Why do wind and solar power generate a mere 3.46% and 0.11% of U.S. electricity, respectively, despite billions of dollars in taxpayer and ratepayer subsidies and Soviet-style production quota for renewable electricity in 29 states?
A more politically-correct explanation these days is the so-called Valley of Death — a period when a high-tech startup firm may perish from poor or negative cash flow before it has had a chance to commercialize its invention.
Although most technology startups fail, the Valley supposedly got even deadlier for greentech companies in recent years. As Bloomberg BusinessWeek reporter Christopher Martin put it, “Hundreds of U.S. cleantech startups find themselves stuck on the road to serious revenues because of the toxic combination of a stalled economy, scarce funding, and Washington’s failure to enact comprehensive climate and energy legislation.”
The Department of Energy’s Stimulus loan guarantee program, administered under Section 1705 of the 2005 Energy Policy Act, was designed to plug the “funding gap” and shepherd greentech companies through the Valley of Death. Yet several recipients of DOE loan guarantees failed, most notably solar panel manufacturer Solyndra, which burned through more than half a billion taxpayer dollars before filing for bankruptcy. What went wrong?
Solyndra’s execs were counting on Congess to enact the Waxman-Markey legislation, with its cap-and-trade scheme and renewable electricity mandates. Like President Obama, they believed regulations handicapping fossil fuels would make renewable energy “the profitable kind of energy” in America. Rigging energy markets may indeed enrich campaign contributors; it can only make society as a whole poorer. But I digress.
The ongoing debate on DOE’s role as green venture capitalist (socialist?) inspired my colleague, Heritage Foundation economist David Kreutzer, to compose a psalm. I post it here with his permission.
1 The DOE is my shepherd; I shall not want.
2 He maketh me to profit from green ventures: he leadeth me beside the still turbines.
3 He restoreth my capital: he leadeth me in the paths of self-righteousness for his name’s sake.
4 Yea, though I invest in the valley of death, I will fear no evil: for thou art with me; thy grants and loan guarantees they comfort me.
5 Thou preparest a subsidy before me in the presence of my competitors: thou anointest my fund with ethanol; my budget runneth over.
6 Surely tax breaks and privilege shall follow me all the days of my life: and I will dwell in the house of big government forever.