[Senate Hearing 110-179]
[From the U.S. Government Publishing Office]
S. Hrg. 110-179
EMERGING ENERGY TECHNOLOGIES
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
TO
RECEIVE TESTIMONY ON REDUCING BARRIERS TO GROWTH OF
EMERGING ENERGY TECHNOLOGIES--RELATIONSHIPS BETWEEN
FEDERAL, STATE, AND LOCAL GOVERNMENTS
__________
ALBUQUERQUE, NM, AUGUST 7, 2007
Printed for the use of the
Committee on Energy and Natural Resources
______
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38-840 WASHINGTON : 2007
_____________________________________________________________________________
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
DANIEL K. AKAKA, Hawaii PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota LARRY E. CRAIG, Idaho
RON WYDEN, Oregon LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota RICHARD BURR, North Carolina
MARY L. LANDRIEU, Louisiana JIM DeMINT, South Carolina
MARIA CANTWELL, Washington BOB CORKER, Tennessee
KEN SALAZAR, Colorado JOHN BARRASSO, Wyoming
ROBERT MENENDEZ, New Jersey JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
JON TESTER, Montana MEL MARTINEZ, Florida
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
Frank Macchiarola, Republican Staff Director
Judith K. Pensabene, Republican Chief Counsel
C O N T E N T S
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STATEMENTS
Page
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Chavez, Martin, Mayor, Albuquerque, NM........................... 3
Domenici, Hon. Pete V., U.S. Senator From New Mexico............. 2
Hou, Hong, Ph.D., President and Chief Operating Officer, Emcore
Corporation, Albuquerque, NM................................... 25
Schmit, Rusty, Co-Founder and Chief Executive Officer, Advent
Solar, Albuquerque, NM......................................... 13
Simmons, Jerry A., Jr., Program Manager, Solid State Lighting,
Sandia National Laboratories, Albuquerque, NM.................. 16
Smith, Douglas, President, Nanopore Incorporated, Albuquerque, NM 10
EMERGING ENERGY TECHNOLOGIES
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TUESDAY, AUGUST 7, 2007
U.S. Senate,
Committee on Energy and Natural Resources,
Albuquerque, NM.
The committee met, pursuant to notice, at 9 a.m., at the
Albuquerque Convention Center, Hon. Jeff Bingaman, chairman,
presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
MEXICO
The Chairman. Why don't we go ahead and get started. Thank
you all for being here. We've got a sort of gathering of the
leaders of the community to talk about a very important issue.
This is a hearing of the Energy and Natural Resources
Committee of the Senate--a field hearing that we are having
today at the suggestion of Mayor Chavez, which I appreciate
very much his suggesting a couple months ago that we convene
this to talk about some of the initiatives that are going on
here in Albuquerque and in the State, both in the public arena,
but also with private companies to promote more use of
renewable energy, to promote more efficient use of energy, to
create jobs and benefit economically from this transformation
of our economy that I think we're all very aware of.
Let me begin by acknowledging Kathryn Clay who is here from
Senator Domenici's office, she came from Washington to be part
of this. I know she's here. All right. Joe Trujillo is
representing the senator here in New Mexico and he does very
well as we all know.
New Mexico and Albuquerque in particular are blessed with a
wealth of technology, of course, that much of which resides in
our national laboratories, Sandia, Los Alamos, Air Force
Research Laboratory in particular, but others as well. In
addition we have the University of New Mexico, we have New
Mexico State, we have New Mexico Tech, all of which are high
quality research institutions.
Over the years these laboratories and universities through
their highly educated work force and state-of-the-art research
facilities have made New Mexico a seedbed for new technology
startups and high technology economic growth in a broad array
of areas, from sophisticated computer codes to advanced
materials and also emerging energy technology companies.
We have some of those with us today and some that are not
here. Companies such as EMCORE and Advent, Tesla Motors,
NanoPore, there are various successful companies that call this
their home and which have put New Mexico on the map with regard
to clean energy and renewable energy.
The Council on Competitiveness, in their 2004 report
``Innovate America,'' called this mix of companies and research
institutions, laboratories, an innovation ecosystem or an
innovation cluster.
Today's hearing is to explore the barriers that emerging
energy technology companies encounter. Also how the Federal,
State, and local government can help these companies to
overcome these barriers. Obviously we need to look at all
levels of government to get this job done.
Again let me just congratulate Mayor Chavez for the
leadership he has shown in putting Albuquerque on the map as
far as a leader in clean energy and moving the economy here to
a clean energy future which I believe the entire country is
aware of.
So he is going to be our witness on the first panel. I
welcome Mayor Chavez. Why don't you go right ahead.
[The prepared statement of Senator Domenici follows:]
Prepared Statement of Hon. Pete V. Domenici, U.S. Senator From
New Mexico
I'd like to begin by thanking Senator Bingaman for calling today's
field hearing, and I'd also like to commend Mayor Chavez for organizing
the conference coinciding with our hearing. Both the conference and the
hearing are designed to call attention to an important issue for our
nation as a whole, and for New Mexico in particular. That is the issue
of the development and commercial application of new energy
technologies.
Developing advanced energy technologies will be critical to our
nation's future success in meeting challenges relating to our energy
security, our environment, and our national competitiveness.
Our witnesses today will provide us with their thoughts on how
federal, state, and local governments can work more constructively with
innovative companies like their own. We have a common goal, to bring
new, advanced energy technologies out of the laboratory and into the
marketplace. We need to do everything we can to make sure that
government and the private sector are working together in a productive
way to make that happen.
New Mexico is the perfect place to hold a hearing on this topic. We
have a tremendous depth of talent and entrepreneurship that we can tap
into, to build new companies and create new jobs based on advanced
energy technologies.
Our witnesses today represent companies that are terrific examples
of this kind of success. EMCORE, a leading maker of high-efficiency
solar cells, started through licensed technology developed at Sandia
National Laboratories. EMCORE, located in the Sandia Science and
Technology Park, has created more than 500 high-paying jobs and
invested more than $100 million in developing and manufacturing
advanced solar cell technology over the last nine years.
Advent Solar is another great example of what we are trying to
achieve. Advent started as a ``spin-off'' from Sandia National
Laboratory four years ago. Today, it has over $120 million in equity
and employs over 200 people.
NanoPore, a University of New Mexico spin-off, uses nanoengineering
to make advanced materials capable of reducing insulation thickness by
a factor of about twenty. This translates into large weight reductions
on commercial refrigerated trucks, and that means big savings on fuel
costs. Nanopore has generated over 80 patents and supplies a wide range
of commercial high efficiency insulation products, again creating new
job growth in energy technology.
I am also glad that we have with us today Dr. Jerry Simmons, the
Co-Director of the Center for Integrated Nanotechnologies (CINT) at
Sandia National Laboratories. Dr. Simmons was instrumental in a recent
dialogue, organized by my office, with Chinese officials representing
solid-state lighting research issues. Our hope is that we can establish
a positive collaboration with the Chinese in solid-state lighting
research, in order to advance both nation's goals of deploying clean,
efficient energy. The potential market in China is enormous, as are the
energy efficiency gains and global environmental benefits, that would
be realized through use of this technology.
I am pleased that the Department of Energy is moving forward to act
on the technology transfer provisions of the Energy Policy Act of 2005.
I am also pleased that Congress passed the Competitiveness bill last
week, a bill that Senator Bingaman and I worked very hard on for a
couple of years. If implemented properly, it will help us remain
competitive in the sciences as we face the new challenges of a global
economy.
Senator Bingaman and I have worked together for a long time on the
issue of technology transfer from the National Laboratories. The
Department is now working on a technology transfer roadmap to determine
next steps in improving technology transfer efforts at the
laboratories, and I think this hearing will yield some useful
information to guide that effort.
Thank you to all the witnesses for your participation today.
STATEMENT OF MARTIN CHAVEZ, MAYOR, ALBUQUERQUE, NM
Mr. Chavez. Mr. Chairman, Senator, thank you so much for
being here this morning and allowing me to be here with you.
All of New Mexico, by last count all 33 counties, have made
contributions to the State. Thursday and Friday of last week,
we hosted in this facility mayors, city managers, county
officials from all across the State to share best practices as
we are experiencing them and learning them in the city of
Albuquerque.
It was clear at the conclusion that there's tremendous
interest on the part of all communities in New Mexico in doing
the right thing, whether it be to address climate change or
whether it be in the interest of energy independence or frankly
for the creation of wealth in our communities. It was very
clear at that time that there was a tremendous need for
resources and expertise.
I want to on behalf of all of Albuquerque thank you and
commend you for the legislation that has now passed the House
and is in conference that would provide block grants to local
governments around the State of New Mexico and indeed around
the country.
As you're aware, Senator, the Federal administration has
been slow on these issues and it has fallen to America's cities
to take the lead. Over 600 cities have now signed onto the
clean air protocol. We're all very proud of that and we
recognize that some things really are best local, whether it be
building codes, things of that nature. But some things
absolutely cry out for Federal partnership.
So I want to commend you for your leadership. I want to
acknowledge as well the leadership of Senator Domenici on
behalf of New Mexico and the country. I want to commend as well
the President for now acknowledging the climate changes and
man-made phenomena, if I'm understanding that that is what he
is acknowledging. We have a long ways to go.
Albuquerque might seem to some an unlikely epicenter for
the place to have a global sustainability movement. But, in
fact, it's because of the inaction at the Federal level that
the cities have had the ability to really do the right thing.
We've had some head starts here in great part thanks to
Federal legislation. Albuquerque is rated as having the first,
second, or third cleanest air of any city in America depending
on whose gauge you use. If you utilize mine, it's No. 1
clearly.
That is a function of Federal legislation of the Clean Air
Act which has compelled us to engage in certain conduct,
whether it be auto emissions checks, things of that nature. We
see that at the end we are a healthier community, indeed the
best community in America most recently ranked but also a more
productive community. It's simply a better place to do business
if the people are healthy, if the air is clean. So we have a
number of things that have allowed us to have a step up.
The interface between the building environment in climate
change is now very well-known. Depending on the community,
between 45 percent and 55 percent of all carbon emissions are
generated by buildings, their construction, their operation.
We're very proud that a New Mexico architect is the architect
of the 2030 plan.
Speaking to this group yesterday was the CEO of Green Build
around the country. They have now incorporated lead into 2030--
or 2030 into lead, Bill Fradrezi, and he's doing a great job on
this. Again it focuses attention on New Mexico and our
communities and the leadership role that we have by virtue of a
lot of hard work by a lot of people.
The location of the national laboratories in New Mexico is
not an accident. It was because people worked to make it
happen. So today we boast the second highest number of Ph.D.'s
per capita than any city in America. That means, when you
combine that with our natural wind, our natural sunshine, and
our built-in gray matter, we are very well situated to be
leaders on many, if not, all of the issues that have to be
addressed if we are to save the planet.
Albuquerque, of course--and please forgive me if I brag a
little bit on my hometown, but it's my job--received a world
leadership award in London in November for our water
conservation program, beating out all the major cities in the
world.
Under the rubric of sustainability which is really what all
of this at its most basic element is about has learned how to
take limited resources, extend them, build upon them, and in
the process create wealth.
I had the distinct privilege of attending a world
conference on these issues in January in Paris just as the new
figures were being released on the gravity of climate change
and how very real it is and how immediate it is. It was clear
that they were still skeptical as they are of many of the
things that we do, looking to the United States of America for
the leadership in technology.
It is also clear to most who spend any serious time with
these issues that this is the beginning of a new era, the
beginning of an entire new economy that, if we take advantage
of, will transform our country. If we don't, we'll condemn our
country for generations.
So I want to assure you that you have our full support as
we work to pass legislation at the Federal level, partner with
local governments, and probably more importantly with the
private sector to remove those barriers. It makes no sense to
me that the regulatory environment ought to be such that it
stifles innovation in these areas.
I have witnessed this in the last few days, because here
are many of the technologies with us today that are dedicated
to a new spirit of entrepreneurship as they save the planet. It
makes no sense that they should be stifled by impediments,
particularly regulatory impediments in that endeavor.
I was in China just 2 weeks ago. The topic of climate
change was very real. They were informed, the officials that I
met with. Interestingly some of the impediments that we have
they do not have, some justified, some unjustified, whether
it's a means of transmission of energy which can be an obstacle
in this country to innovation, whether it be--no matter what
the source of the energy is to CAFE standards which we seem to
struggle so greatly with in this country.
At some point I believe the market, if it is respected, and
it always has to be respected, will simply demand that change.
I know, Senator, that Congress feels that demand from the
consumers. Certainly the sales in Detroit indicate that they're
feeling a little bit of that demand.
