Posted by: bmeverett | August 5, 2009

Energy Grants = More Wasted Money

The Obama Administration announced today the winners of $2.4 billion in grants to develop advanced batteries for electric cars. The money is to come from the stimulus funds which have created a nice flow of your money to someone else. According to The White House, the grants will fund 48 projects in over 20 states. What could possibly be wrong with trying to develop new, more efficient energy technologies? A lot, actually.
Let’s start with the concept of technology. At the beginning of the process, we have a long list of good ideas for new ways of producing and using energy, including electric cars, fusion power, solar panels in space, biofuels from algae, tidal power and many, many more. Some of these ideas progress to the engineering stage, where we can actually build a machine that works. So far, we can’t build a fusion system that generates more energy than it consumes, but we know how to make electric cars or put solar panels in space. Building a functioning machine, however, is not enough. We need to build a commercially viable machine that can be sold on a mass scale at a competitive price and will perform at least as well as alternative products. It’s at the commercial stage, not the engineering stage, that most new energy technologies fail.
Suppose we launch into orbit a solar power station with a capacity of 2,500 kilowatts. On Earth, this system would require about 200,000 square feet of PV cells, cost about $12.5 million and produce about 5 million kilowatt-hours each year. If we could get the system above the atmosphere, it would certainly be more efficient, since the Sun’s energy would not be attenuated by air, clouds, dust and pollution. In space, a 2,500 kilowatt system would require only about 150,000 square feet and would produce almost 22 million kilowatt-hours each year, if it could be pointed at the Sun continuously. We’d need some way to get the energy back to the Earth’s surface, probably in the form of microwaves, but let’s ignore all that for the moment
Our 150,000 square feet of solar cells would cost about $10 million. Terrestrial solar PV panels currently weigh about 4 ounces per watt, but let’s say we could reduce the weight by 75% to just one ounce per watt. Our total system would weigh about 156,000 pounds.
For real efficiency, we’d need to put our solar panels in a “geosynchronous orbit,” an orbit that circles the earth exactly once each day. That way, the solar cells would remain over a single point on the earth’s surface all the time, and we could keep the system pointed at the sun and easily receive the transmitted energy.
A geosynchronous orbit is roughly 22,000 miles above the earth’s surface, and it takes a lot of energy to push anything up that high. Russia has a Zenit 3-Sl rocket which has launched payloads into geosynchronous orbits for about $9,000 per pound. Houston, we have a problem. Our payload would cost one and a half billion dollars to launch. The cost would be about $200 per watt, 40 times the cost of our Earth-bound solar station, and we’d get only 3-4 times as much electricity. Good idea, but just too expensive.
Government programs are pretty good at the engineering stage – solving complex technical problems at very high cost. That’s how we landed a man on the moon. Forty years later, however, we still have no commercially viable space travel, unless you count Virgin Galactic’s plan to offer a few minutes of suborbital flight for $200,000 a ride (no timetable yet).
We also know how to built supersonic aircraft, but 60 years after Chuck Yaeger’s historical flight in the Bell X-1, there are no supersonic aircraft in commercial service.
There is no reason whatsoever to anticipate that the Obama administration’s energy grants will move any technology from the engineering to the commercial stage. Where there are reasonable prospects for developing commercial technologies, private companies are already at work. Note, for example, ExxonMobil’s recent announcement of a $600 million program for algae-based biodiesel. The economic rewards for success in new energy technologies would be enormous – akin to Bill Gates’s success in developing Windows. We do not need any additional incentives to get people to look for new energy technologies. Throwing government money at the problem may result in some good science and some useful technical work, but not commercialization. In fact, the US Government has spent about $125 billion (in today’s dollars) on energy R&D over the last 30 years and has produced absolutely nothing of any commercial significance.
The key to the energy grants is the notation in the White House press release that the money will be spent in over 20 states. In other words, the purpose of the exercise is to spread money around, not to achieve any particular technical objectives. These funds, like the other stimulus money, might as well be thrown out of an airplane at 30,000 feet. Moreover, that money is being diverted from capital markets through either taxation or borrowing. Left alone, those funds might have produced something useful, instead of another handout.



  1. I am a design engineer and I have worked with NASA on space systems and have also worked on solar energy projects. I think this is a great article but I think it would be better if it noticed the opportunity costs of government spending. The opportunity costs of which I am referring to is the cost of having a large portion of engineers and scientists working on completely un-economical technologies. I am also speaking of the opportunity costs of linking government whim to industry. Just as government created bubble’s in the housing market there is also the problem of creating a knowledge bubble in the technology sector. Soon there will be a small enough “traditional” work force in coal and oil that there will be few that can “do the job.” Government science is bad practice in concept and execution. Not only are many scientists wasting time on un-commercializeable technologies but all of that money could also be more wisely spent by the people who earn it rather than a bunch of bureaucrats in Washington.

    Can you also give sources for some of your statistics?

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