DOE Releases First Quadrennial Technology Review

This post was originally published at the Breakthrough Institute Blog.

Today the Department of Energy released the first Quadrennial Technology Review (QTR), a new report that recommends many of the same investment and competitiveness strategies presented by the Breakthrough Institute. Modeled after the Defense Department's Quadrennial Defense Review, the QTR was commissioned last year by the President's Council of Advisors on Science and Technology and represents what Energy Secretary Steven Chu calls "the necessary first step of a multi-agency Quadrennial Energy Review that could dramatically improve the integration and effectiveness of the government's energy policy."

The QTR establishes six categories for modernizing and improving our energy portfolio:

1. Deploy Clean Electricity
2. Modernize the Grid
3. Increase Building and Industrial Efficiency
4. Deploy Alternative Hydrocarbon Fuels
5. Electrify the Vehicle Fleet
6. Increase Vehicle Efficiency

These are all sound strategies to address the three broad challenges imposed by our current energy systems: energy insecurity, environmental threats, and international competitiveness. The QTR makes it very clear that the DOE's first imperative for addressing these challenges will be to invest in technology and research:

The Department's core strength is its science and technology efforts, which have led to technology improvements and breakthroughs, and these efforts are the focus of this QTR report.
...
Underpinning that Nation's high-tech economy, both basic scientific and fundamental engineering research increase knowledge of nature and integrate that knowledge in ways directly useful for practical engineering applications. In the course of their work, researchers develop new tools and techniques to discover and measure previously inaccessible physical phenomena.

The goal of achieving technological breakthroughs to deliver clean, affordable, and abundant energy is clear.

The United States energy economy needs more than basic research, however. Fortunately, the QTR does not omit strategies for commercialization, maturation, and deployment of innovative clean energy technologies. As the report clarifies in its section on international competitiveness, "US economic competitiveness is a growing challenge in a world made even more competitive by developing countries striving to create sustainable economic growth and establish themselves as technology leaders."

As such, the report recommends advanced technology policy to address deployment, innovation, and manufacturing. These areas are much in line with the competitiveness strategy outlined in Breakthrough's reports "Rising Tigers, Sleeping Giant" and "Post-Partisan Power," which have shown that the US needs a comprehensive and aggressive competitiveness policy in the face of increasing technology investment from China, Korea, Japan and other nations.

But there are also important elements missing from the QTR. While the report effectively covers the broad energy imperatives facing the United States, specific policies and funding mechanisms are glossed over. A multi-year technology policy from DOE will require flexibility, but some policy instruments will prove essential if the nation is to achieve any of the goals laid out in the report: Increasing federal funding for energy technology R&D, as recommended by the President's Council of Advisors on Science and Technology last fall; creating a Clean Energy Deployment Administration (CEDA) to build public-private partnerships and bridge technologies from demonstration to full maturation; and reformed subsidy policies that prioritize innovation over deployment. Alternative and additional policy instruments are available, and including them in these discussions is important for building an ambitious and fruitful policy dialogue.

The QTR is an encouraging step, and as Secretary Chu writes, hopefully one on the road to a comprehensive Quadrennial Energy Review. As was proposed in the American Energy Innovation Council's recent report "Catalyzing American Ingenuity," a QER would "serve as a strategic technology and policy roadmap." The ability of the DOE and other federal agencies to drive substantial innovation and growth is increasingly apparent. Outlining and planning for a unified national energy policy will prove vital as we address economic growth, international competitiveness, and a changing climate.

To read DOE's full report on the Quadrennial Technology Review, click here (PDF).

The Submerged State

I recently engaged in a discussion with David Zetland, a former economics professor of mine, on the value of public investment in technology (NB: I feel authorized to re-publish his and my comments because they were originally published on his public blog). It's worth noting that his blog, Aguanomics, is spectacular and I enjoy reading it every day.

Compelled by his assertion that the Solyndra case proved government investment is a failure, I pointed out that without government investment in technological innovation, we wouldn't have jet engines, cell phones, the Internet, any major forms of energy generation, and many other game-changing technologies as they exist today. He gave a thorough response, which I will summarize by pulling out this key quote:

Govt shouldn't take my $ to invest. Ever.

