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Before Solyndra, a long history of failed government energy projects

By Steven Mufson,November 11, 2011

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Many policy experts say some of government’s biggest energy investment payoffs have come in the small stuff, such as testing the use of magnesium alloys to make lightweight car batteries more efficient or developing ballasts that make compact fluorescent bulbs more efficient.

Still others say that the nearly $40 billion paid out by the federal government so far to subsidize corn-based ethanol is a success story; ethanol has displaced more than half a million barrels a day of petroleum. But that benefit must be weighed against whether ethanol has driven up corn prices, along with evidence that it may be worse than oil from a greenhouse gas perspective.

Energy innovation is simply different from innovation in other industries, argue Edward Steinfeld and Jason Lee of the Massachusetts Institute of Technology. In electronics and information technology, they note in an unpublished article, the end products are cheap, consumers buy new ones every few months or years, and much of the value is captured by the front-end designer rather than the manufacturer. (Think Apple.)

Energy technologies, however, “are more expensive by several orders of magnitude, and they have much longer life cycles,” they say. “A solar panel is expected to last 20 to 25 years. Moreover, for many of these technologies, including thin-film solar, the key knowledge lies not just in upstream design, but also in learning how to produce inexpensively at high volume.” Essentially, Steinfeld and Lee conclude, “to pull off energy innovation successfully, you need scale.”

And, of course, you also need to keep innovating. As First Solar’s Eaglesham says, “there’s never the last word in technology.” Doing all this requires massive sums of money — and an acceptance of the inevitability of frequent failure.

That could be a tough sell in Washington, given the downfall of Solyndra and the unsteady status of some other recipients of Energy Department assistance. Massachusetts-based Beacon Power, maker of a nifty and effective — but unprofitable — method of using flywheels for electricity storage, filed for bankruptcy on Oct. 30. Ener1, a maker of lithium-ion batteries and a recipient of an Energy Department grant, was delisted by the Nasdaq Oct. 28 because of its low stock price.

Perhaps the federal government is, as former Obama economic adviser Lawrence Summers put it, “a crappy VC,” or venture capitalist. Or perhaps it should stick to funding basic research. But if more recipients of Energy Department loan guarantees falter, they will become part of a long, if undistinguished, history of failure.

mufsons@washpost.com

Steven Mufson covers energy for The Washington Post.

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