Again I want to pledge to you the support of America's
cities in your efforts. I want to thank you for your
leadership. There is no question in my mind that done properly
we can save our planet. We can assure this country of energy
independence and in the process become once again the world
leaders in technological innovation.
I know, Mr. Chairman, that you share my goal that the
center for technological innovation be located right here in
New Mexico. Thank you very much.
[The prepared statement of Mr. Chavez follows:]
Prepared Statement of Martin J. Chavez, Mayor, Albuquerque, NM
Thank you for providing Albuquerque with the opportunity to host
this hearing on fast tracking of energy and climate change technology.
I want to commend Chairman Bingaman in this regard, and Ranking Member
Domenici as well for their continuing leadership in this critical area.
My name is Martin J. Chavez. It is a privilege to talk with you
about the role of the State, Federal and Local partnership in
addressing the urgent challenge of energy innovation and climate
change, and the many opportunities generated by a coordinate, pro-
active approach in answering the challenge.
CITIES AS EPICENTER FOR INNOVATION
To some, a city like Albuquerque might seem like an unlikely
epicenter for the global sustainability movement. But a failure on the
part of the present Administration in Washington to take seriously the
threats to our environment posed by global climate change has prompted
states, and indeed over 600 localities across the country, to step up
and rise to the challenge.
And a confluence of circumstances has given communities such as
Albuquerque an early opportunity to transform how we live and, by
example, be a leader that communities worldwide can look to and learn
from.
In terms of clean air, metropolitan areas like Albuquerque got a
jump start years before most communities because of our periodic
inversion layer. The same recirculation that makes us the hot air
ballooning capital of the world, also made it imperative that we
greatly reduce emissions.
Today, thanks to emissions testing, particulate mitigation
strategies, fuel reformulation, CNG and Hybrid-Electric buses and many
other innovations, Albuquerque air is healthy and cleaner than it had
been in decades.
But it is worth noting that while the impetus may have come from
the grassroots, the authority had to involve federal imperatives such
as come from the EPA under an Air Quality Management District. We could
not have had the success we have worked so hard for without the federal
government as an active and authoritative partner.
NATURAL/BUILT ENVIRONMENT INTERFACE
In terms of the interface between our built and natural
environments, Albuquerque today garners a variety of national awards
and recognition, from arborists to cyclists and from open space
enthusiasts to fitness gurus.
Today's leaders in these areas can point back to the middle of the
last century, when Mayor Clyde Tingley built parks, set aside open
space and initiated a particularly ambitious tree planting program. We
now build on that legacy with initiatives such as the 3000 acre Bosque
Restoration Project, renowned trails and open space acquisitions as
well as world class sports and cultural amenities. We also recently
kicked off a ``Million Tree Challenge'' by handing out 5000 free
saplings to the community.
But again, open space and park land acquisition would have been
greatly limited if not for our federal partners. We would not, for
example, have the degree of protection we enjoy for the Petroglyph
National Monument, or for the Sandias or even the Bosque.
WATER SUSTAINABILITY
And in terms of water sustainability, it was an alarming discovery
back in the early 1990s that our aquifer was not nearly so limitless as
had been thought, which prompted one of the nation's most ambitious and
successful water conservation programs as well as the biggest public
works project in the city's history--the San Juan Chama surface water
diversion.
Here too, we took the legacy of forethought from those federal,
state and local leaders two generations ago who purchased rights to
40,000 acre feet per year of Colorado River water, and we built
dramatically upon it. Today Albuquerque boasts not only a sustainable
water future on a par with any other major city in America, we actually
garnered a World Leadership Award on the subject.
And again, as much as we might have the will, without the federal
partnership we all too often lack the ways and means to accomplish our
critical environmental goals.
Water makes a great allegory for energy in New Mexico. We have
reduced our use by a third, even while we were growing our number of
accounts by just about as much. When every level of government comes
together as we did over water sustainability, such results should not
be unexpected and I believe we can do even better with a similar effort
toward energy sustainability. Indeed, it is every bit as imperative
that we succeed because our very future depends on it.
ALBUQUERQUE AS HOTBED OF INNOVATION
It should also not come as a surprise to the world that we are a
hotbed of innovation, since New Mexico hosts two of the nation's
premier energy laboratories as well as major research and development
institutions. Even groups that are normally focused elsewhere, such as
the National Hydrogen Association, came away impressed with Albuquerque
after they chose us as the site for their first Renewables to Hydrogen
conference last Fall.
What has become increasingly true about Albuquerque and New Mexico
is that the innovations that get their start here are more often
sticking around to fruition. We are finally coming into our own as a
metroplex capable of hosting the most sophisticated of production
operations while attracting, cultivating and retraining the world's
most creative minds.
Advent Solar now produces a superior solar cell at the South end of
town with a technology that was hatched right here at the federally
funded Sandia National Laboratories. And companies such as Eclipse
Aviation and Tesla Motors, who could have taken their innovative
manufacturing anywhere, have chosen us as well.
MISSING ELEMENTS
But to stay on this path toward sustainability that is economic as
well as environmental, we must continue to work the game plan that has
brought us here and map out our next moves wisely.
Some key elements to the nascent federal, state and local
partnership are still missing.
For one, we lack the resources the federal government can bring to
bear. While we now dedicate 3% of our bond revenues to energy
conservation and distributed power projects, this amounts only to about
$3 million per cycle. A great down payment, to be sure, but not the
kind of resource infusion that is going to sufficiently shrink our
carbon footprint or transform our sustainability prospects by itself.
Fortunately, it is our understanding that the critical Energy Block
Grants to localities that the Senate sent over to the House have
remained whole in that body. So we are optimistic that this element of
the partnership may soon be falling into place.
Another area, where we are greatly alarmed, is the lack of CAFE
standard increases. This is especially embarrassing, when we compare
ourselves to the rest of the world. Even China is putting us to shame
in this regard, and it is an area where we are at the mercy of the
federal government to set the standard.
While buildings may account for a plurality of greenhouse gas
emissions elsewhere in the country, here in New Mexico the number one
contributor is transportation. This is partly the result of relatively
mild weather shrinking our buildings' emissions somewhat, and also
partly due to the fact that we register more miles per year of per
capita vehicle travel than most.
This is one area where the localities and states must look almost
totally to Washington for leadership.
CONCLUSION
The goal has always been an Albuquerque where our children or
grandchildren don't have to leave town to realize their dreams. Thanks
to smart planning about sustainability and decisive action, and working
thru NGO partners such as the International Council on Local
Environmental Initiatives, we are making great gains toward that goal.
And we have learned that action toward sustainability can actually
be good for both our economic wealth and our quality of life, and that
the two goals support each other when we ``push the green envelope.''
It is also, quite simply, the right thing to do and the greatest moral
imperative of our time. Because our grandchildren will either look back
to us in this time and celebrate that we had the foresight and will to
change course, or they will curse us for what we will have left them.
For those remaining folks who disbelieve the scientific consensus
about man's influence on global climate change, I would also just like
to add briefly that our present reliance on foreign oil--adding
billions of dollars per month to our foreign trade deficit--is
something we ought to rethink.
But it is also clear to us that there are some things we cannot do
alone, and others where we need a ``force multiplier'' of a partner in
the federal government.
So I would respectfully urge the Committee to stand fast on
proposals for block grants to municipalities and to make another run at
a serious improvement to our now antiquated CAFE standards.
And I would also invite a review of our sustainability blueprint,
which will be posted on the sustainability link from www.cabq.gov once
it is finalized.
With that, thank you again Mr. Chairman on behalf of Albuquerque
and all of New Mexico, both for what you do in the realm of public
service and for giving us this opportunity here today.
The Chairman. Thank you very much. Again thanks for all
your leadership. Let me just ask a couple of questions that
occurred to me.
One of the problems we've had historically with trying to
promote renewable energy and do a better job with energy
efficiency is that in the past, that's been driven by changes
in the price of oil and the price of gasoline.
You've seen as the price of oil goes up, everybody gets
worried about energy efficiency. When the price of oil drops,
everybody moves on to other subjects. So we're not able to
sustain a focus on the issue.
My impression is that the concern about climate change is
sort of a new element in this debate and in discussion and that
that is going to change that going forward; and that just as
you made this a priority, your administration, whoever succeeds
you, and whoever succeeds me in my job is going to have to make
it a priority as well just by virtue of the changed perception
of the importance of the issue.
I don't know if that's something that you've focused on or
if you have any thoughts about how much this is an issue that
is front and center because it's of concern to you or is front
and center because it is sort of getting hard wired into our
national policy concerns.
Mr. Chavez. Mr. Chairman, it is my opinion that we're
standing on a railroad track and there's a train coming
straight at us and we have two options. One is to get on the
train or be run over by it.
The events, the reality of climate change will compel
action. The only real question is whether we will act in time
to save the species. As one of our speakers, Terry Tammen, last
week who is the principal architect of all of California's
green program said this is not about saving the planet. The
planet will be fine. The question is whether or not our species
will be living on the planet at the time.
So I think all of us simply have to respond. What is
impressive about this movement, if you will, is the involvement
of the private sector. The private sector sees the economics.
Much of this conversation started not with environmentalists
but with economists. It brings all parties to the table.
I have seen many skilled legislators in my career. Without
sounding too sweet about it, you are one of the most skilled
I've ever witnessed. I've watched the difficulty of taking a
major piece of energy legislation that is imperative and see it
work through the Senate and the House and how difficult it is
to have meaningful change.
That cannot be the status quo for the future. Either that
or the public will rise up and we're all out of work.
The Chairman. Let me just ask on one other issue. One of
the things that we've always strived for here is to take
advantage of the technology developed in our laboratories, move
it into the private sector, create jobs, and do a lot of good
in the process in addition to the job creation, the economic
benefits.
We've got some companies that are on this second panel that
are going to talk about how they've done that and been able to
take technology that was created either in our laboratories, or
with help from the public sector, in some way or another, and
gone ahead and succeeded in the private sector with that.
It would seem to me that we've struggled to make this work
in New Mexico over a long time. But I would think that we would
probably have as good an insight here in New Mexico as to what
the factors are that make that occur as anyplace in the
country.
I don't know if this is something that you've spent a lot
of time on. I know, if you have any thoughts about it you want
to express, I would be anxious to hear them.
Mr. Chavez. Thank you, Senator. It's just very clear that
we have all of the basic assets. I had a marvelous conversation
not long ago with one of the principals of the city of
Covington, one of the premier or newest developers in the
country. Of course, we're building up all of Mesa del Sol which
will be to my mind building a city the right way for the future
in a sustainable fashion.
He looked at basic elements, free college tuition. There's
not many places in the country where you can go to college for
free if you just have a decent grade point average. The number
of Ph.D.s, all the technological excellence that's going
around, the beautiful environment.
His question to me was, Mayor, with all those assets which
are superior to just about any community in the country, why
aren't you doing better as a community? Of course, they see the
business opportunity and that's why they're here. So we
definitely have the assets.
Why we continue to subsidize an industry when gasoline is
$3 at the pump for that continued behavior when we have the
crying need for alternatives and renewables is beyond me. It is
simply beyond me.
I believe with your leadership and the leadership of the
delegation and frankly with the upcoming elections, because I
think all sides are now much better informed on these issues,
that we're at the beginning of something great and not the end
of something great.
The Chairman. OK. Thank you again for being here and all
your leadership on these issues.
We have a second panel of very distinguished private sector
leaders who are going to come and tell us about their
particular companies and circumstances and the problems that
they have encountered and ways they've overcome them. So again
thank you very much, Mayor.
Mr. Chavez. Thank you, Mr. Chairman.
The Chairman. Why don't we ask the second panel to come up
here and I'll introduce everybody and we'll go ahead with their
testimony.
While I'm thinking of it, so I don't forget, let me also
particularly thank John Epstein for his good work in getting
this hearing put together. He works with me on the energy
committee there in Washington as well and does a great job on
this and a lot of other things. So I very much appreciate that
effort and want to acknowledge that.
Let me just start to my left, your right, and go right
across. I'll introduce everyone and then just ask for you to
each say whatever is on your mind.
Dr. Doug Smith is president of NanoPore here in
Albuquerque. We had Doug testify before our finance committee
in Washington, a couple months ago, on some of the tax issues
related to the business that he's in and very much appreciate
that and appreciate him being here again today.
Rusty Schmit who is the founder and president and chief
executive officer of Advent Solar which is a very successful
company that we're very proud of, it's located here in
Albuquerque. He's got a great story to tell and great insights
into this issue and so we appreciate him.
