Four major solar companies, including Solyndra, filed bankruptcy in the last four months, yet the Department of Energy continues to aggressively promote and fund solar energy projects. The rationale behind how the DOE appropriates its budget to explore multiple alternative energies– with varying degrees of success–was the central topic of the latest episode of Federal Spending, an online analysis program broadcast Oct. 6 through a collaborative arrangement with Breaking Gov.

Despite our best efforts, China outpaces the U.S. in solar and wind equipment production, largely because its government provides low cost loans and quick approval of imports and construction, according to keynote speaker Jack W. Plunket, CEO and publisher of Plunkett Research, Ltd., a Houston-based provider of market research and industry information.

Although China uses much of the equipment they manufacture, they are rapidly entering a position to dominate exports, he said. That and the relatively low cost of labor make it cheaper to have a wind turbine shipped from China than it is to build one here.

Foreign competition is one of the insurmountable hurdles cited by Solyndra, the failed solar cell manufacturing company that received $535 million in federal loan guarantees and nearly $200 million in venture capital. “It’s a pretty grim future for most traditional solar cell manufacturers in the United States,” said Plunkett.

The DOE does offer another incentive besides loan guarantees: a 2.2 cent tax credit for solar and wind farms.

“If that credit was not in place, we would probably not see any solar farms or wind farms even attempted in the United States, despite loan guarantees,” said Plunkett. “So that tax credit is pretty essential because it’s so ineffective on a cost basis for solar and wind to generate power.”

Solar energy only has the true efficiency of 10-to-30% of its output. And, unless you live in west Texas, the wind just doesn’t blow all the time, he said. Combined, solar and wind power generated a scant 1.2% of total U.S. energy production in 2009, leaving one to wonder why the government is investing so heavily in these technologies.

Green technologies that foster efficient, renewable and sustainable energy garner immense federal support. The 2012 proposed budget for the DOE research and development totals $4.8 billion, and more than half of that is allocated to energy efficiency and renewable energy.

“Research and development is the key to the future in many, many ways,” said Plunkett. He said that while the primary focus for renewable energy is on solar and wind power, the proposed budget will significantly support biomass fuels like ethanol, methane and trash-to-power. Nanotechnology, in which the U.S. is the global leader, will receive $2 billion of R&D support and is expected to rear its tiny head in big ways. “I think we’re going to be absolutely startled by how technology is going to change our lives in this century and make things more efficient and more effective,” said Plunkett.

Projections vary, but it’s estimated that the U.S. population will grow by 41% in the next 40 years, which has some analysts fretting about the supply of energy resources. “Many times the federal government has predicted that we were going to run out of oil by a certain date, and those dates have all expired, and we have larger reserves than at any other time in history,” said Plunkett. He said the population increase will not affect energy usage so long as our ability to make energy use more efficient and effective continues.

“Yes, world population is growing, our number of appliances and computers is growing, but our ability to use energy efficiently is very exciting.”

Episode 7 also featured commentary by former DOE employee Anthony Sheehan, who shared some anecdotes from his six-year tenure back in the 1980s. Sheehan recalled instances of failed projects, noting that he and his fellow employees would request final reports from the organizations that had received funding:

“We would always send out termination documents, ask them for their final report, what they had done. As I remember, they would send back several copies, one for the procurement office, one for the technical office that sponsored the project. And we would deliver these to the tech offices, many of which had been closed. So we had these huge bubble-wrapped final reports, and they’d be dropped in front of an empty tech office, and a few days later the janitors showed up and took them to the recycling bin.”

One can only hope that DOE processes have become far more efficient in recent years.

Additional Resources:

Link to good photo showing growth of Japanese economy:

Energy Intensity

World energy use

Contact Info:

Host: Eric Kavanagh, [email protected] – 512.426.7725
Show Manager: Rebecca Jozwiak, [email protected] – 817.320.3495
Robin Bloor, Chief Analyst, The Bloor Group: [email protected]

Federal Spending is produced by Inside Analysis in collaboration with Breaking Gov.