The whole exchange is available here. I was left to assume he was unaware of the DARPA investment that made the Internet possible, without which he could not have made that comment on his blog. He also uses Blogger, which is owned and operated by Google, whose founders benefitted from an NSF grant for the creation of their original algorithm. His rebuttal, that since the Defense Department didn't know that the Internet would be the result of their investment, doesn't really hold much water -- he is essentially saying that because they weren't planned, the huge (read: f'ing HUGE) benefits from this particular investment don't count.

What struck me most, however, was not his strange assertion that government should never invest money, but the fact that he seems to be in the majority. There is widespread unawareness of the role of the federal government plays in driving technological innovation and investment, an unawareness that is perhaps a contributing factor in the anger over Solyndra's failure. Several scholars have taken up the job of diagnosing this phenomenon.

• In State of Innovation, a recent (an excellent) compilation of case studies, Fred Block and Matthew Keller demonstrate that "for many technologies, it has not been Adam Smith's invisible hand, but the hand of government has proven decisive in their development." They refer to the Hidden Developmental State, finding that "because these programs [DARPA, SBIR, etc.] contradict the market fundamentalist ideology that celebrates private enterprise and denigrates the public sector, they have remained largely  unknown to the public." Throughout the rest of their book, Block, Keller, and their colleagues discuss the role of the state in the development of solar technology, biotech, nanotech, and microelectronics.


• In a journal article (PDF) for "Perspectives on Politics," Suzanne Mettler discusses the political difficulties in restoring faith in a government polices which most people aren't aware of.  "Such policies have shrouded the state's role, making it largely invisible to most ordinary citizens, even beneficiaries of existing policies." She proceeds to walk through a strategy for "reconstituting the Submerged State."


• I've already mentioned Mariana Mazzucato's new pamphlet "The Entrepreneurial State" on this blog before, but it's well worth bringing up again. As she writes, "Many of the problems being faced today by the Obama administration are indeed due to the fact that US taxpayers are virtually unaware of how their taxes foster innovation and growth in the USA, and that corporations that have made money from innovations that has been supported by the government are neither returning a significant portion of the profits to the government nor investing in new innovation." Her work is particularly illuminating on the subject of DARPA, the SBIR, the pharmaceutical industry, patents, the and British innovation system (or lack thereof).

QOTD: Plumer on the key energy imperative

From Brad Plumer at WaPo. Always good to remember the big picture:

The main, glaringly obvious fact about energy is that we need it, lots of it — and, ideally, we want it to be as cheap as possible, as clean as possible and as dependable as possible.

Global Energy Intensity on the Rise

This post was originally published at the Breakthrough Institute blog. 

New analysis from the WorldWatch Institute shows that energy intensity of the global economy has been on the rise for the past two years, reversing a decades-long trend of increasing energy efficiency. As computerized and digital services have paved the way towards technological innovations and the “knowledge economy,” global economic energy intensity has declined an average of 0.8 percent per year since 1981. However, since the economic crisis of 2008, the energy inputs required to produce the same level of economic output has been increasing, by 1.35 percent in 2010 alone.

Basic arithmetic tells us that increasing energy intensity equates to rising carbon emissions as long as carbon intensity of energy remains static. Breakthrough Senior Fellow Roger Pielke Jr. emphasizes this in his recent book The Climate Fix, in which he employs the “Kaya Identity” to prove his point:

Carbon emissions = GDP per capita x energy intensity x carbon intensity

In order to reduce global emissions, at least one of these variables will have to fall substantially: GDP, population, energy intensity, or carbon intensity. With limits to economic growth and population controls unlikely, and with energy intensity making a sudden rise in recent years, we are left with the imperative to reduce carbon intensity by deploying more clean energy technology.

As the WorldWatch report states, the energy intensity of the global economy is projected to decline in the long-term but continue its upward trend over the next several years. With the majority of economic growth coming from the developing world, where rising energy consumption will likely exploit the cheapest technologies available, it is essential that we bring clean tech to price parity with fossil fuels by investing in innovation.