Dr. Jerry Simmons who is the program manager for solid
state lighting out at Sandia National Labs. Jerry is putting
New Mexico and Sandia on the map in this solid state lighting
area and it's an area that we think is going to be a growth
area for a long, long time.
Dr. Hung Hou who is president and the chief operating
officer for EMCORE Corporation that now is headquartered here
in Albuquerque. We're very glad that they are. We're very glad
that Dr. Hou is here to talk about that and what they're doing.
So, Doug, why don't you start and give us your views and
we'll just go across in the order that I've indicated and then
I'll have a few questions.
STATEMENT OF DOUGLAS SMITH, PRESIDENT, NANOPORE INCORPORATED,
ALBUQUERQUE, NM
Mr. Smith. Thank you, Mr. Chairman, for the invitation to
speak here today. It's probably a bit dangerous to say I can
say whatever I have on my mind.
The Chairman. Go right ahead.
Mr. Smith. So as background NanoPore has been in business
for 14 years here and we now have three different spin-offs and
they're all related to not energy production but rather energy
efficiency.
We have a brand-new startup called NanoVend which has
developed a new kind of vending machine which cuts the amount
of energy for vending machines by 80 to 90 percent. We have
NanoCool which makes medical packaging which greatly reduces
the size and, therefore, the amount of fuel required for air
freight for shipping pharmaceuticals.
Our biggest spin-off right now is NanoPore insulation which
makes advanced thermal insulation, roughly R-40 per inch. So
about seven times better than foam, seven to eight times better
than polyurethane foam.
As I testified up in Washington, that's being used now in a
number of applications, from refrigerated transport, where we
can save 1,000 gallons of diesel per year, to cold storage in
everything from McDonald's to large cold storage facilities
even getting into housing now.
What I wanted to talk about was really--again we enforce
the idea that saving energy is probably the cheapest way to
make energy rather than alternative energy. Actually saving it
is probably the most efficient way.
But what I really want to talk about is the experience of
NanoPore. When I saw about governments working together, I
started thinking back to my history. I won't go too far back in
my history. I started at--NanoPore is a spin-off of both UNM
Sandia.
I ran a center at UNM in engineering and advanced
materials. This was a spin-off of that. Sandia was actively
involved in that. So we always claim to be a spin-off of both.
When our company started 4 years ago, I think of--14 years ago,
I think now what would have helped us and would continue to
help us.
There are really four issues where government is working
together that can talk about tax credits and investment and
funding for a change and to talk about what are the practical
things, local things that could help us. The first was really
technology demonstration projects.
When you come forward with a new technology, whether it's
advanced insulation or a new kind of air-conditioning, it's
important to get large-scale demonstration projects that have
credible analysis of the data. Not me analyzing the data and
putting it out, but scientists in the national labs and the
university independently monitoring the performance of that.
I think that's an important thing. It's tough for small
companies to do when they startup with a new technology. But it
really helps give them credibility to have both local
governments and State and Federal Governments involved in these
kinds of demonstration projects. I think it's a great role for
the national labs too.
Another one is really education. Especially when it comes
to energy efficiency and energy production, is doing a better
job of educating the consumers, even our kids, about the
relationship between energy and climate change.
Everybody hears about climate change. But they don't not
buy an SUV because of climate change. They may not buy an SUV
because of oil prices. So really a better job of education,
just like the city of Albuquerque has done on water
conservation. So I think there needs to be a combined education
effort all the way from the schools up to the Federal level on
consumers.
The third is economic development. When NanoPore started 14
years ago, the economic--local economic development activity
was essentially nonexistent. Three years ago, when we started
NanoCool, one of our spin-offs, we got connected with
Albuquerque Economic Development. I have never had such a
fantastic experience.
Gary Tonjes and Bob Walton went out of their way to help
us. The people who are starting up these days really have it
made. But really getting the economic development to focus on
these target areas that we want locally to foster.
Finally the fourth thing I think and the most important
thing is for governments at all levels to be a good example. I
was walking around D.C. recently and walked by the White House.
Next to the Executive Office Building there were 20-year-old
air-conditioners sticking out of every office window.
It's the most, you know, inefficient way you can think of
it. I criticized the Senate when I was there and the vending
machines weren't Energy Star rated vending machines. So I think
being a good example--you know how it is with your kids. If you
don't do something, then your kids aren't going to do it. I
think the same thing is going to be true about modifying our
energy pattern. With that I'll conclude my testimony.
[The prepared statement of Mr. Smith follows:]
Prepared Statement of Douglas Smith, President, NanoPore Incorporated,
Albuquerque, NM
Mr. Chairman and Members of the Committee, thank you for inviting
me to testify before you today on the subject of reducing barriers to
the Growth of Emerging Energy Technologies-Relationships between
Federal, State, and Local Governments. Before I begin, I should state
that by my way of thinking, emerging energy technologies include both
new and improved sources of energy production as well as ways to
improve energy efficiency such that we accomplish the same with less
energy. This doesn't have to mean that we drive slower or lower the
thermostat, just that as a nation, we insert new technologies to reduce
our energy consumption. Just from NanoPore and our three New Mexico
based spin-offs, we have multiple examples of how this can be
accomplished. These include NanoPore Insulation which is the country's
largest producer of thermal superinsulation, NanoCool which produces
controlled temperature medical packaging which dramatically shrinks
package size and hence, reduces air freight fuel consumption, and
NanoBev which is producing a new generation of beverage vending which
reduces the electricity consumption of vending machines by 80-90%.
We strongly believe that the lowest cost form of new energy
generation capacity comes from increasing the efficiency of existing
products. In particular, retrofitting insulation to applications
originally designed in the era of low cost energy and ignoring the
environmental impact of energy use. Although not as sexy as new ways to
produce energy, retrofitting older, energy intensive applications has
the potential for demonstrating similar energy savings in a much
shorter time period and at greater economic and environmental savings
to society.
So how can governments at all levels work together to boost the
growth of energy technology companies? First, I would start by
expanding this group to include our Universities (private and public)
as well as our National Laboratories. Before starting NanoPore, I was a
professor at the University of New Mexico with strong research ties to
Sandia and Los Alamo National Laboratories. That said, I see four areas
where government can help to reduce barriers to emerging energy
technologies.
1. Technology Demonstration and Validation.--One large
barrier to new energy companies is creditability and an
unbiased value analysis for their technology whether it is
biofuels or advanced electronic controls. Governments are in a
unique position to sponsor a range of peer-reviewed, technology
demonstration projects for emerging technologies. These serve
multiple purposes. As with all new technology, it is often
difficult to separate the wheat from the chaff when the market
is filled with an array of competing claims. When economic and
technical performance is validated by independent sources such
as Universities or National Laboratories in well-controlled
demonstration projects, the performance data has more
creditability in the marketplace and more value in driving
energy policy. This builds support from both the customer base
and investment community. Because it has been generated by
governments, the data can be freely circulated. This approach
also helps to connect University and National Laboratory
researchers with emerging technology companies. Another benefit
is that it helps to build markets for new energy technologies.
2. Education.--As the debate over climate change played out
in the media, the consumer has now recognized the importance of
climate change but they still do not want to change their
behavior. The move to smaller cars from large SUV's is driven
more by high oil prices (i.e., market forces) than a concern
for the environment. So how does government help? Education is
the key to guiding consumer actions to reduce their energy
footprint without sacrificing their way of life or receiving an
adequate return on their investment. As an example, I suppose
that some would say that market forces should govern the use of
better thermal insulation and, if the return on investment is
adequate, the market will drive the implementation of new
technology. My favorite response to this statement is to direct
our attention to the hot water heaters we have in our homes.
How many of us have gone to Home Depot or Lowe's to buy a
insulation blanket for your hot water heater? If our heater is
electric, the investment pays for itself in months, not years.
Governments, with the support of Universities, National
Laboratories, and federal agencies such as DOE and EPA, need to
greatly expand education efforts for everyone from young
children in school to the elderly consumer. Energy education
and awareness is critical to helping to move new energy
technology into the marketplace.
3. Economic Development.--As with any new business, a strong
local and state economic development team is essential to
reduce barriers. When NanoPore started fourteen years, a local
economic development team was essentially nonexistent. Three
years ago, when contemplating the location of our NanoCool
spin-off, the Albuquerque Economic Development team led by Gary
Tonjes and Bob Walton were fantastic. They introduced us to a
wide range of assistance which made our decision to stay in
Albuquerque easy and has allowed us to increase investment and
expand. In my experience, it is not enough to just have strong
incentives but what is necessary is to have a team that helps
guides the technology company through the process of obtaining
that assistance. Of course, if economic development efforts are
only judged by the number of jobs created that year, it drives
development efforts towards companies such as call centers
which will create a large number of jobs in a short time and
away from helping technology companies which will grow jobs
year over year. NanoPore and its' joint ventures have grown by
40+% per year for each of the last three years and project at
least that rate for the future. Our economic development
efforts should be expanded to provide more resources to help
focus on areas of longer-term impact and strategic interest for
the city.
4. Serve as an Example.--Governments must practice best
energy use practices and make the community aware of this. The
problem is always the trade-off in initial capital cost and
operating costs. Governments should consider energy costs in
all of their purchasing decisions whether it is new
construction, retrofitting buildings, purchasing equipment, or
even sourcing vending machines. Beverage vending machines are a
perfect example of how there is often disconnect between the
person who pays for the insulation and the person who pays the
energy bill. Most vending machines are owned by large beverage/
ice cream companies and loaned to the location where the
machine is placed. The store/office/university must pay the
energy cost. There are approximately 2 million vending machines
in this country and the retrofit application of a \1/4\ " thick
superinsulation would save over 500 MW of energy. This energy
savings does not account for the knock-on effect that when
energy is being expended inside a building, there is an
additional energy load on the HVAC system. Government needs to
publicize what it has done to save energy and provide a report
card to the consumer. Just as Albuquerque has accomplished with
water conservation, we need to use examples and progress
reports to show that the Federal, state and city government can
save energy (and money) and therefore, the consumer can also.
I would like to thank you for the invitation to speak today and I
hope that the information provided will be useful.
The Chairman. OK. Thank you very much. That's very useful.
Rusty, why don't you go right ahead.
STATEMENT OF RUSTY SCHMIT, CO-FOUNDER AND CHIEF EXECUTIVE
OFFICER, ADVENT SOLAR, ALBUQUERQUE, NM
Mr. Schmit. Thank you, Mr. Chairman, for the opportunity to
testify here today. I will keep my opening remarks brief
hopefully, but be happy to answer any questions.
For background Advent Solar is a privately funded early
stage company. We began operations in July 2003 so we're now 4
years in operation. We have raised 120 million in equity
capital and several million dollars more in debt.
So in one sense, as you said in your introduction very
graciously, we are successful. But really we've been successful
to clarify only in raising money and spending it to get to the
next stage. To be a real sustainable business, we have to
compete in a global marketplace.
So the target of my remarks today is the barriers in the
global industry in which we are living today and what can
governments do to model after those other countries'
governments in order to promote this kind of industry.
By background as you can see on this first chart on the
easel there, the photovoltaic industry in which we are
operating is booming. In 2006 the global cell production topped
2.5 gigawatts. As you can see, over the past 10 years, that's
an increase of over six X. This is a global industry. The
competition that we face is formidable.
All of the leading photovoltaic producing countries have
advanced their industries with national energy policies that
provide supply and demand in incentives for photovoltaics and
other renewable energies and with policies linked to the
national energy policy that provide economic development
incentives for companies in those fields.
This is not the case yet in the United States despite your
leadership in trying to push some of these things through,
which I very much appreciate. So I would like to talk about
three barriers to companies like ours given this global
backdrop.
Like the host countries of our industry leading
competitors, the U.S. needs a long-term energy policy that
provides incentives for the production and consumption of
emerging energy technologies in the U.S. market. This has been
highly successful in other countries.
Japan, for example, was the first to provide market
incentives for solar electric power as an integral part of
their energy policy back in the 1990's. This policy led to
tremendous growth in the amount of solar electricity generated
and it also led that country to be a leader in manufacturing of
solar photovoltaic products. That industrial leadership
continues today, they are the largest manufacturing country of
solar PV products in the world.
Though the market demand in Japan has been surpassed now by
that in Germany. Germany followed the example of Japan,
implemented an incentive program to drive market demand for
solar power. Here again it was part of a broader national
energy policy for long-term diversification away from
traditional coal and nuclear in that country. This market
demand in turn led to the buildup of the manufacturing base in
Germany.
The second factor is to have open and equal domestic market
access. Very simply emerging energy technologies will not
emerge if they are easily squashed or obstructed by the bested
status quo opponents who fear the loss of their franchise
businesses.
