Fostering Innovation in the Energy Sector
Innovation helps to develop the economy, create jobs and improve our standard of living. In recent years, we have seen innovation hubs popping up all over the world. Innovation is not only created through research institutions but through experimental research and development activities in commercial environments. In fact, many experts cite collaboration between industry and researchers as crucial to successful implementation of innovative ideas. Building an environment that fosters innovation requires mindful effort on behalf of the government, academia and business.
Jon Creyts and Curtis Probst from the Rocky Mountain Institute recently wrote an article regarding innovation in the energy sector. They mentioned that America’s early success in clean energy was greatly influenced by research and development funding, which encouraged businesses to innovate in the sector and created incentives for greater risk-taking. Creyts and Probst believe that whilst stability is important for capital providers, a portion of their financial system must provide adequate risk capital to support higher risk ventures.
Furthermore, although laws and regulations have an important place, they can increase business costs and stifle innovation at the same time. Creyts and Probst argue that innovative technologies (such as rooftop solar power) can reduce the costs of business as well as the negative effects of energy production on the environment, and therefore regulators need to leave room for experimentation.
It is imperative that today’s energy companies keep up with the rapidly changing sector. Many new technologies are emerging and challenging current energy production methods. This change will affect all industries as economies rely heavily on energy usage.
To assist with the transition, federal and state R&D tax credits are available for energy companies investing in qualified innovative activities. Companies can find out whether their project is eligible for the credit by contacting Swanson Reed R&D Tax Advisors. Tax incentives and disincentives allow policies to favor positive outcomes such as clean energy and discourage less desirable outcomes such as the burning of fossil fuels. Incentives can help to increase the speed that clean technology is adopted and allow for further research and development to be undertaken in order to improve existing technologies. By investing in research and development for clean energy, governments can save significant amounts of money that would otherwise be spent on conventional energy infrastructure.