 --
*The Kaya Identity, more precisely: Carbon = [Population x GDP/Population] x [Total Energy Consumption/GDP] x [Carbon/Total Energy Consumption]

New reports on innovation and federal investment

Cross-posted at the Breakthrough Institute Blog.

The last few weeks have been pretty cool, if your definition of cool, like mine, involves a bevy of new reading materials extolling the benefits of public investment in technology innovation. Dig:

• New report from the American Energy Innovation Council (already blogged about here and here), featuring the wisdom and research of Bill Gates, John Doerr, Jeff Immelt, and other titans of American industry. The report refutes the notion that deficits require paring back our investments in science and technology, and explicitly calls for increased federal funding for energy innovation as well as the creation of new public-private partnerships to bring clean energy technologies to commercial scale. 
• A World Resources Institute working paper called "Two Degrees of Innovation" by Letha Tawney, Francisco Almendra, Pablo Torres, and Lutz Weischer. The paper offers background of innovation systems, and suggests policy mechanisms that would fully realize the potential of the innovation engine in the pursuit of a clean energy economy. The report in particular examines the role of global value chains, innovation ecosystems, and policy support. Ms. Tawney and Mr. Torres blogged about the report here. 
• New report from the OECD called "Fostering Innovation for Green Growth." This new research expresses where the OECD expects innovation to come from (hint: less from a carbon price, more from energy and general scientific R&D). But as is becoming increasingly obvious to those studying the history, more is needed than public investment in R&D; technological innovation requires strategic policies to mature and commercialize emerging technologies, the mechanisms for which will often times be different across a portfolio of technologies. 
• One of the best reads out there on the history and primacy of innovation, "The Entrepreneurial State" is a new pamphlet out of Demos by Mariana Mazzucato. The guiding notion, thoroughly proven, is that states are not just vital in the fixing and regulating markets, but that governments actively foster and create them all the time. This has proven true in computing, biotechnology, aviation, nuclear energy, and now clean technology. 

This is all especially relevant as 1) American federal policy support for clean tech is heading for a crash and 2) the Solyndra story keeps heating the airwaves with critics crying "failure" and "scandal." As the AEIC report points out, the DOE loan guarantee program (the source of the Solyndra loan) is one of the smartest and most successful federal programs in support of clean energy. 

With austerity-mania sweeping the nation and federal clean energy programs about to collapse en masse, now is exactly the time to adopt a unified national energy strategy focused on innovation and strategic investment to bring clean tech to commercial scale unsubsidized. As Ms. Mazzucato puts it in "The Entrepreneurial State,"

In a policy environment where the frontiers of the state are now being deliberately rolled back, that process [of innovation] needs more than ever to be understood so that it can be successfully replicated. Otherwise we miss an opportunity to build greater prosperity in the future. 

Business Industry Titans Call for Major Federal Investments in Energy Innovation

By Alex Trembath and Devon Swezey. Originally published at the Breakthrough Institute. Cross-posted at Forbes and the Huffington Post. 

Yesterday, the American Energy Innovation Council (AEIC)--composed of industry titans like Microsoft Chairman Bill Gates, Bank of America Chairman Chad Holliday, and leading venture capitalist John Doerr--released a follow-up to their 2010 report "A Business Plan for America's Energy Future." The new report, "Catalyzing American Ingenuity: The Role of Government in Energy Innovation," doubles down on the Council's earlier calls for increased and sustained public investment in clean energy technology, and offers new ideas about how greater energy innovation investment can be paid for in a new era of fiscal austerity.

In the wake of the high-profile bankruptcy of California solar company Solyndra, government critics are attacking federal investment in clean energy innovation, arguing that such decisions should be left to the "free market." But in their new report, these business leaders and entrepreneurs argue that government investment in energy innovation is key to realizing a clean energy future.