Emerging energy technologies in the U.S. need open access
to the largest energy market in the world. Our home market is
our special advantage. But we need to level the playing field
and not handicap newly emerging technologies like solar
photovoltaics.
The third factor, Federal, State, and local economic
development incentives aligned with national energy policy.
Companies such as Advent compete in the global market in which
virtually all other countries align their economic development
with national policy.
In the solar energy business, we are at a huge disadvantage
with our competitors in countries such as Germany because of
their grants and other aid provided to companies that locate
there.
Germany, for example, has created an estimated 100,000 jobs
in the renewable energy field over the past several years. Last
year they reported over 35,000 jobs in solar photovoltaics
alone. This has driven not only by the market incentives that I
mentioned as part of their national energy policy, but also
through outright grants from the European Union, the German
national government, and the German State governments.
This combination of grants which are linked to job creation
often amounts to 50 percent or more of a total project
investment. It's very difficult for companies like Advent to
compete in this global industry.
To put that in perspective, I mentioned earlier that Advent
has raised over 120 million in equity capital. We could have
done the same in another country for half of that amount, which
is obviously very attractive to investors and makes it much
easier to get businesses going and growing quickly.
To summarize, Federal, State, and local economic
development efforts should be coordinated through grants or
other near-term incentives that lower the barrier to investment
for companies involved in strategic new energy technologies.
Again thank you for providing me with this privilege to
testify and I'm happy to answer any questions.
[The prepared statement of Mr. Schmit follows:]
Prepared Statement of Rusty Schmit, Co-Founder and CEO, Advent Solar,
Albuquerque, NM
Mr. Chairman and distinguished members of the Committee, my name is
Rusty Schmit. I am co-founder and CEO of Advent Solar, a solar cell and
module manufacturing company located in Albuquerque, New Mexico. I
would like to thank you for providing me the opportunity to testify
before you today.
Advent Solar is a privately funded, early-stage company. We began
operations in July, 2003 based on a proprietary ``Emitter Wrap
Through'' solar cell technology licensed from Sandia National
Laboratories in Albuquerque, New Mexico. We have raised $120M in equity
capital and $25M in debt. Today Advent occupies a new 25MW
manufacturing facility at Mesa del Sol with close to 200 well-paid
employees.
Even though Advent Solar is a U.S.-based company utilizing U.S.-
based technology, most of its sales are in Europe, and virtually all of
its $30 million in manufacturing equipment was purchased from industry-
leading European equipment vendors. Most of our key raw materials also
come from European suppliers.
The photovoltaic (PV) industry is booming. In 2006, global solar
cell production topped 2.5GW, a five year increase of 632% from 400MW
in 2001. This is a global industry and the global competition in
formidable. In 2006, the top PV producing countries or regions were:
Japan with a 36% market share; Europe (primarily Germany) with 28%, and
China and Taiwan with 22%. The U.S. share of global production totaled
7% (174MW), and a large portion of this was from European and Japanese
companies with U.S. operations.
Most industry analysts believe that China will be the world's
largest nation PV producer in a very few years. Currently, China
exports 95% of its production.
All of the leading PV producing countries have advanced their
industries with national energy policies providing supply and demand
incentives for PV and other renewable energies and with policies that
are intended to promote economic and energy security and environmental
goals. This is not the case in the United States.
Just sixty days ago, the 2007 Senate Energy Bill was stripped of
its demand incentives providing federal tax credits for prospective
residential PV users in the United States. This was an enormous setback
for the advancement of the PV industry in the U.S. and for Advent
Solar. The PV world was watching with the expectation that the U.S. was
on the verge of asserting its market strength and potential, and
instead the status quo prevailed.
In its World Energy Outlook 2006, the International Energy Agency
(IEA) projects that world electricity demand will double by 2030. That
is, whatever the issues are today, multiply them by two over the next
23 years. Just last month, the National Petroleum Council in its report
entitled ``Facing the Hard Truths about Energy'' stated that the world
would need 60% more energy by 2030, and that there are accumulating
risks to continuing expansion of oil and natural gas production from
conventional sources. The report called for increased energy efficiency
and for the expansion and diversification of energy resources.
The global and domestic drivers for renewable energy and other
emerging energy technologies have never been more vivid, and I do not
need to recite them for you. We live with the consequences of our
energy policy or lack thereof day in and day out. The quality of life
and standard of living for future generations of Americans and global
citizens will be impacted by your wisdom and sensibilities as U.S.
legislators and policy makers.
With this backdrop, and from the perspective of Advent Solar, I
would like to cite three barriers to Emerging Energy Technologies. The
issues and contrasting interests may be complex at a micro level, but
they are obvious from a perspective on national policy.
Removing barriers will require bold leadership and enlightened
public policy with the longterm public interests in mind.
My three observations are simple and straightforward:
A LONG-TERM NATIONAL ENERGY POLICY
Energy is ubiquitous, it is a global commodity; and it is a global
industry. As a U.S.-based industry, solar cell and module manufacturing
faces enormous global competition and huge barriers to having any
footprint at all. If we are to be successful, it will not be solely as
an exporter.
Like the host countries of our industry-leading competitors, The
U.S. needs a long-term energy policy that provides incentives for the
production and consumption of emerging energy technologies in the U.S.
market. This has been highly successful in other countries.
Japan was the first to provide market incentives for solar electric
power as an integral part of their energy policy to diversify the
sources of electric power generation. This policy led to growth in the
amount of solar electricity generated, and also led that country to be
the leader in manufacturing of solar photovoltaic products. That
industrial leadership continues today, even though the market demand in
Japan has been far surpassed by that in Germany.
Following the example of Japan, Germany implemented an incentive
program to drive market demand for solar power. Here again, it was part
of a broader national energy policy for long-term diversification away
from a dependence on coal and nuclear. This market demand led to the
build-up of the manufacturing base in Germany.
The private and social benefits make a broader-based national
energy policy a sure winner for the twenty-first century.
OPEN DOMESTIC MARKETS
Change happens. In fact, it is a hallmark of an advancing and
prosperous society.
Emerging energy technologies will not emerge if they are easily
squashed and obstructed by vested, status quo opponents who fear the
loss of franchise and annuity income status. Emerging energy
technologies in the U.S. need open access to the largest energy market
in the world. Our home base is our special advantage.
We will not grow our domestic manufacturing industry by selling
only into foreign markets. China will beat us at that game.
The U.S. needs political leadership and progressive public policy
at Federal, State, and Local levels to bridge diverse energy interests
and accommodate change.
It is past time to claim our energy independence and get to work.
FEDERAL STATE, AND LOCAL ECONOMIC DEVELOPMENT INCENTIVES ALIGNED WITH
THE NATIONAL ENERGY POLICY
Though often called industrial policy and therefore frowned upon in
the U.S., the reality is that companies such as Advent Solar compete in
a global market. In that global market virtually all other countries
align economic development with national policy. In the solar energy
business, for example, we are at a huge disadvantage with our
competitors in countries such as Germany because of the grants and
other aid provided to companies that locate there.
Germany has created an estimated 100,000 jobs in the renewable
energy field over the past several years, with over 35,000 jobs
reported in solar energy alone last year. This has been driven not only
by the market incentives mentioned above, but also through grants from
the European Union, the German national government, and often from the
German states. This combination of grants, which are linked to job
creation, often amounts to 50% or more of the total project investment.
It is very difficult for a U.S. company to compete in this global
industry with these types of incentives.
The federal, state, and local economic development efforts should
be coordinated through grants or other near-term cash incentives to
lower the barrier to investment for companies involved in strategic new
energy technologies.
Once again, thank you for providing me with the privilege to
address this committee. I thank you for your interest and leadership,
and I would be pleased to answer your questions.
The Chairman. Thank you very much. As I said I'll have some
questions after we finish hearing from the other two witnesses.
Jerry, why don't you go ahead.
STATEMENT OF JERRY A. SIMMONS, JR., PROGRAM MANAGER AND ACTING
CO-DIRECTOR, SOLID STATE LIGHTING, SANDIA NATIONAL
LABORATORIES, ALBUQUERQUE, NM
Mr. Simmons. OK. Senator Bingaman, thank you for this
opportunity to testify today on reducing barriers to the growth
of emerging energy technologies through relationships between
Federal, State, and local governments.
In the time allotted, I think I'm going to point out some
existing partnering mechanisms that have worked well from
Sandia's perspective. Then I'll suggest a couple of new ideas.
At the Federal level, the National Competitiveness
Technology Transfer Act of 1989 was a watershed event for
Sandia. It enabled us to enter into cooperative research and
development agreements, or CRADAs, with individual companies
and to give them licenses to Sandia technology.
This has been a real success. In the past 3 years, Sandia
has signed 245 different CRADA agreements with both large and
small businesses. The Act also enabled us to establish
entrepreneurial leave program. This program allows Sandia
scientists to take a 2-year leave of absence to form startup
companies and then to return to Sandia employment, if needed.
The safety net increases the number of Sandia scientists
willing to try to take this risk to form a startup company.
Both EMCORE and Advent Solar had key founding personnel that
were Sandia's on entrepreneurial leave. I don't know if Doug
also counts that. No. OK.
Another Federal partnering mechanism is the establishment
of user facilities. By far the largest of Sandia's many user
facilities is the Center for Integrated Nanotechnologies or
CINT jointly run by Sandia and Los Alamos National Labs.
CINT is one of five nanoscale science research centers
established by the DOE and represents an investment of $100
million in buildings and state-of-the-art equipment.
Through a web-based proposal process, universities and
businesses can come and use CINT equipment and have CINT
scientists work collaboratively on their projects with the
costs paid for by CINT. It's turning out to be a great success.
Over 200 user projects have been undertaken to date.
As you know in October the National Center for Solid State
Lighting was established in affiliation with CINT. Solid state
lighting is the use of semiconductor LEDs for ultra efficient
general illumination and has the potential for enormous energy
savings nationwide and worldwide, reductions in total
electricity use of up to 10 percent.
This Center For National Solid State Lighting seeks to
leverage CINT equipment and expertise to harness nanoscience
for revolutionary advances in this new lighting technology.
At this point I think I might echo something that Doug
said. There's a saying that a bird in the hand is worth two in
the bush. I'd like to coin a new one, which is a kilowatt-hour
at the point of consumption is worth two kilowatt-hours at the
point of production. So I think conservation plays an important
role.
Let's see. At the State level, the Energy Innovation Fund
is a recent exciting development. This is a new partnering
mechanism. It's in its first year. The fund provided $2 million
for grants in private public partnerships to accelerate
innovation for clean energy technologies in New Mexico. The
first five projects of the fund were announced last month.
The local level I think from Sandia's perspective is
Sandia's science and technology park is a tremendous success.
This 250-acre public/private partnership was initiated in 1998.
Companies that located in the park gained easy access to
Sandia's world class facilities and scientists, while the city
and State get new high paying high technology jobs.
The park currently has 24 tenants, 1,500 employees, and
$260 million in investment. So at this point I'd like to
suggest a couple of ideas for bold new moves that we might
take, new partnering relationships.
First Sandia often finds it difficult to find funds to
enter into CRADA activities that otherwise might make sense.
The business partner is often unable to pay for Sandia's share
of the CRADA activity, while Sandia's internal funds are often
restricted from being used for this purpose.
For example, the funds provided by DOE for the National
Center For Solid State Lighting are restricted in this way. A
solution to this problem might be this establish funds
specifically designated for tech transfer and cooperative R&D
in the area of emerging technology, emerging energy technology.
I believe this could substantially increase CRADA activities.
The second idea that I would like to suggest involves
Federal, State, and local government working together. As I
mentioned earlier, there are five nanoscale science research
centers including CINT located at national labs around the
country.
At many of these labs, State, local, and Federal
Governments are partnering with businesses to establish truly
major new initiatives in emerging energy technologies. They are
leveraging the DOE nanoscience center investments.
One example is the Helios Project. The Helios Project is
led by Lawrence Berkeley National Lab and leverages their
nanoscience center, the Molecular Foundry.
Helios has already received a commitment from British
Petroleum for $500 million over 10 years. They have also
recently been promised 125 million from the DOE's Genomes to
Life program and $70 million from the State of California. A
similar broad public/private partnership has been formed at Oak
Ridge National Labs in Tennessee to establish their bioenergy
science center.
So I think we might want to consider whether a similarly
bold new major energy initiative might not be established in
New Mexico. It could be formed through a Federal, State, and
local partnership, have substantial business involvement, and
be affiliated with the Center for Innovative Nanotechnologies
at both Sandia and Los Alamos.
A focus on solid state lighting and solar photovoltaics
would take advantage of the lab's unique expertise in
semiconductors and the State's significant semiconductor
business activity.
