Clean Energy Clearing Way for Economic Bounce

Public-Private Partnerships Key

Ken Silverstein | Jun 15, 2011



What’s a key to America’s economic success? Plowing resources into research and development to bring innovative tools and technologies to market. And among the critical concepts are those tied to the generation of electricity in the cleanest possible fashion. 


That remains the message of the Obama administration, despite the persistent hard times and the constant onslaught of criticism. It’s an economic idea premised on the fact that older manufacturing processes have given way to modern protocols that are able to do things more efficiently. But, while the dreams are formulated here in this country, they are more adequately funded and created overseas. 


The stark truth is that public-private partnerships have almost always been used to take viable ideas from conception to the market. Some proposals are bigger -- and more expensive -- than any one company. They therefore require the added resources of the public sector, assuming that they would be deemed to be on the cutting-edge. The energy sector, of course, is accustomed to such arrangements as government is working with it to develop everything from carbon capture and sequestration to energy storage that can harness wind and solar power. 


“What we've realized is sometimes it takes a national investment and a national vision to spark private sector investment,” says Vice President Joe Biden, during a visit to the National Energy Renewable Laboratory. “The government never does it. But the government can spark it on occasion. And over and over it again it has been that American model of innovation that has allowed us to lead the world in technological advances over the last 150 years. It's part of our nation's DNA. It's embedded in our nation's history.”


In testimony before Congress, the clean technology community said that the market for such products and services is forecast to triple by 2020. That would take it from $740 billion today to $2 trillion. What will be the leading tools? They range from the smart grid to ultra high capacity transmission to electric vehicles. 


But the same group cautioned that the United States is becoming complacent. For example, 6 percent of the worldwide solar PV cell production takes place here while 59 percent of it occurs in China. Interestingly, this country created 143,000 wind jobs and 58,000 solar jobs during the recession, although China and Germany have added hundreds of thousands to their totals. 

“To be competitive, the US must not just maintain its edge in R&D investment, but focus even more on encouraging the growth of manufacturing and deployment at home, as are other countries around the world,” says Neil Auerbach, managing partner of Hudson Clean Energy Partners, before lawmakers. “America is not predestined to remain home to the most vibrant economy in the world forever. We need to rise to the challenge.”


Dealing with Debts


To be sure, the national debt is the greatest it has ever been and if the country does not clamp down, it will remain mired in difficulties. Simply, when the national treasure goes toward paying down the annual deficit it is not going into either feasible programs or tax cuts. Additionally, the government must increase the interest it pays to attract investors whose money is used to make those debt payments -- investments that compete with those in the corporate sector. 


No one disagrees. However, if the nation is to develop tomorrow’s technologies then it must invest in them today. This is what the Asian nations are doing and why their clean tech sectors seem to be burgeoning. Here in this country, the solar sector says that the solar credit alone will create 440,000 new jobs and inspire $230 billion in investments if it remains in effect for an extended period. 


Clearly, the federal government is already rooted in the energy sector and is participating in both early-to-late stage research. In point of fact, the $720 billion utility sector is heavily subsidized. The goal then is to prioritize those projects that are ready to emerge or those that could be life-changing. 

The government’s role is to reduce the “acceptable risks,” says Dan Arvizu, director of the National Energy Renewable Laboratory. That allows the private sector to "move up and down the learning curve.” 

Now is not the time to retreat, he adds; rather, it is right opportunity to invest in such things as grid optimization and solar photovoltaics. 

The quandary that the nation faces is over to how to deal with mounting deficits while also facilitating a prolonged economic bounce. Budget cuts are assuredly in the offing. But lawmakers must be careful not to root out future technologies that encourage the efficient and clean use of energy. 


EnergyBiz Insider has been named Honorable Mention for Best Online Column by Media Industry News, MIN. Ken Silverstein has also been named one of the Top Economics Journalists by Wall Street Economists.  


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Should we be subsidizing carbon capture and sequestration? It is much less proven than wind or solar, which now works. Should we be subsidizing oil production? If the answer is yes, then green energy ought to be included. If the answer is no, then at least you are consistent. As one of the letter says, there is a difference between research and development and subsidies. R and D is seed money to commercialize projects whereas subsidies pay them to produce once they are already in business. The purpose of the stimulus money has been to provide seed money to shovel-ready projects. 

Public funding of for profit companies not smart

I agree with spending federal (taxpayer) money for true R&D but not for subsidizing uncompetitive forms of generation.  If we were spending hundreds of millions per year to develop the most effective wind turbines and get the prices for deployment down, that is R&D.  But pumping taxpayer money into a technology to make it competitive with other generation technologies that must use 100% owner/developer investment without even considering the hidden costs of long distance transmission and impacts of the massive quantities of building materials on overall costs of all businesses is just plain not right.  Ditto for solar.  Spend money on R&D but leave commercialization to the private sector.

Yet, at the same time, the government is slashing the space program.  My wife did research for a magazine article she wrote concerning the technological spin-offs of the space program which were then utilized by private enterprise to make new products and build new businesses or expand the product lines of existing businesses.  You would be surprised at the new products and new businesses that were spinoffs of technology from both the space program and military aeronautic research. 

