Will the energy industry buy energy innovation?

We all know that the failure of Detroit is tied to its chief industry's refusal to innovate. I have written here about how the Houston energy industry's refusal to innovate could doom that city.

(Picture from Rice University.)

But energy innovation is coming. It's coming fast. As one commenter on my Houston story noted, energy innovation is coming on at a Moore's Law speed, at an industry that moves on 30-year time frames.

Well, I've seen that movie before. Companies that can't adapt to a new pace of change are always destroyed as Moore's Law takes hold.

So could Houston be replaced by Japanese consumer electronics firms? Yes, easily.

At the Consumer Electronics Show last week in Las Vegas, Martin Lamonica of C|Net found many indications that might just be happening. While some TV producers are complaining of demands for efficiency, others are seriously looking for innovative start-ups to back.

Panasonic, for instance,  is developing fuel cells, he writes, and entrepreneurs were all over the show, seeking capital to scale-up their ideas into volumes that can impact the mass market.

Some of the ideas are silly, like powering cell phones with soda. Others are dreamy, like artificial leaves that split water into hydrogen using a semi-organic process.

But all these ideas have something important in common. They are about making something small that is mass produced. They scale up through manufacturing. Ideas are the raw material.

The illustration above is one example I covered recently. Michael S. Wong of Rice University, in Houston, is working on methods for producing quantum dots. This can revolutionize the solar panel business, dramatically increasing the efficiency of panels.

How will his work get to market? Through the manufacturing of equipment, and the scaling-up of that manufacturing. And Dr. Wong isn't the only innovator here. Back him, and someone else with a better idea may trump you. Speed to market matters.

Today's energy business doesn't work that way. Today energy scales through process, over time. Whether you're talking about a process for turning oil into gasoline, or for producing plastic, or for dividing atoms, you start with a feed stock, transform it in some expensive way, and deliver an energy-producing output.

Finding and gaining control of the feed stock is the battle. Its transformation into useful energy is also highly centralized. You don't want to live near a chemical plant.

The problem is that the feed stocks of our energy future are all around us. They don't have to be discovered, they only need to be used.

Sun, wind, the energy of the Earth or the rushing water of the tides, these exist in abundance everywhere. What they require are the mass production of products that can harness this energy.

The future of energy lies in laboratories, on university campuses, and in clean manufacturing plants.

What will make a green energy future possible is the research-and-manufacturing process already familiar to Silicon Valley, not the discovery-and-exploitation system on which Houston is based.

You can't concentrate the necessary brain power, either. What we have learned in the last 40 years is that innovation can come from anywhere, that scouting ideas is different from scouting resources, that open systems for testing ideas are more powerful than closed, highly-capitalized laboratories.

This may be the toughest problem Houston faces. It's not about money, but about how money is deployed. It's about the wildcatting of ideas, not leaseholds.

It's a paradigm shift in the entire business process I despair of Houston ever learning.

This post was originally published on Smartplanet.com