In addition to Gates, Holliday, and Doerr, the AEIC boasts membership from former Lockheed Martin CEO Norm Augustine, Xerox CEO Ursula Burns of Xerox, General Electric CEO Jeff Immelt, and Tim Solso, CEO of Cummins Inc. In the report, these executives highlight the tremendous impact that federal investment has had on technological innovation and economic growth throughout American history:

The federal government has played a central role in catalyzing and driving innovation and technology deployment throughout the history of the United States--often with strong results. This kind of support took a variety of forms. In the 19th century government scientists mapped out natural resource endowments and Army officers surveyed routes for railroads, including helping to plan and sometimes manage their construction. In the early and mid-20th century, programs such as rural electrification and massive public works projects, such as the construction of the Interstate Highway System, enhanced mobility and connectivity and directly or indirectly contributed to the development of new technologies and industries 

...government efforts to develop guidance systems for the military played a role in the development of digital computers and microchips. Navy support for aviation technology led directly to Boeing's 707 -- one of the first major commercial jetliners. The Defense Advanced Research Projects Agency (DARPA) created a distributed network of computers called ARPANET, which laid the early foundation for the internet. The U.S. government played a direct and indispensable role in launching the commercial nuclear power industry.

Indeed, as the Breakthrough Institute has documented in "Where Good Technologies Come From," the federal government has made key investments in most of the technologies we take for granted, including the personal computer, the Internet, the jet engine, GPS, cell phones, the biotechnology industry, and countless blockbuster pharmaceutical advances. Today, as the AEIC report makes clear, such investment is urgently needed to catalyze breakthrough innovation in clean energy technologies in order to make them cheaper, more reliable, and therefore more widely adopted around the world.

Critics tend to ignore this history, claiming that innovation is the solely the domain of the private sector. Following Solyndra's bankruptcy, these critics have insisted that "the government should not play venture capitalist." AEIC member John Doerr, perhaps the nation's most well known venture capitalist, sees things differently. Doerr writes, "America must embrace risks in innovation and invest heavily in R&D to create a full pipeline of good ideas." Echoing what we wrote after Solynda closed its doors, the report recommends that federal energy innovation investment "focus more on overall program success than on individual project success and emphasize the value in calculated risks."

In addition to issuing a robust defense of federal investment in energy innovation, the AEIC report also presents smart suggestions for strengthening some energy technology programs and reforming others. They support the federal energy loan guarantee program (which is under increasing scrutiny after Solyndra's bankruptcy), and call for boosting the budget of ARPA-E, the government's innovative, high-risk energy research agency, to $1 billion annually from around $200 million today. They also support a new Clean Energy Deployment Administration to aid the commercialization of first-of-their-kind innovations and mobilize significant private-sector capital in scaling up advanced energy technologies.

The Council also urges reform of the inefficient process by which the government conducts national energy policy, warning that "uncertain annual appropriations, short-term tax credits, and one-time spending injections are all unsuited to creating the sustained, predictable funding stream needed to bolster the country's innovative infrastructure." Moreover, as Breakthrough wrote recently in the National Journal, many of the federal programs supporting clean energy industries are set to expire in the next few years, which will likely precipitate a crash in the industry.

In order to avoid the perpetual boom-bust cycle in clean energy, the US government must increase the kinds of energy innovation investments outlined in the AEIC report. These investments must be rationalized around driving innovation and cost declines to make clean energy cost-competitive without subsidy.

Given the tight fiscal environment, the Council recommends a number of revenue streams that could fund innovation investment without adding to the budget deficit, including revenues from domestic oil and gas production, redirecting existing energy subsidies for mature industries, or small fees on electricity usage.

Ultimately, however, these leading business executives make a forceful case that America's current "budget dilemma," as they call it, is no reason to delay in boosting funding for energy innovation. "Supporting innovation," they write, "is an investment, not a cost." Indeed, given the country's economic malaise, there is no better time to make growth-enhancing investments that could catalyze a new era of American economic leadership in a key global industry. Critics of government investment in energy innovation would do well to listen to these titans of industry, and to heed their recommendations. To read the full AEIC report, click here (PDF).

QOTD: AEIC on energy innovation

This from the a new report by the American Energy Innovation Council, comprised of Bill Gates, Jeff Immelt, John Doerr, Norm Augustine, Ursula Burns, Charles O. Holliday, and Tim Solso:

If the U.S. fails to invent new technologies and create new markets and new jobs that will drive the transformation and revitalization of the $5 trillion global energy industry, we will have lost an opportunity to lead in what is arguably the largest and most pervasive technology sector in the world. However, if the U.S. successfully innovates in clean energy, the country stands to reap enormous benefits. 

