<blockquote></blockquote>One of the most important things about those subsidies is what the government gave away was essentially free: land that had little value before there was a railroad nearby. Let's take a look at how an analogous subsidy might work:
There's recently been a <a href="http://spectrum.ieee.org/energy/renewables/hydrostor-wants-to-stash-energy-in-underwater-bags" rel="nofollow">surge of interest in underwater compressed air storage</a>. Although the technology currently envisioned <i>"will be deployed at a depth of 80 meters, and they should be able to supply about a megawatt of electricity for 3 hours or so"</i>, greater depths are feasible:<blockquote>At depths greater than 500 meters, says Garvey, “the cost of the containment becomes negligible compared with the costs of the power-conversion machinery.”</blockquote>So here's what could be done: anybody who creates a prototype underwater compressed air system can be granted a large plot of ocean bottom, for future development. To keep it (analogous to <a href="http://en.wikipedia.org/wiki/Homestead_Acts#Homestead_Act_of_1862" rel="nofollow">homesteading</a> in the 19th century US) the grantee must show progressive development of energy storage using the underwater area granted. As with the railroad subsidies, the underwater rights will only acquire value when the technology develops.
Ideally, IMO, the grants should specify energy storage depending on the pressure at depth, without going into details whether they use compressed air or pumped hydro using <a href="http://www.gizmag.com/mit-offshore-wind-concrete-sphere-energy-storage/27357/" rel="nofollow">underwater spheres</a>, or any other technology.
For instance, rather than spheres, smaller horizontal tubes might be cheaper per energy stored. And for compressed air, perhaps a giant cylinder/piston system with insulating capacity, so the air could be stored at the adiabatic compressed temperature (~200°C for 80 meters), rather than having to be cooled and re-heated. Such a system would be pressure-neutral, although an insulating material capable of withstanding the compressive force would be needed. With good insulation, only tiny amounts of heat would be needed to keep it hot (making up for leakage), and perhaps that heat could be gotten directly from concentrated sunlight.
Such a subsidy system would cost the government almost nothing (immediately, although it would detract from later income selling off useful sea-bottom once the technology is mature). But as long as the technology is close enough to mature to attract investors, it might well be highly workable.
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