I agree with Mayor Chavez, that Albuquerque and New Mexico
have all the ingredients for an initiative in this area.
So, Senator Bingaman, thank you for the opportunity to
testify today and for your strong support of solid state
lighting and other emerging energy technologies.
Mayor Chavez, thank you for your leadership in the
convening of this event.
[The prepared statement of Mr. Simmons follows:]
Prepared Statement of Jerry A. Simmons, Jr., Program Manager and Acting
Co-Director, Solid State Lighting, Sandia National Laboratories,
Albuquerque, NM
Mr. Chairman, thank you for the opportunity to testify on reducing
barriers to the growth of emerging energy technologies through closer
and enhanced relationships between federal, state, and local
governments, and the role that national laboratories can play. I am
Jerry A. Simmons, Jr., Program Manager for Solid State Lighting
research and development (R&D) at Sandia National Laboratories (Sandia)
and Acting Sandia Co-Director of the U.S. Department of Energy (DOE)
Center for Integrated Nanotechnologies or CINT. Sandia is managed and
operated for the DOE by Sandia Corporation, a subsidiary of the
Lockheed Martin Corporation.
Sandia is a multiprogram laboratory of DOE, one of the three
National Nuclear Security Administration (NNSA) laboratories with
research and development responsibility for nuclear weapons. Sandia's
job is the design, development, qualification, and certification of
nearly all of the non-nuclear subsystems of nuclear weapons. We perform
substantial work in programs closely related to nuclear weapons,
including intelligence, nonproliferation, and treaty verification
technologies. As a multiprogram national laboratory, Sandia also
performs a substantial and ever-growing amount of R&D for DOE's energy
and science offices, as well as work in national security and homeland
security for other agencies when our special capabilities can make
significant contributions. This past year, for the first time, the
total amount of direct non-nuclear weapons work performed by Sandia
grew to be greater than half our total budget. Energy efficiency and
renewable energy and supporting technologies such as energy storage
will be a rapidly growing area of Sandia's work for the foreseeable
future.
I will begin my testimony by describing some Sandia-related
examples of what has worked well in nurturing relationships between
local, state, and federal government to promote technology transfer. I
will then describe what I see as shortcomings or existing needs, as
well as efforts that could be made to overcome these obstacles and
deepen relationships between government entities at all levels.
Sandia facilitates the use of federal R&D results, facilities, and
resources through technology transfer agreements with private industry,
universities, and state and local governments. Partnerships are
conducted to ensure that national security is protected, U.S. economic
interests are promoted, competition (by the national labs) with private
industry is prevented, and fairness of opportunity is provided to all.
FEDERAL GOVERNMENT PARTNERING MECHANISMS
The federal government has taken a number of legislative steps to
aid in the transfer of national laboratories-developed technologies to
U.S. industries. Technology transfer has been a goal of U.S. government
policy since the Stevenson-Wydler legislation of 1980. The Bayh-Dole
legislation, also enacted in 1980, permitted small businesses to obtain
title to inventions developed with government support. For DOE national
laboratories, a watershed event occurred with the passing of the
National Competitiveness Technology Transfer Act of 1989, which
established technology transfer activities as a mission of Government-
Owned Contractor-Operated (GOCO) labs such as Sandia. This enabled
Sandia to establish and use two major mechanisms for technology
transfer, which continue to be used today.
First, this act enabled the licensing of Sandia-developed
technologies to the commercial sector. This includes not only
non-exclusive licenses, but exclusive licenses as well.
Exclusive licenses are particularly important because the
competitive advantage provided can motivate companies to make
the investment necessary to bring a given technology into
production. The Act also authorized GOCO labs like Sandia to
establish Cooperative Research and Development Agreements
(CRADAs) with large and small businesses and to make advance
agreements on title to inventions resulting from these
agreements. Sandia has embraced this mechanism wholeheartedly;
in FY04, FY05, and FY06, Sandia signed 245 different CRADAs
involving both large and small businesses.
Second, in another approach to this technology transfer
mission, Sandia established the Entrepreneurial Separation to
Transfer Technology (ESTT) program, which enables Sandians to
take a leave of absence to start up a technology-based
business, with the option of returning to employment at Sandia
within 2 years. This program is widely considered a success. It
enables employees to mitigate their risks in taking the bold
move of establishing start-up companies and has resulted in a
number of successful start-ups that might otherwise never have
happened. In some cases Sandia has become a partner with the
company by accepting equity as partial consideration for
licensing its technologies.
Two examples that have particular relevance to today's hearing
include that of MicroOptical Devices (MODE) and Emcore and that of
Advent Solar:
MODE was founded in 1995 by a group of Sandians who took an
entrepreneurial separation leave. MODE was purchased in 1997 by
Emcore. Additional Sandia technology was licensed by Emcore,
which then established a facility in the Sandia Science and
Technology Park. Today that facility employs nearly 500 people,
is an anchoring institution in Albuquerque's high-technology
business nexus, and last fall moved its global headquarters
from New Jersey to the Park.
A second example is provided by Advent Solar. Founded in
2002, Advent has an exclusive license to three Sandia patents
on emitter wrap-through technology. James Gee, Vice President
and Chief Technology Officer as well as a founder of Advent,
was one of the original Sandia scientists who led work on this
technology. He took advantage of Sandia's entrepreneurial
separation program to co-found Advent with President and CEO
Rusty Schmit. Today Advent employs more than 165 people and is
becoming a cornerstone of Albuquerque's high-tech business
community.
Sandia has also established more than 30 unique research facilities
for use by U.S. industry, universities, academia, other laboratories,
state and local governments, and the general scientific community.
These user facilities enable businesses, government, and other
institutions to access specialized equipment and the expertise
developed to satisfy DOE's programmatic needs. These facilities range
from the National Solar Thermal Test Facility, which provides
experimental engineering data for the design, construction, and
operation of unique components and systems in proposed solar thermal
electrical plants planned for large-scale power generation (among other
testing capabilities), to the Photovoltaic Laboratories, which are
designed to accelerate the commercial use of photovoltaic energy
systems and aid in understanding and improving the performance of those
systems. One of the most important of these user facilities, and
certainly the largest, is the recently established Center for
Integrated Nanotechnologies (CINT).
In FY 2001 the U.S. Government launched the interagency National
Nanotechnology Initiative (NNI) to accelerate the pace of revolutionary
discoveries in nanoscale science and engineering and to facilitate the
incorporation of these scientific advances into beneficial
technologies. As part of the NNI, DOE's Office of Basic Energy Sciences
(BES) has established five new Nanoscale Science Research Centers
(NSRCs) located at DOE laboratories. These five Centers, each housed in
a new laboratory building with new scientific equipment, are BES
national user facilities. The capital investment in these Centers is
roughly $100M each. CINT, with a facility in Albuquerque and another
one in Los Alamos, is one of the five NSRCs and is jointly operated by
Sandia and Los Alamos National Laboratory (Los Alamos). CINT has state-
of-the-art facilities staffed by laboratory scientists, post-doctoral
fellows, and technical support personnel. The four scientific thrust
areas of CINT are Nanophotonics and Optical Nanomaterials; Nanoscale
Electronics, Mechanics, and Systems; Soft, Biological and Composite
Nanomaterials; and Theory and Simulation of Nanoscale Phenomena. Users
can obtain access to CINT capabilities through a peer-reviewed
technical proposal for either independent or collaborative research
submitted through the web in response to semiannual Calls for User
Proposals. Precompetitive research that will be published in the open
literature can receive no-fee access to CINT, while proprietary
research can be conducted on a cost-recovery basis. CINT and the other
NSRCs provide one model for how federally funded nanoscale science
research can be pursued jointly with universities and industry. The
five NSRCs are now up and running and appear to be a success: CINT
alone has already approved and undertaken over 200 user projects, with
the in-kind labor of CINT scientists typically valued at 30K for each
project.
CINT and the other NSRCs provide another opportunity for
partnering--the establishment of new initiatives, programs, and centers
that seek to leverage the substantial investment in the NSRCs made by
DOE/BES. I would like to give two examples in this regard: the first is
the National Center for Solid State Lighting (NCSSL) headquartered here
in Albuquerque and the second is the Helios Project in Berkeley,
California.
Solid state lighting refers to the use of light-emitting diodes
(LEDs) to provide white light for general illumination in our homes,
offices, and stores. It is believed that in the next decade or two,
solid state lighting technology will reach energy efficiencies that are
ten times as high as incandescent bulbs and twice as high as
fluorescent lamps. If solid state lighting at that efficiency were to
replace all the incandescent and fluorescent lamps in the nation, the
result would be an overall reduction in the nation's electricity use of
10% and a drop in the national electricity bill of up to $50B. Further,
solid state lights do not contain toxic materials like the mercury
found in fluorescents. The technology for solid state lighting has been
rapidly advancing and products have recently become available that
exceed fluorescents in efficiency. However, it is believed that to
reach the ultimate efficiency and cost targets of solid state lighting,
breakthroughs in understanding the nanoscale science of LED materials
will be necessary.
The NCSSL, established in October of 2006, is a virtual research
center involving the five DOE NSRCs. Funded by the DOE's Office of
Energy Efficiency and Renewable Energy, the NCSSL program seeks to
build upon the investments made by the DOE/BES by performing targeted
research in nanotechnology in areas that could increase the efficiency
and lower the cost of LED-based lighting. Projects are selected from
the five NSRCs by a competitive proposal process. Sandia has been named
the Lead Laboratory in the NCSSL. With proposals from both Sandia and
Los Alamos, CINT captured 5 of the 7 projects awarded ($3.4M of the $5M
appropriated) in FY06.
This example shows how the emergence of new energy technologies can
be aided by leveraging existing investments and expertise, resulting in
the creation of something that is greater than the sum of its parts. In
this case one part of DOE was leveraging investments made by another
part. However, my second example shows that by involving state and
local government, it is possible to accomplish something that is more
visionary and much larger.
The Helios Project is an emerging research program, based at the
University of California-Berkeley and Lawrence Berkeley National
Laboratory, that leverages Berkeley's Molecular Foundry, their NSRC
equivalent to CINT, as well as their other R&D programs. The Helios
Project targets the research and development of new efficient processes
to produce transportation fuel from biomass or from solar-energy-driven
electrochemistry. Because of the broad and interdisciplinary
capabilities necessary for this bold and ambitious goal, the facility
is developing an innovative management plan for integrating the efforts
of leading scientists and engineers from disparate disciplines into a
single large program. Partnerships will be developed with researchers
from a broad base: universities, other national laboratories, and
industry. Funding for the project will be similarly broad-based: $500M
over 10 years has already been committed by industry (BP, formerly
British Petroleum), up to $70M may be provided by the State of
California, and up to $15M may be provided by private donors. The
federal government (through the DOE Office of Basic Energy Sciences) is
also playing a key role through the Molecular Foundry and a solar
energy research institute and will provide substantial funding. The
expectation is that the Helios Project will maximize the innovation and
scientific and engineering strengths of its researchers to produce
solutions to problems encountered on the route to efficient and
scalable solar fuels, on a time scale of five to 20 years.
The Helios Project in California is an excellent example of how new
approaches to managing and funding collaborative work can hasten
scientific breakthroughs and carry them through to the practical
applications that are required to resolve the energy issues facing our
nation and our planet. Of course, every state is different, and each
state must consider its unique needs, resources, and institutions.
Other examples of successful state-federal partnering include the DOE
Center for Nanoscale Materials at Argonne National Laboratory in
Illinois and the DOE Bio-energy Science Center at Oak Ridge National
Laboratory, which leverages $80M in state and private-sector sources.
It might be possible that New Mexico, building on the expertise of CINT
and other resources in the state, could undertake an emerging energy
initiative project of similarly bold scope.
STATE GOVERNMENT PARTNERING MECHANISMS
Continuing with examples that have worked, Sandia partners with the
State of New Mexico in the New Mexico Small Business Assistance (NMSBA)
program. In 2000 the New Mexico Legislature enacted a law that is both
innovative and unique among all states. enabling Sandia to use a credit
against taxes of up to $1.8M (this year it was increased to $2.4M at
Sandia and a similar program was initiated at Los Alamos) of its NM
gross receipts taxes each year to provide technical advice and
assistance to New Mexico small businesses. Requests can be made through
the web and assistance can take the form of consulting, testing, and
accessing Sandia's unique facilities. This program has been quite
successful (the following data is cumulative for 2001-2005): returning
greater than $17M in economic growth in NM (combined increase in
business revenues and decrease in operating costs) on an investment of
$9M; creating more than 450 jobs at an average salary twice the state's
mean salary prior to this program; generating $13M in new tax revenues;
and increasing the investments in NM goods by more than $8M. Since its
creation by the Legislature, NMSBA has assisted over 1500 small New
Mexico businesses. By design, the cost of assistance rendered cannot
exceed $10K/company/year in urban communities and $20K/company/year in
rural communities to assure that Sandia will help companies solve
difficult technical problems but avoid becoming the R&D arm of the
company.