Download the report, "Catalyzing American Ingenuity: The Role of Government in Energy Innovation" (PDF).

UPDATE [2:30pm 9/14/2011]: This from an interview with John Doerr, one of the members of the American Energy Innovation Council (via VentureBeat):

“We shouldn’t kid ourselves about the lone entrepreneur in the garage creating an industry,” he said. “We have this myth that the IT industry got started on its own — no, there was federal funding, just like what we need for clean technology.”

Worth remembering that John Doerr is a partner at Kleiner Perkins, one of the leading venture capital firms in the nation. Also relevant is an article by Mark Muro and Jonathan Rockwell of the Brookings Institution, published yesterday in the New Republic, that compared clean tech to the IT industry.

American Jobs Act

Much will be said in the coming days of President Obama's American Jobs Act, which in one form or another will very likely be the keystone policy of his re-election campaign. Whether via its victory of defeat, Obama will almost certainly campaign on its proposals and job creation ambitions.

As the National Journal's Amy Harder pointed out during the Presiden't speech, the word "energy" did not appear once in the 4000-word speech Obama gave to a joint session of Congress last week (although his slideshow did include a picture of high-speed rail). This is in contrast to this year's State of the Union, in which he omitted the words "climate change" but hit the energy innovation narrative pretty hard. Indeed, in February the President called for the elimination of federal oil subsidies to pay for a smarter, expanded clean tech policy strategy. Last week, he proposed eliminating those same subsidies in favor of extending tax credits for small businesses.

All was not lost on the energy front, however. As Energy Secretary Steven Chu pointed out on Friday, much of the investment enabled by Obama's proposed National Infrastructure Bank would be directed towards clean energy projects.

The national infrastructure bank would not only put Americans back to work, but continue to build off of the significant strides we’ve made in clean energy sector through our Recovery Act-funded Loan Program, which is set to expire on September 30th. In the past two years, the Loan Program has supported a robust, diverse portfolio of more than 40 projects that plan to employ more than 60,000 Americans and create tens of thousands of indirect jobs.

Here Secretary Chu invokes the DOE Loan Guarantee Program, recently criticized for its 2009 approval of a loan to California solar manufacturer Solyndra, which declared bankruptcy two weeks ago (laying off 1100 workers in the process). Perhaps Solyndra was the reason President Obama did not mention energy in his speech on job creation, but if the goal of a clean energy future is to be realized, policies and institutions with the financing capability of this National Infrastructure Bank will be essential.

Energy ≠ Power

Bay Area locals may recognize this ad, which I found on BART. I thought it was hilarious, though you may not unless you share my appreciation for energy/power errors in your sense of humor.

I've taken better pictures in my life. The caption reads: "Power from the sun: 400,000,000,000,000,000,000 kilowatts per second." This of course makes no sense, as a kilowatt is a unit of power, which is basically a rate of energy transfer (a watt is 1 Joule per second, and a Joule is a unit of energy).

It is true that a tremendous amount of solar power is intercepted by the Earth, but we need to incorporate context and the appropriate units into our illustrations. In terms of solar power hitting Earth's land mass, the rough number is about 7000 TW, or 7,000,000,000,000 kW. Where these folks got their 4x10¹⁴ kW per second [sic] figure from I have no idea--it's possibly expressing a kWs (kilowatt-second) estimation, a.k.a. the amount of energy produced by a 1-kW power source over 1 second. Or it could by kWh (kilowatt-hours). I have no idea, but either way they're mislabeling their units, probably in the name of including a VERY BIG NUMBER in their illustration.

Without proper units or context, numbers are meaningless. In this case, the number is a lie.

See blogger Lee.org for a similar take on this silly ad.

Solyndra's Failure No Reason to Abandon Federal Energy Innovation Plicy

This post was originally published at the Breakthrough Institute Blog, and was also picked up by the Forbes online business section.