Economies are built on what people want to buy, not on what they need to buy.  The reason is that consumers will voluntarily pay a premium for the things they want because they are not being forced to buy them. But they will force the absolute lowest price on anything they must buy.  Electricity has pretty much become a necessity in the modern world and the government is intent on forcing people to buy "green" power.  But, the costs would be too high so the feds are taking money forcibly from taxpayers and spending it to make wind and solar a profitable venture--ergo, they are using taxpayer money to ensure a profit for wind and solar investors.  Add to that the fact that only 53% of the taxpayers in the US actually pay taxes, and that number is shrinking, and you have income redistribution.   Problem is, the administration is too stupid to see that all they are doing is redistributing taxpayer money to some already gold lined pockets because the investors in and makers of green power equipment are already pretty well off.  If it is not a case of being too stupid, then it is a case of corruption.

One has to wonder just how much the taxpayers could have done to build businesses if they still had the funds the DOE has thrown away on unfeasible generation schemes.

We also must look at the reason this is being done--because the "consensus" science says that manmade CO2 is the primary cause of global climate change.  Consensus science is not science, it is an opinion shared by a number of people who happen to be in fields considered scientific.  The problem with the consensus is that it is based on computer models fed with data that has been manipulated cleansed of contrary information according to other scientists who are not part of the consensus community.  One thing about computers, they can only calculate based on what information they are given--garbage in, garbage out.

Let me make a point with this.  A land-based wind turbine installation costs about $2500 per KW nameplate capacity and, in the prime locations, has a capacity factor of about 30%.  THIS DOES NOT INCLUDE THE COSTS OF LONG DISTANCE TRANSMISSION NOR ENERGY STORAGE.  To make up the remainder of the missing capacity factor, there must be something to back it up--steam generating facility, gas turbine generating facility, etc.  If the developer takes the cash-in-lieu 30% of capital in place of the production tax credits, that is $750 per KW nameplate capacity.  Based on the 2010 Gas Turbine World Handbook, that $750 per KW would have been enough  or considerably more than enough to pay for the equipment and construction of any CCGT plant over about 50MW.  The wind turbine will be able to put 2628KWh on the grid for each 1KW nameplate capacity while a CCGT would be able to put over 8000KWh on the grid per KW nameplate capacity. 

One could argue the wind turbine will not burn any fuel and thus release no CO2 but the backup power will.  And, if the backup is an older coal fired plant, it will put about 7 tons of CO2 into the air over a year for each KW of nameplate capacity of the wind turbine (without considering spinning reserve operation) versus about 4.8 tons for the CCGT's yearly KWh production.  If the backup is a simple cycle gas turbine, it will put about 5.9 tons of CO2 into the air.   In the ERCOT region at least, there are few new CCGTs being built because the federally subsidized windfarms (subsidized with taxpayer money--there are no true "federal funds") make the power pricing too uncertain for investors.

Let's just keep subsidizing green energy so we can continue our economic decline (check Spain's experience for reference) while continuing to pump unnecessary CO2 into the atmosphere and continuing to waste fuel.  That is true brilliance!

Is the Utility Sector Heavly Subsidized?

Ken  -  There is a belief among some that "In point of fact, the $720 billion utility sector is heavily subsidized".  But I have never seen a rational explanation of that assertion.  If 1% were going to the utility sector, i.e. $7,200 million a year, you would think it would be noticed and commented on.

The explanations I have seen point to the US Department of Energy's budget, and assert that is a subsidy to utilities.  If that is the 'proof', it is obviously non-sense. Large parts of DOE's budget support nuclear weapons, run the BPA, and provide subsidies for renewal energy; none of that ought to be considered utility subsidies. 

There is some utility oriented R&D associated with coal, nuclear, solar, wind, etc, but I doubt that totals $0.5B.  Small change for a $720B industry, and isn't the point of the article that R&D is not a subsidy?

I would appreciate an article addressing government subsidy of the utility sector.


Gee....just yesterday the President was pointing out how efficiency improvements kill jobs.

In the end, the government is a net burden on economic activity....and the more government, the more burden. At best, government provides a rich, level playing field. Unfortunately, our government tilts the playing field and adds mirrors.

You argue that public money should be used to promote innovation. Problem is, that public money you covet didn't come out of thin was either confiscated out of existing productivity or printed fresh (which is a tax on everyone).

My point is that your editorial only presents the happy-half of the public-private equation. The half you ignore is that someone already creating jobs (and therefore a likely innovator) is being effectively "punished" through wealth confiscation. The result: less innovation from a proven source.

Ultimately, even the "happy-half" you're promoting is bogus. The government spreads money around in an effort to buy favor, contributions and votes. It's practically a money laundering scheme. If innovation "happens" it's an accidental consequence.

Cln Engy Clrng Way for Ec.Bounce Public-Private Partnerships Key


Sorry for typing errors. Corrected remark

Dear Sir,

First of all I was in hospital till now and I couldn't answer.

Remark: To improve the partnerships between public and private sector and to increase volume it may be necessary to make it internationally partnerships, based on an international accord on Research and Development. What I mean by this: let's say U.S.A. will develop clean energy for U.S.A. and Germany and Germany will develop smart grid process for both countries, so every country will get best results by halving the costs.

With deep respect and consideration,

Constantin ROBITU

Cln Engy Clrng Way for Ec.Bounce Public-Private Partnerships Key

Dear Sir,

First of all I was in hospital till now and I could'nt answer.

Remark: To improve the partnerships betveen public and private sector and to increase volume it may be necessary to make itm internationally partnerships, based on an international accord on Research and Development. What i mean by this: let's say U.S.A. will develop clean energy for U.S.A. and Germany and Germany will develop smart grid process, so every country will get best results by halving the costs.

With deep respect and consideration,

Constantin ROBITU