However, to support sustained collaborations with companies
entering the emerging new energy technologies market, a different model
is needed that allows R&D investments of larger size. Governor
Richardson's Energy Innovation Fund, created during the 2007
legislative session, is precisely the kind of program that will help to
incubate new green energy technology businesses in New Mexico. The fund
was established with a $2M appropriation to accelerate innovation for
faster commercial adaptation of clean energy technologies in the state.
Projects are required to involve partnerships between private and
public sectors, with at least one of the principals being a New Mexico
entity. Selections of the first five projects in this program were
announced by the Governor last month.
LOCAL GOVERNMENT PARTNERING MECHANISMS
Another example of a relationship that has worked very well on the
local level is the Sandia Science & Technology Park (SS&TP), a 250-acre
technology community located adjacent to Sandia in southeast
Albuquerque. The SS&TP is a public/private partnership originally
initiated in 1998 by Sandia National Laboratories, Technology Ventures
Corporation, and the City of Albuquerque. Today the partnership
includes Albuquerque Public Schools, BUILD New Mexico, the New Mexico
State Land Office, the Economic Development Administration, the State
of New Mexico, Bernalillo County, the Public Service Company of New
Mexico, and the Mid-Region Council of Governments. The benefit of the
Park to Sandia is that it facilitates joint R & D, technology
commercialization, business development, and supplier relations. The
benefit to our federal, state, and local governments is that the Park
creates jobs--and not just any jobs, but high-paying, technology-based
jobs. Companies benefit from their close physical proximity and access
to Sandia's world-class technologies, state-of-the-art facilities, and
internationally recognized scientists and engineers. The Park is widely
recognized for its notable results--24 tenants, 1500 people, and $260
million of investment. Perhaps an even more important result is that
the average annual salary for each job in the Park is $62,000, compared
to $37,000 for each job in Albuquerque.
EMCORE is a fine example of a successful company at the Park. They
built their first facility there in 1998, a 50,000 sf building to house
their Photovoltaics Division, a division built on technology that was
licensed from Sandia. Over the years they have licensed even more
Sandia technologies and they have continued to add facilities and
continued to add jobs. They now have over 175,000 sf of space and
almost 500 employees at the Park.
IDEAS FOR BOLD MOVES FOR THE FUTURE
I have been discussing some of the partnering and relationship
mechanisms that have worked well from Sandia's perspective in reducing
barriers to the growth of emerging new high-tech energy technologies.
At this point I would like to suggest a few ideas for additional things
that might be tried to further encourage the emergence of new energy
technology development in New Mexico and in Albuquerque.
FEDERAL
Let me first address the federal level. As we have discussed,
CRADAs have been a tremendously successful mechanism for technology
transfer. However, it is often the case that a business will have
insufficient funds to pay for a 100% funds-in CRADA; under this
agreement, the business would pay laboratory scientists, engineers,
technologists, and other laboratory staff to conduct research on their
behalf. This is prohibitively expensive, especially for the bold, high-
risk, high-payoff research that will be necessary to develop
revolutionary new energy technologies to address the daunting energy
challenges facing us. In these high-risk cases, it would be greatly
advantageous if Sandia and its industrial partner could apply jointly
to the government for joint project funding, with an appropriate amount
of matching funds provided by the business. However, funding currently
available is often restricted so that it cannot be used in this way.
For instance, joint projects between labs and businesses cannot be
undertaken through funding for the National Center for Solid State
Lighting. To further complicate research partnerships with industry,
these NCSSL projects are subject to an ``exceptional circumstances''
determination with respect to Bayh-Dole, making it difficult to grant
exclusive licenses to individual businesses. CRADA activity would
likely be stimulated if DOE were to provide funding mechanisms
specifically for the development and transfer of emerging energy
technologies through joint research by labs and industry.
STATE
On the state level, we are extremely fortunate to have a Governor
who is taking bold steps to position the state for a leadership role in
the energy technologies of the future. New Mexico's Renewable Energy
Transmission Authority (RETA) Act, which just took effect last month,
establishes the nation's first state-level financing authority
dedicated to developing the towers, transmission lines, and other
infrastructure that will be needed to carry electricity produced by
renewable sources to consumers in New Mexico and other states. This
positions our state to continue to develop its renewable energy source
businesses to supply demand throughout the west, raising our economic
prosperity.
We should also acknowledge the leadership of the State of New
Mexico in the development of an ecosystem for high-performance
computing through the implementation of the New Mexico Computing
Application Center. This will be a partnership among New Mexico
national labs and academic and industrial entities. A total of $14
million has been committed by the State of New Mexico this year.
We also have two DOE national laboratories here in New Mexico, each
with world-class facilities and staff and unique R&D expertise. In
addition, we have excellent capabilities in many relevant fields at the
University of New Mexico, New Mexico State University, and New Mexico
Tech. Together, these assets provide enormous advantages to the State
of New Mexico in its pursuit of energy technology leadership. I'd like
to mention a couple of ideas to consider.
Of course, if there were to be a Helios-like project established in
New Mexico, it would be highly desirable to have strong state
participation. By contributing funding to the project, the State of New
Mexico could not only add to the size, momentum, and scope of the
activity, but also could help set strategic directions that are
tailored to the labs' areas of expertise, complementary to existing New
Mexico high-tech industry, and in line with the state's strategic goals
for its future energy technology economy. Strong state participation is
necessary to make this a true partnership and to ensure there is
maximum leverage and benefit to all stakeholders. A large local/state/
federal joint energy initiative project for New Mexico will be a large
undertaking and likely to take some time to initiate. So the time to
start discussing this is now. We might want to consider some smaller
jump-start activities to get the ball rolling.
One possibility would be to utilize the existing user facility
infrastructure--the arrangements for lab visitors, the proposal call
and peer review mechanism, etc.--to start a special category of
industrial and university user projects at CINT. This would involve a
special pot of money set aside for collaborative projects on emerging
nanoscience-enabled energy technologies, leveraging DOE's investment in
the facilities at the CINT.
A second way in which the state might reduce barriers to emerging
energy technologies is to establish an institution modeled after the
New York State Energy Research and Development Authority (NYSERDA).
NYSERDA is a public benefit corporation created in 1975 by the New York
State Legislature. One of the things NYSERDA does is support basic
research projects to help New York's businesses and municipalities with
their energy-related challenges. Since 1990, they have successfully
developed and brought into use more than 170 innovative, energy-
efficient, and environmentally friendly products, processes, and
services. These R&D activities provide funds to municipalities and
emerging businesses for development in areas such as photovoltaics,
wind power, electrical grid technologies, improved high-efficiency
vehicles and transportation systems, water management and treatment,
building envelopes, and solid state lighting. NYSERDA's research budget
of roughly $30M per year is provided by a combination of assessments on
intrastate sales by investor-owned electric and gas utilities,
voluntary contributions by the New York Power Authority and the Long
Island Power Authority, and limited corporate funds. These
contributions to New York's economic growth, energy efficiency, and
environmental protection come at a cost of only $0.70 per year for each
New York resident. In addition, the gravity and heft of NYSERDA's
program has helped attract matching funding; its Energy Efficiency
Services program is federally funded and working with over 500
businesses, schools, and municipalities to identify and adopt existing
technologies to reduce their energy costs.
It seems to me that if New Mexico plans to be a leader in growing
emerging energy technologies, to reduce the consumption of non-
renewable resources by New Mexicans, and to safeguard our enchanting
southwestern environment, we might do well to consider establishing a
similar institution for New Mexico, adapted to our state's own unique
needs and conditions. RETA, the Governor's Renewable Energy
Transmission Authority is already a major step in this direction. RETA
might be expanded in scope and could be made a partnership between DOE
and the State's Energy, Minerals, and Natural Resources Department, so
as to encompass the area of energy storage, where Sandia has specific
capability as manager of DOE's Energy Storage Program.
Another possibility is to broaden the State's Rail Runner
initiative by planning for the next generation of high-speed trains
using Sandia and Los Alamos expertise in traction, energy storage, and
electricity transmission. High-speed trains could link Las Cruces to
Santa Fe and extend westward to Grants and Gallup to further catalyze
economic growth in the State.
LOCAL
On the local level, I would also like to suggest a couple of ideas.
First, I want to commend the Mayor for his leadership in establishing
the AlbuquerqueGreen Program. This innovative program has a number of
bold components, such as the commitment to make Albuquerque the most
bicycle-friendly city in the Southwest, making sure all newly purchased
vehicles run on alternative fuels, changing city operations to reduce
greenhouse gas emissions by 67%, and promoting the growth of green-tech
companies. I would also like to congratulate the Mayor and the City of
Albuquerque on winning the Climate Protection Award from the United
States Conference of Mayors for this program. Events like this one that
raise awareness of the singular importance of energy to the future of
Albuquerque, New Mexico, and the nation serve to underscore the Mayor's
leadership in this area. It is a very exciting time.
Some additional ideas that the City might consider are both
symbolic and practical. (I suspect that many of them may already have
been discussed.)
First, Albuquerque could declare itself as the Energy City
of the Future, defining a blueprint for energy-smart
neighborhoods and commercial developments such as the
``Jefferson Green Project,'' but going beyond that to
incorporate advanced distributed generation, energy
conservation, and transportation technologies at the City
subdivision-development level. The City might also consider
setting targets for incubating emerging energy technology
industry within the Rio Grande corridor.
Second, the City might wish to designate an Energy Czar,
reporting directly to the Mayor, who is responsible for
developing and implementing this vision of the Energy City of
the Future through specific funding mechanisms that blend
federal, state and City of Albuquerque resources. The Czar
would also serve as the official liaison on energy issues with
the State government, the New Mexico Congressional delegation,
the state universities, and Sandia and Los Alamos, our two
national laboratories. This Energy Czar would serve as a rapid
and efficient conduit of communication between these
stakeholders and could help to coordinate future bold actions
in this arena.
Third, the City might consider implementing integrated
energy efficiency, renewable energy, and distributed generation
technology demonstration projects that can be installed at
pilot sites like the Sandia Science and Technology Park (SSTP)
or Mesa del Sol. These should be high-visibility projects that
showcase these technologies in a ``real-world'' environment and
attract national attention to the City's leadership position in
energy and the environment, leveraging the expertise at the
national labs.
One opportunity currently exists at the SSTP. Sandia, the City of
Albuquerque, and the State of New Mexico have been discussing ways to
convert the closed landfill in Phase II of the Park into a source of
energy. Imagine all of us, including the federal government, working
together to create a demonstration project that converts this landfill
gas into a heating source for companies at the Park.
Solid state lighting installations in interior public spaces are
another possibility. Because solid state lighting has been used mostly
as traffic lights or as exterior architectural lighting (e.g., the
Empire State Building), an interior installation would be relatively
new and likely to attract national attention, if implemented on a
sufficient scale. Possible spaces for such a demonstration project are
City government offices, the Rail Runner train station, or even the
Albuquerque International Sunport.
SUMMARY AND CONCLUSION
Challenges to supporting the growth of emerging energy technologies
revolve around establishing good communication between federal, state,
and local government entities and incubating strong partnerships to
take bold action. Examples of how large partnerships might work are
provided by the Helios Project in California and by the New York
State's Energy Research and Development Authority. While these
initiatives were established in much larger states with considerably
greater economic resources, I feel that New Mexico has other
advantages--namely, two large national laboratories with great
technical expertise, universities with both requirements and interest
in energy research and development, an expanding high-technology
business climate, and an outstanding commitment to emerging energy
technologies on the part of its two Senators, its Governor, and the
Mayor of its largest city. Sandia is equally passionate about future
energy technologies and stands ready to support this initiative in any
way possible. I would also like to invite the Congressional delegation,
the Governor, and the Mayor to come and visit the Center for Integrated
Nanotechnologies' Core Facility here in Albuquerque and to learn about
the ways we are harnessing nanoscience for future energy technologies.
Mr. Chairman, thank you for your long-standing vision and
leadership in introducing legislation to support energy efficiency and
renewable energy technologies and for convening this hearing today.
Thank you.
The Chairman. Thank you very much. Dr. Hou, go right ahead.