By Jesse Jenkins, Devon Swezey, and Alex Trembath 

Wednesday's news that the California solar cell manufacturer and DOE loan guarantee recipient Solyndra will be declaring Chapter 11 bankruptcy has government critics grumbling about clean tech boondoggles and failed government programs. But Solyndra's failure, while unfortunate, is hardly an indictment of federal energy technology policy. Failure is to be expected with emerging, innovative companies, whether they are financed by the government or the private sector. The success of the Department of Energy's Loan Guarantee Program (LGP) should thus be judged not by any one investment but by the performance of the entire portfolio.

Critics have seized on the news of Solyndra's bankruptcy to condemn the Department of Energy's Loan Guarantee Program, which provided a $535 million loan guarantee in 2009. The National Review's Greg Pollowitz writes that Solyndra's failure shows "why the government should not play venture capitalist." Yet the fact is that, when judged by its entire diverse portfolio of investments, the LGP has performed remarkably well. Indeed, with a capitalization of just $4 billion, DOE has committed or closed $37.8 billion in loan guarantees for 36 innovative clean energy projects. The Solyndra case represents less than 2% of total loan commitments made by DOE, and will be easily covered by a capitalization of eight to ten times larger than any ultimate losses expected following the bankruptcy proceedings.

The broad success story of the LGP shows why federal investment in clean energy is necessary to help early-stage clean energy technologies achieve scale and reach commercialization. The inherent uncertainty in investing in novel technologies, coupled with the high capital costs and long time horizons, prohibits most venture capital funds from investing in large-scale clean energy projects. Financing tools and direct investment from the federal government can help bridge this well-known "Commercialization Valley of Death," and the LGP is an effective way of doing that.

Instead of "picking winners and losers," as the program's critics allege, the program actually reduces risk for a suite of innovative clean energy technologies and allows venture capitalists and other private sector investors to invest in the best technology. Rather than picking winners, the LGP enables innovative companies to compete in the marketplace, allowing winners to emerge from competition. And while Solyndra is shutting its doors, companies like SunPower, First Solar, and Brightsource Energy, which also received loan guarantees and other support from the federal government, are industry leading success stories.

With perfect hindsight, it's all too easy to see why Solyndra proved to be a bad bet: the firm's central innovation, a thin film technology that avoided the use of silicon, proved to be far less important when refined silicon prices collapsed after Solyndra's founding; the remaining installation cost advantages provided by the company's cylindrical solar panels proved too small, and Solyndra was unable to capture the manufacturing cost reductions that have helped other U.S. thin film companies, like First Solar, thrive despite low silicon prices. Perhaps most importantly, intense pressure from heavily subsidized Chinese manufacturers is driving a surprisingly competitive solar market, forcing Solyndra to get costs down faster than the start-up firm could achieve.

It is possible that these fatal factors could have been avoided by better vetting from DOE, or that removed from the pressures of a fast-paced stimulus environment, DOE may not have made this bad bet. But to assert, as numerous conservative commentators have been quick to do, that Solyndra's failure is proof positive of the government's supposed inability to "pick winners" is patently absurd. After all, Solyndra received repeated rounds of investment to the tune of $1.1 billion from some of the private sector's biggest stars, including Richard Branson, the WalMart family, and leading venture capital firms like U.S. Venture Partners and RockPort Capital. Venture capitalists and the U.S. government both placed a bet, Solyndra's entrepreneurs took a shot, and unfortunately for all, they missed. Such is to be expected in the high-risk but high-reward world of early-stage technology ventures. In addition, the loan commitment places the government in a senior position in the result of a bankruptcy, ensuring that DOE will get paid out before the VCs and other investors.

Critics who think the government has no place in supporting technology innovation have a tenuous grasp of U.S. economic history. In fact, the government has a long and successful history in helping America's intrepid entrepreneurs succeed in new high-risk, high-reward technology sectors. As we wrote in "Where Good Technologies Come From," the government has played a key role, either as an early investor or a demanding customer, in the development of virtually every advanced technology we take for granted today, from aviation to biotechnology, to computers and the Internet, microchips, and now clean energy. Indeed, without a visionary government investing in key strategic industries, world-leading companies like Google, Genentech and Boeing would not exist.

