical process, combining hydrogen (derived from any one of numerous sources) with air-borne oxygen to generate power.

Microturbines are another generating technology attracting attention at the moment. Able to burn a variety of fuels, most microturbines burn natural gas, with comparatively low noise and emissions-hence their inclusion in the family of sustainable energy technologies. Most important, they are small, ranging from anywhere from 25 to 500 kilowatts (kW), making them appropriate as a source of backup or primary power for single businesses and similar uses.

Finally, the category of sustainable energy technologies often includes energy storage such as batteries, ultra-capacitors and flywheels. Such devices are especially important for energy resources such as photovoltaic and wind systems which generate power only intermittently. A large utility grid can harbor a surprisingly large amount of intermittent capacity with no decrease in reliability, but storage devices allow wind and solar systems to power grid-independent systems as well.

What is an industry cluster? We do not propose here to lay out the theory behind industry clusters,⁴ but rather to provide a working definition. An industry cluster gathers together in one location an agglomeration of like firms, along with associated consultants, service firms, upstream component suppliers, downstream system integrators, educational or training institutions, trade associations, standards agencies, and other entities. An industry cluster allows firms to share physical and human infrastructure (e.g., rail links and knowledgeable accountants), as well as a labor market containing a critical mass of trained employees. An industry cluster will not constitute the entire economic life of its host region, but it will provide enough employment and local benefits (e.g., taxes) to merit tailored governmental planning.

An industry cluster aims to incubate the development of innovative-and therefore robustly competitive-firms. To foster this competition, an industry cluster must enjoy informed customers who demand high-quality products. In the case of a sustainable energy industry cluster, this might require policy measures, at least initially: to ensure that nearby communities have access to information about energy; to reduce market barriers to the purchase of sustainable energy and sustainable energy equipment; and so on. (In contrast, the concept of industry clusters implies that subsidizing sustainable energy might be a bad idea, if subsidies reduced the necessity for the cluster's participants to compete with each other and therefore innovate.) Whereas the stiff competition for the local market might trim margins within the cluster's home region, it would produce a loosely knit family of highly innovative firms able to compete nationally and globally-as do, for example, the Italian shoe industry, the California wine industry, the linked computer and venture capital communities Silicon Valley, the Nashville/Louisville hospital management network, the Omaha telemarketing cluster, the Los Angeles area defense/aerospace industry, and so on.

A Sustainable Energy Industry Cluster
for Mesa Del Sol

1. Introduction
   
2. Defining our Terms
3. Industry Drivers
4. Mapping the Sustainable Energy Industries
5. Selected Finance Programs for Sustainable Energy
6. What Might Sustainable Energy Firms Seek in a Location?
7. Major Players

copyright © 1999 by Renewable Energy Policy Project