STATEMENT OF HONG HOU, Ph.D., PRESIDENT AND CHIEF OPERATING
OFFICER, EMCORE CORPORATION, ALBUQUERQUE, NM
Mr. Hou. Thank you, Senator and Mr. Chairman, for inviting
me to testify on this very important subject. It is important
to our country, important to our community. Apparently it is
very important throughout the private sector as well.
As you know EMCORE with its headquarters moved to
Albuquerque at Sandia Science and Technology Park. We offer a
broad portfolio of compound semiconductor based product for
broadband and fiber optic telecommunications networks and high
efficiency multijunction solar cells and systems for space and
terrestrial solar power applications.
Nine years ago EMCORE licensed advanced solar cell
technologies from Sandia National Laboratories and National
Renewable Energy Laboratory. We successfully commercialized
them for a variety of commercial and defense applications.
Today EMCORE is a world leader in high efficiency
multijunction solar cells. We utilize the same technology
combined with focusing optics to produce concentrated
photovoltaics or CPV systems today. We have successfully
demonstrated approximately 40 percent conversion efficiency and
a 500 X concentrated illumination.
So this technology offers a significant advancement in
conversion efficiency over traditional photovoltaic technology
with a typical efficiency of six to 20 percent. It is uniquely
produced in the United States. So we believe you will be the
most competitive solar photovoltaic in the future.
Over the last decade, EMCORE has invested over $100 million
to develop and manufacture this emerging technology here in New
Mexico. We have created approximately 500 new jobs in
Albuquerque. More than half of the employees in our Albuquerque
campus work in the photovoltaic and solar power divisions.
So my comments today are targeted to a segment of the
renewable energy industry. That is the fastest growing energy
technology in the world; namely, grid connected solar
photovoltaic technology. We have observed this growth and
believe it is a direct result of the policy driven support
mechanism that other countries primarily European countries
have established.
So as a producer of advanced and emerging renewal energy
technology, we have a unique perspective on the obstacles that
needs to be overcome to achieve success. So we have some
recommendations in how the government can help. Also we can
talk about, you know, how the private sectors like EMCORE can
give back.
Also in a perfectly level playing field of energy, we ought
to consider the cost of economic, social, and environmental
impacts. But we do realize that we need to be economically
competitive in renewable energy. So accordingly EMCORE
continues to devote substantial resources to develop
technologies to enable a new generation of solar powered
systems based on high efficiency concentrated photovoltaics.
We believe this approach will result in the most cost-
effective energy derived from solar power. However, no single
company is structured to bear all the risks and costs
associated with the deploying new energy technologies.
Especially for the emerging concentrated photovoltaic or
CPV technology, we're commercializing. There is in our view a
``first mover penalty.'' Due to the emerging nature and the
lack of heritage, we are often asked by our customers to
guarantee the performance and an even energy saving revenue
stream over 20 to 25 years. So this clearly is beyond our
capability. It becomes prohibitively difficult to deploy in the
United States.
On the other hand, what we have seen in Europe is
government sponsored strong incentive mechanisms. Guaranteed
electricity purchases as high as 60 cents per kilowatt-hours
for 20 to 25 years for solar photovoltaics has provided price
surety and risk return for investors. This type of investment
is competitive with any other investment options.
So the U.S. in our view needs a similar risk targeted
policy to attract investment in emerging technology. There are
other financial considerations we can talk about. For example,
Jerry talked about and Rusty talked about the consideration of
capital grants to mitigate higher cost for first movers, a
duration that allows investors to recoup their investments, and
financial measurement and control that reduce price support
over time as emerging technologies mature and late movers come
to market.
An additional first mover penalty is achieving project
financing for the first large-scale project. Market acceptance
requires heritage. But heritage requires a first mover to
provide an acceptable risk profile in project financing. The
government backing to lenders and warranty or insurance support
are major risk mitigation benefits for the first project.
Beyond the first project, the industry needs Federal as
well as State renewable portfolio standards that are achievable
and enforceable to permit a sustainable business environment.
So as the mayor talked about, here in Albuquerque we have
excellent solar resources. We have Sandia National Labs and
world premier energy research institutions, we have EMCORE and
Advent Solar and high tech photovoltaic technology companies.
With our tradition to explore renewable energy, we can
really mine gold out of the wonderful blue sky with its high
direct normal irradiance. The project support from the local
government can take the form of access to the land for
deployment.
Project support from the State government can take the form
of connection to a facility that can use the power generated
from the project. Project support from the Federal Government
can take the form of a financial support mechanism to the
project financer.
As for the long term, cooperation between the State and
Federal Government can take the form of renewable portfolio
standards that are enforceable.
How can industry contribute? Industry can give back and is
anxious to do so in the form of job creation. To talk about
EMCORE's history, in the last 9 years, we have created over 500
jobs in Albuquerque. But in Europe this is already happening
related to photovoltaics. Spain reported a net job creation
from 2005 to 2010 is over 9,000 for only 350 megawatts of
deployment.
The European Photovoltaic Industries Association reports
that due to strong feed-in tariff support in Germany for
deployment of 750 megawatts of solar photovoltaics, over 20,000
jobs supporting the solar power industry were created in 2006
alone.
This job creation can happen in the U.S. as well with the
support for solar photovoltaics. Only our government can
recognize that renewable energy is necessary, not just a
discretionary good.
I would like to thank the committee and the chairman for
providing me the opportunity to testify and deeply appreciate
your interest in supporting emerging energy technology
development in commercial deployment. Thank you very much.
[The prepared statement of Mr. Hou follows:]
Prepared Statement of Hong Hou, Ph.D., President and Chief Operating
Officer, Emcore Corporation, Albuquerque, NM
Thank you, Mr. Chairman and the members of the Committee for
inviting me to testify today on a subject that is of great importance
to the nation, namely finding pathways for Federal, State and Local
governments to enable US companies to accelerate the development and
deployment of emerging energy technologies.
My name is Hong Hou, and I am the President and Chief Operating
Officer of EMCORE Corporation. EMCORE, with its headquarters located in
Sandia Science and Technology Park in Albuquerque, New Mexico, offers a
broad portfolio of compound semiconductor-based products for broadband
and fiber optic telecommunications networks and high-efficiency, multi-
junction solar cells and systems for space and terrestrial solar power
applications. Nine years ago, EMCORE licensed advanced solar cell
technologies from Sandia National Laboratories and National Renewable
Energy Laboratory, and successfully commercialized them for a variety
of commercial and defense applications. Today EMCORE is the world
leader in high-efficiency multi-junction solar cells. We utilize the
same solar cell technology, combined with focusing optics, to produce
Concentrator Photovoltaic (CPV) systems. We have successfully
demonstrated approximately 40% conversion efficiency under a 500x
concentration. This technology offers a significant advancement in
conversion efficiency over traditional photovoltaic technologies and is
uniquely produced in the United States. We believe it will be the most
competitive Solar Photovoltaic technology in the future.
Over the last decade, EMCORE has invested over $100 million to
develop and manufacture this emerging technology here in New Mexico. We
have created approximately 500 new jobs in Albuquerque. More than half
of the employees in our Albuquerque campus work in our Photovoltaics
and Solar Power Divisions.
My comments today are targeted at a segment of the renewable energy
industry that is the fastest growing energy technology in the world,
Grid Connected Solar Photovoltaic Technology. We have observed this
growth and believe it is a direct result of the policy-driven support
mechanisms that other countries, principally European, have
established.
The U.S. electricity system is built around fossil fuels and this
may be true for many years to come unless a more significant shift in
gas prices occurs. According to a recent AEO (Annual Energy Outlook)
Report, out of 4,100 Billion KWhr power generated in 2006, renewable
energy, excluding hydro power, accounts for only 2.7%, and solar power
accounts for less than one four-thousandths. So there is plenty of room
for improvement. EMCORE's Solar Photovolataics developments are
responding to the market factors of increasing energy costs and
worldwide interest in this energy sector. As I mentioned, Grid
Connected Solar Photovoltaic Technology is the fastest growing energy
technology in the world.
As a producer of advanced and emerging renewable energy technology,
we have a unique perspective on the obstacles that need to be overcome
to achieve success. We have some recommendations for how government can
help, and what EMCORE can give back.
Although, in a perfectly level playing field of energy, we ought to
consider the costs of economical, social, and environmental impacts, we
recognize that we need to be economically competitive in renewable
energy. Accordingly, EMCORE continues to devote substantial resources
to develop the technologies to enable a new generation of solar power
systems based on high efficiency concentrating photovoltaics. We
believe that this approach will result in the most cost effective
energy derived from solar power. However, no single company is
structured to bear all of the risks and costs associated with deploying
new energy technologies. Especially for the emerging CPV technology we
are commercializing, there is, in our view, a ``First Mover Penalty.''
Due to the emerging nature and lack of heritage, we are often asked by
our customers to guarantee the performance and an even energy-selling
revenue stream over 20 to 25 years. This becomes almost prohibitively
difficult to deploy in the US. What we have seen in Europe is
government-sponsored, strong incentive mechanisms. Guaranteed
electricity purchases as high as 60 cents per kilowatt-hour for Solar
Photovoltaics over 20 to 25 years have provided price surety and risk
return for investors competitive with their other investment options.
The U.S needs similar risk targeted policy tools to attract investment
in emerging technologies. Other key financial considerations are:
Price surety that allows risk returns competitive with other
investment options.
Consideration for Capital Grants to mitigate higher cost for
first movers.
Duration, which allows investors to recoup their
investments.
Financial measurement and controls that reduce price support
over time as emerging technologies mature and late movers come
to market.
An additional First Mover Penalty is achieving project financing
for the first large-scale project. Market acceptance requires heritage;
and heritage requires the First Mover to provide an acceptable risk
profile for project financing. Government backing to lenders and
warranty backup or insurance support are major risk mitigation benefits
for the first project.
Beyond the first project, the industry needs Federal as well as
State Renewable Portfolio Standards (RPS) that are achievable and
enforceable to permit a sustainable business environment. Large-scale
grid connected PV deployments require efforts to overcome regulatory
bias in rates which impact technology choices. Public Utility oversight
resists cost recovery of capital on renewable energy.
Government agencies can uniquely capture the public value renewable
energy; and cooperation between federal, state and local governments
can be key to viability of emerging energy technologies.
With these,
Our technology risk can be reduced by market factors such as
higher energy prices, which stimulate private investment in
renewable energies,
Our market risk can be reduced by incentive mechanisms,
which provide defined and stable returns for investors, and
Our execution risk can be reduced when project lenders whose
confidence in emerging technologies can be aided by credit
enhancements such as loan guarantees or warranty backups.
Here in Albuquerque we have excellent solar resources: Sandia
National Labs as a world premier energy research institution, as well
as EMCORE and Advent Solar as high-tech photovoltaics technology
companies. With our tradition to explore renewable energy, we can mine
gold out of the wonderful blue sky with its high direct normal
irradiance. Project support from the local government can take the form
of access to land for deployment. Project support from the state
government can take the form of connection to a facility that can use
the power generated from the project. Project support from the Federal
government can take the form of a financial support mechanism to the
project financer. And for the long term, cooperation between the State
and Federal Governments can take the form of Renewable Portfolio
Standards that are enforceable.
How can industry contribute? Industry can give back and is anxious
to do so, in the form of job creation. In Europe, this is already
happening. Spain reports that net job creation from 2005 to 2010 is
9,186 with over 360MW of Solar PV to be installed. The European
Photovoltaic Industries Association reports that due to strong feed-in
tariff support in Germany for the deployment of 750MW of Solar PV,
18,000 jobs supporting their solar power industry were created in 2006
alone. This job creation can happen in the US as well with support for
Solar Photovoltaics.
With cooperation between government agencies, emerging technologies
can reach this success. Right here in Albuquerque, innovative
technologies are emerging; and sustainable employment can be created
here at home.
In summary, policies that encourage local industry development
rather than international job creation should be a significant
priority. Policies that create surety for investors will enable
renewable energy deployment. Finally, simplicity of policy
implementation will accelerate the deployment of solar energy, create
jobs, and contribute meaningful renewable energy over the long-term.
These simple polices are:
Price and duration surety.
Financial support to encourage project financing for
emerging technologies.
Enforceable RPS.
Only our government can recognize that Renewable Energy is
necessary--not a discretionary good. I would like to thank the
committee for providing me the opportunity to testify and deeply
appreciate your interest in supporting the emerging energy technology
development and commercial deployment.
I am prepared to answer any questions you may have.
The Chairman. Thank you very much. Thank you all very much
for your testimony. Let me just start by asking Doug Smith
about your four suggestions.
One of the first was that we, the government, can help with
technology demonstration. Can you give us some examples of what
you see or an example of what you see that the government could
do to help demonstrate some of the technologies that you've
developed on a large scale basis?