The United States was able to be the world's technology leader in these fields because of its forward-looking investments, as well as a relative dearth of competition from economic rivals. In today's clean energy market, however, competition is fierce. U.S. companies compete with low-cost Chinese manufacturers who benefit from generous state subsidies and a robust and comprehensive set of policies to encourage solar manufacturing. Indeed, in 2010 the China Development Bank provided more than $30 billion in loans to Chinese solar manufacturers. China's large clean energy investments have helped reduce the price of solar cells by 42% in just the last nine months, which was one factor in Solyndra's inability to compete.

While the United States may not be able to afford the scale of support for clean energy that China can, it can compete by focusing on what it has always done best: innovation. In the solar industry, the long-term goal must be to drive innovation so that solar can be cost-competitive without subsidy. Fortunately, the Department of Energy recognizes this imperative and has embarked on a new effort--the SunShot initiative--geared toward dramatically lowering the cost of solar PV. The SunShot initiative focuses on bringing down costs by pursuing innovations in four particular areas, including solar cell technology, power electronics that optimize the performance of installations, improvements in manufacturing processes, and installation and system design.

The Sunshot initiative and other key technology innovation programs like the Advanced Research Projects Agency for Energy (ARPA-E), embody the kind of smart innovation policy that holds the promise of fundamentally transforming the economy and ushering in a new era of U.S. technology leadership.

In the face of intense competition in the clean energy sector, America faces two choices. We can abandon our entrepreneurs and innovators in this new strategic growth sector, or we can redouble our efforts to invest in energy innovation, support clean energy entrepreneurs and help American firms compete and ultimately prevail in the global clean energy race. If we walk away now, America will lose out on one of the greatest economic opportunities of the 21st century.

Solyndra Round-up

News that California solar company Solyndra will be declaring Chapter 11 bankruptcy has sent waves through the energy blogosphere, not least because the company was an early recipient of a DOE loan guarantee and because President Obama and Energy Secretary Steven Chu both touted Solyndra as a success story in US innovation policy.

• TIME Magazine's Dan Grunwald: Solyndra’s version did have certain advantages, particularly ease of installation. And according to the Energy Department, the company sold more than 1,000 installations in 20 countries, increasing its sales revenue 2,000% in three years. But they couldn’t keep up with the competition on cost.

• Joe Stephens and Carol D. Leonnig at WaPo: GAO auditors fear that similar defaults could happen with other projects, possibly including the other four that it found weren’t properly vetted. The GAO last year uncovered the department’s rush to provide Solyndra its loan — less than 60 days after Chu was sworn in to the fledgling administration — without completing required reviews.

• Arno Harris at the Energy Collective: Bottom line, I'm sad to see Solyndra fail and feel immense sympathy for the 1,100 employees who are now out of work. But in the bigger picture, Solyndra's failure underscores just how successful the PV industry has been at cost reduction--and highlights the risks when governments try to pick winners and losers in highly competitive markets.

• Slate's Andrew Leonard: So what's really happened here is that half-hearted industrial policy lost out to the real deal. Because if Solyndra's failure is taken as proof that the U.S. government can't pick winners, doesn't that mean that China's success proves the exact opposite?

• Mike Traugher at Mercury News: Solyndra also reportedly received more than $1 billion in venture capital over the past five years from firms including Redpoint Ventures and U.S. Venture Partners. Other reported investors included Virgin Group entrepreneur Richard Branson and the Walton family, heirs to the Walmart fortune.

UPDATE (9/6/2011 at 10:05am): 

• Michael Grunwald at TIME: The operation was successful, but the patient died. Politically, it’s probably an impossible case to make. But that doesn’t mean it’s wrong. 

• Bloomberg Analysis: Solyndra said it failed because it couldn’t compete with foreign manufacturers funded by their governments. Those factories produced an oversupply of panels at low prices and offered buyers lengthy payment terms. Demand for Solyndra’s panels also fell as European governments reduced incentives for buying solar energy, said W.G. Stover, chief financial officer, in a filing today.