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N.Y.’s NYSERDA and the State Role in Fostering Cleantech Innovation

To what extent can state governments play a role in accelerating cleantech innovation? The quick answer: Significantly, and in powerful ways.

NYSERDA--the New York State Energy Research and Development Agency--provides one example showcasing the role state policy support can play in fostering a productive innovation system that enables new technologies to transition from the laboratory to the marketplace. 

The Metro Program’s new report, “Sizing the Clean Economy,” identifies innovation as one of three key drivers (in addition to market creation and finance) of clean economy growth--with the message that policies to bring about reforms in these three areas will have to be crafted in the context of regional cluster development. 

Which means that while progress on the nation’s cleantech innovation system requires synchronized effort from federal, state, and regional actors, there is a lot that state governments can and have been doing in this sphere independently. State research, development, and demonstration (RD&D) activity in particular has been an important complement to federal leadership, whether by investing directly in research; supporting business incubators; establishing seed funds to fill the funding gap between lab research and venture funding; or supporting demonstration projects.

And here it is worth highlighting the strategic role played by NYSERDA, a public benefit corporation with an annual budget of $620 million, in spearheading the state’s cleantech innovation efforts and doing so in a way that leverages the regional strengths of the state.

One way NYSERDA is fostering cleantech innovation is through its Clean Energy Business Incubator  (CEBI) program. The program promotes successful partnerships between early-stage cleantech companies and regional incubators that provide guidance, technical assistance, and consultation to companies to help them develop and commercialize clean energy technologies.

Since 2009, NYSERDA has invested nearly $9 million in six cleantech incubators through the program: Long Island High Technology Incubator, Inc. at Stony Brook University; Rochester Institute of Technology’s Venture Creations; the University of Buffalo’s Office of Science, Technology Transfer, and Economic Outreach; the Tech Garden at Syracuse; the NYC Accelerator for a Clean and Renewable Economy (ACRE); and the Incubator for Collaborating and Leveraging Energy and Nanotechnology (iCLEAN) at the University of Albany.

NYSERDA has also distinguished itself by undertaking a strong, tailored regional approach to its investments in emerging technologies. Each incubator program is specifically designed to capitalize on its regional strengths and assets, including the intellectual capital and research housed in each region’s universities and colleges. So while the Long Island region is positioning itself in the energy storage segment, Syracuse is carving a niche in building technology and Hudson River Valley region in solar technology.

As Frank Murray, President and CEO of NYSERDA, aptly summed up in a panel discussion at our recent clean economy event, what works in Albany won’t work in Syracuse. NYSERDA fully recognizes that a “one size fits all” strategy, not attuned to regional strengths, won’t turn the state into a cleantech innovation leader--or its regions into cleantech innovation hubs. 

Through the end of 2010, after only 18 months of operation and $2.5 million in program expenditures, the Clean Energy Business Incubator program has already achieved significant results. The six incubators have nurtured the creation of several hundred net new jobs at client startup companies and the introduction of 26 new products to serve the clean energy market. They have assisted client companies in raising $16 million in private capital and attracting $11 million in federal funding, leveraging state expenditures by more than 10 to 1.

As NYSERDA demonstrates, state governments can play an important and strategic role in fostering the emergence of innovative clean industries that is at the same time attuned to regional and place-based thinking. Especially in these times of limited resources and budgetary stress, states will have to get even more creative as they strive to maintain and recharge their innovation systems. New York provides one sound example of how.