Incentivizing Investment in Innovative Technologies | Finance Forum 2025

Panel Scope and Objective

• The discussion addresses strategies to de-risk and incentivize investment in critical and emerging technologies, specifically focusing on clean energy, AI, and innovation ecosystems.
• Key speakers include Karen Kornbluh (Moderator), Doug Arendt (NREL Foundation), Jennifer Hankins (Tulsa Innovation Labs), Jigar Shah (World Resources Institute), and Maggie Swiatek (Milken Institute).
• The consensus is that traditional linear innovation models are too slow for current demand growth in power and molecule production.

Rethinking Investment Incentives and Ecosystems (Doug Arendt)

• Investment incentives should shift focus from purely financial tools (tax credits, R&D grants) toward fostering "unconventional partnerships" between disparate sectors.
• Current demand growth has not been seen in 50 years; linear workflows are insufficient, requiring simultaneous collaboration among AI companies, utilities, and clean energy developers.
• The "First Movers Coalition" exemplifies successful demand-building partnerships where companies across tens of sectors coordinate on supply chain and market development.
• Innovation ecosystems must be compressed from a multi-decade linear timeline to 3–5 years by leveraging both knowledge and physical assets from national labs.
• NREL's "Innovation Incubator" program, funded by Wells Fargo, has seen 99.9% of its 70+ participating companies survive and expand, garnering over $2 billion in follow-on funding.
• Success rates for the incubator cohort are approximately 20 times higher than the non-selected applicant pool.

Local Implementation and Regional Strategies (Jennifer Hankins)

• Tulsa, an MSA of approximately 1 million, leverages its core industries (aerospace and energy) to drive global technological innovation using local assets.
• Local entities partner with "juggernaut" corporations (e.g., Microsoft, Devon Energy, One Oak Williams) to create venture studios that align corporate needs with university and lab research.
• The region focuses on "white-glove" engagement to match local pilots with global corporate scale, particularly in geothermal and energy decarbonization.
• A specific case study involves midstream oil and gas companies (e.g., Helms & Payne) engaging with geothermal technology, creating value chains that were previously unimagined.
• Challenges remain in moving technologies from TRL 5–6 (pilot) to commercialization, requiring continued corporate and government investment.

Federal Role and Commercialization Risks (Jigar Shah)

• The U.S. has led in innovation for 40+ years but historically struggled with commercialization, often resulting in technologies being scaled abroad (e.g., solar, batteries, nuclear designs in China).
• A recent four-year federal commitment mobilized approximately $100 billion in private sector capital, though project success depends on sustained government signaling.
• Key Risk: If the U.S. lacks a thriving domestic manufacturing base (e.g., for battery cells and silicon), it risks licensing advanced U.S.-developed technologies to competitors like China at little cost.
• Targeting a 2027 completion for domestic EV battery manufacturing is critical to preventing the outflow of IP.
• National labs are required to validate claims and crowd in capital; state and local governments cannot fund the 10,000+ scientists needed for this validation.

Global Investment Trends and Emerging Markets (Maggie Swiatek)

• In 2024, $15 billion in private investment flowed into emerging space technologies, with ~$10 billion (67%) going to China and ~$1.5 billion (15%) to India.
• India and Brazil succeed due to established financial markets (e.g., NSE, BSE), regulatory stability, and cost reduction in insolvency/resolution processes.
• Digital public infrastructure is a key government enabler; Mexico ranks 14th globally in central government internet access, comparable to the U.S. (9th).
• Obstacles: Security issues (Mexico), high costs of doing business, and the need to balance foreign investment with national security (e.g., Mexico's CFE coordination).
• Mexico relies heavily on foreign investment for renewable energy but requires regulatory openness that protects community security.

Grid Capacity, Permitting, and Cultural Barriers

• U.S. GDP growth is now directly contingent on adding electricity capacity to the grid; current GDP is held hostage by grid constraints.
• Technical Solutions: Virtual power plants and AI-driven grid analysis can reduce safety study times from two years to four minutes.
• Cultural Barrier: Utilities and engineers often resist efficient, low-cost solutions because they were not taught them by mentors (e.g., grid-enhancing technologies).
• Permitting Friction: Removing NEPA does not eliminate parallel processes involving the Fish and Wildlife Service, Army Corps of Engineers, and Historical Preservation.
• Investment Horizon: Utilities face volatility risks (e.g., natural gas price swings above $5/MMBtu) and long asset lifecycles (10–30 years), discouraging capital deployment without clear returns.
• AI data centers require massive, localized power (hundreds of megawatts to gigawatts), driving tech giants (Microsoft, Meta) to invest directly in nuclear, gas, or geothermal assets.
• Texas and Brazil are cited as models for success, utilizing clear planning and procurement rules to accelerate transmission and generation investment.

Forward-Looking Recommendations

• Maggie Swiatek: Prioritize regulatory agility to ensure grid modifications are not delayed by protracted permitting processes.
• Jennifer Hankins: Focus on "unconventional partnerships" and creative capital allocation to identify gold-standard solutions.
• Doug Arendt: Engage in cross-sector relationship building by meeting five new individuals to explore potential business collaborations.
• Jigar Shah: Identify a central orchestrator or authority to coordinate the complex ecosystem of innovation, funding, and deployment.