You indicated that our vending machines in the Senate are
out of date. I agree with that. Are there some other things
like that that the government could take the lead on
demonstrating the cost savings that can be achieved through use
of your technology?
Mr. Smith. Absolutely. I should say some of that is ongoing
already. We're working with the EPA smart waves program already
on reefer trucks. But again they don't really have much funding
to support demonstration programs. They're just trying to
actually bring together people in the private sector to do it.
What we were thinking of is much more of a larger scale
effort combined with a large pull-through customer such as a
large retailer which has a large reefer fleet to have them
outfit them and actually collect data independently from, you
know, universities or someone who will then they will report
all that data back.
A lot of what we do is we generate data on how insulation
helps a reefer truck or a refrigerator in your house. But it's
much more like the DOE program with domestic refrigerators back
in the eighties, where they subsidized the cost of
refrigerators that were much more efficient. Then generated the
data to show, yes, you really can save that energy over the
life cycle of a refrigerator.
The Chairman. I'm wondering, on the point about how the
government can provide an essential help or a service by doing
good independent analysis of the data. I guess that could
happen not just with government funded projects but even--I
mean if you're doing something for Wal-Mart or you're doing
something for some commercial entity, your ability to replicate
that and to sell it to others depends upon having good
independent data on how much has been achieved by virtue of
that use of that technology.
Is there a role for government in that even in analyzing
the data that's derived from private sector activities?
Mr. Smith. There is. But it's more difficult to do. We've
been trying to do that now. The issue is if I'm let's say at
Wal-Mart, I don't really want that data published so my
competitors can see that data unless I get something for it.
So if I'm taking all the risk as the first mover, putting
the money into the insulation, doing the project, it's really
that, why would I want to share that data with my competitors.
The Chairman. You say there are some examples, though,
where the Federal Government has similar needs for this
technology which could be properly analyzed and independently
reported on.
Mr. Smith. Absolutely. The military is a perfect example.
It has a large number of cold storage facilities around the
world, where again it's gotten a lot of public attention
recently obviously in warm parts of the world.
The military would be a perfect example of doing some
demonstration projects where they could then monitor it also.
The Chairman. All right. I think that's useful, a useful
suggestion.
Rusty, let me just pick up on your point about aligning
national energy policy with economic development policy at the
State and local level. I think that's a good way to formulate
or frame that.
I guess part of what we have--there's a combination of tax
provisions plus direct regulatory provisions that sort of
create these incentives that are present in some of our other
countries, in Europe in particular, and not present here.
Maybe you can elaborate a little more on this feed-in
tariff and how that works. I think maybe people aren't entirely
familiar with that. That's something that I've just gotten
educated about because of your good help over the last year or
so.
If you could describe how that works and what kind of tax
and how that compares to the tax incentives or lack thereof
that we have in this country.
Mr. Schmit. I would be happy to, Mr. Chairman. I'll use
Germany as an example, in which the German government driven by
the concerns about climate change and driven by the
population's concerns about an additional nuclear and coal
power plants decided that renewable should be a major part of
their energy source portfolio.
But in order to do that, they had to overcome the large
hurdle of the upfront costs of solar photovoltaic systems. So
they implemented a program in which all the ratepayers in the
country pay a very, very small additional fee to the utility
companies.
The utility companies in turn take that additional money to
pay people who generate electricity from solar panels a higher
rate than what you would normally pay to the utility company.
To put that into--quantify that, typical in U.S. dollars,
typical rates that a homeowner pays for their electricity in
Germany are about 20 cents per kilowatt hour.
On the contrary, if you put solar panels on your home, the
German utilities will pay you on a sliding scale about 60 cents
per kilowatt hour for that electricity because that is, in
fact, the value to the country for that power. So they're
trying to level the playing field for a new emerging technology
by providing this market pull of a guaranteed rate for that
electricity over some long period of time.
Because that feed-in tariff is then guaranteed, the banks
finance the upfront costs and pay back to the homeowners a
reasonable amount of years, even in Germany which doesn't have
the sunshine that we have here in the Southwest. It makes it
financially attractive and solves the need for clean energy in
that country.
The Chairman. Contrast that system you just described with
the efforts we're making here to try to provide some tax
incentives to encourage use of alternative fuels, use of
photovoltaic cells, if you could.
Mr. Schmit. Certainly the tax credit that was proposed in
as I understood it Senate bill 590 was three or $3.50 per watt
tax credit is an upfront credit to the purchaser of a system.
So if I as a homeowner put in a system and spent $15,000
for that system, then I would get about one-third to 40 percent
of that back in the form of this tax credit. However, that's
not immediate. So it still requires the upfront purchase to
come out of my pocket.
Then I benefit from the offset to buying electricity. But
it's a little bit more cumbersome system. However, we recognize
certainly the regulatory environment in this country over all
the multitude of utility companies, public and co-ops, is much
more difficult to negotiate a feed-in tariff type of program.
But a combination I believe of a renewable portfolio
standard in which the Federal Government imposes a certain
percentage of every utility company's generation come from
renewables with tax credits and other incentives like that to
help offset the cost, although not as streamlined as a feed-in
tariff, it could provide definitely the market stimulation that
we need in this country.
The Chairman. So one way to look at the renewable portfolio
standard, at least as I'm sort of divining from what you're
saying, is it's an indirect way to get to the same point as you
have with a feed-in tariff.
But it does show by providing much more flexibility to the
individual utility as to how they're going to generate that
energy from renewable sources. They could do that by changes in
the rate structure, they could do that by purchasing the power
from someone else who is producing it from renewable sources.
They have a lot of ways to meet it. It's less prescriptive than
a feed-in tariff would be.
Mr. Schmit. That's correct. It allows the market to sort of
define the best way to do that. I think a key element to make
that successful as you well know, Senator, in this country is
in areas that don't have abundant renewable sources, as you
said allowing them to buy from others that do.
Creating that mechanism for interstate transmission of
renewable energy and allowing that to be part of their
renewable portfolio I think is a key mechanism to make that
work.
The Chairman. OK. Do you see the growth in demand for
photovoltaic cells in this country growing substantially? I
mean the chart, the first chart you put up, and I guess all
these charts show how much more usage there is and purchasing
there is of photovoltaics in Germany and in Japan than in our
own country in real terms, not just relative to the size of our
economies, but in real terms.
Do you see that changing or do you see them moving ahead
faster than we are still?
Mr. Schmit. Yes to both. It is growing in this country. But
the other countries are growing much, much faster. One of the
points that I was trying to convey in the testimony is that,
through the various programs and policies that those countries
have put in place, not only are they solving their energy
needs, but they have taking this industry over.
The U.S. led this industry 20 years ago. Today, as you
think see on the charts, the U.S. has been growing very slowly.
Other countries have been growing very, very quickly,
generating many jobs, taking over the industrial leadership as
they have in other industries in the past.
The most recent country to come into play is China just
over the last two or 3 years. Many new Chinese solar companies
are in operation, many of them have actually gone public on the
NASDAQ. So it's U.S. investor base that is helping to finance
these. That's the sort of thing that we compete with.
The U.S. market is growing. In a normal sense, you might
say it's growing healthfully, maybe 30, 40, 50 percent per
year. But Germany is growing by almost two X per year.
The Chairman. Now the growth in this industry in China I
presume is a result of the low cost of manufacture that they
enjoy in China for everything, whereas the growth in this
industry in Germany or in Japan is not driven by the low cost
to manufacture but rather by conscious government policy to
promote the transition of the economy to more use of this
technology, is that a fair statement?
Mr. Schmit. That's correct, that is a fair statement.
The Chairman. Jerry, let me ask you, on some of your good
suggestions, could you elaborate a little more. You talked
about these public/private projects or partnerships that have
evolved or developed around the country around these five
nanoscale centers and suggested that we should consider here in
New Mexico.
As I understand what you're saying, we should consider a
combination solid state lighting and photovoltaic effort; is
that right? Can you elaborate on exactly what you have in mind
there?
Mr. Simmons. I think if we could try to establish something
similar to what's been done at some of the other nanoscience
centers, that could really be an exciting opportunity for the
State and for the two national labs and for the Federal
Government.
A lot of the other centers that have been established are
looking at alternative fuels or biofuels. We have expertise in
that area. But one thing that I think New Mexico has that the
other centers don't have is the expertise in semiconductor
technology.
So we could fill a very nice gap nationwide in emerging
technology in the semiconductor area. Solid state lighting,
Sandia is by far the leading national lab in the country in
this area. We have partnerships with businesses and with the
DOE. I think that we could do something very substantial there.
I think lowering the cost and improving the efficiency of
photovoltaics is also an area that we could contribute to. I
don't mean to rule out other emerging technology areas. But I
think those two stand out as an opportunity.
The Chairman. What would be needed by way of a structure or
collaboration that is not currently existing? I mean it seems
to me you have your center for solid state lighting. We have
CINT. There are I think you said a couple of hundred projects
currently going on at CINT with private entities as I
understand it?
Mr. Simmons. Most of the projects of CINT are with
universities.
The Chairman. Oh, they are?
Mr. Simmons. Yes. So we're trying to grow the projects to
increase the number of projects with businesses. They also tend
to be rather small in scale.
The performance of the facility will be judged by number of
users. The projects tend to be on the order--have value of 20
to 30 K per project. I think the investment needed for major
revolutionary advances in emerging energy technology are larger
than that.
One opportunity I think is the new America Competes Act
that was passed last week through the leadership of yourself
and Senator Domenici. That Act proposes that there be--or
mandates that there be up to three discovery institutes located
at national laboratories that provide up to $10 million a year
for emerging energy technologies.
I think--and it also specifies that this be partnership
arrangements with State and local governments and businesses.
So I think that could be an outstanding mechanism to get
something major started if the community here in New Mexico can
pull together and put together a strong proposal in this area.
The Chairman. In the private sector in this area of solid
state lighting, is there a consortium of companies that is
working together to advance the technology or are they just
independently doing whatever they can do to advance the
technology?
Mr. Simmons. I would say that there are aspects--that they
are cooperating in some ways. There's a body called the Next
Generation Lighting Initiative--Industrial Alliance, Next
Generation Lighting Industrial Alliance which is working with
the DOE to help them shape their solid state lighting program.
They do compete fiercely with one another. So one of the
things we've found is when we seek to establish partnerships
with companies, if the mechanisms are such that the IP has to
be provided to the competitors, then the companies are
reluctant to work with us. They feel like their crown jewel
secrets might be given up to the competitors.
The Chairman. Dr. Hou, let me just ask you, I think it's
remarkable the technology that you've developed at EMCORE. As
you point out, you've got 40 percent efficiency conversion?
Mr. Hou. Yes, and 500 X concentrates, yes.
The Chairman. Yes. Explain that second part a little better
for me. Maybe everybody in the audience understands it. I don't
understand it that well. I understand 40 percent efficiency
conversion. Tell me about the 500 X concentration.
Mr. Hou. Yes. In that broader category, there's three
technology categories for solar photovoltaics. Silicon, that's
what Advent Solar is doing. It had a conversion efficiency of
typically about 20 percent. The second class is thin film
technology, a multi-silicon cadmium telluride, its conversion
efficiency about 6 to 9 percent.
Our technology, we use triple junction advanced solar cell
originally developed for space applications. But it's too
expensive to populate a whole area. So what we do is using
cheaper optics to get the light, solar light velocity focusing
to a smaller area.
We put our solar cell only at a focal point. But, you know,
it essentially would generate the electricity for the whole
area of illumination. So that way we can reduce the cost and
make the system more cost competitive.
So the 500 X is now significantly in that way. The 40
percent of convergency is, you know, the indirect comparison to
the 20 percent generated by silicon.
The Chairman. So as far as cost per kilowatt hour of
electricity produced, is what you can do with your technology
in any way competitive with regular photovoltaic technology?
Mr. Hou. Yes. So, for example, the silicon solar panels
these days, you know, it costs about $3.50 to $4 per kilowatt--
per watt. Our technology, you know, we go to the market with
about $3 to 3.25 per watt. So it's more cost competitive.
Per area basis, you know, we generate more power because at
a module level we can get about 30 percent conversion
efficiency compared to 18 percent conversion efficiency of
silicon. So we generate about twice as much power per unit area
because of the technology.
The Chairman. So what is the main market for the technology
that you have developed, is it going to always be sort of the
high end space technology kinds of applications or I mean can
this be used in normal residential/commercial power needs? What
is the main market?
Mr. Hou. Senator, this is designed for terrestrial
applications and because of the concentration, we have to have
the mechanism to follow the satellite. So we have to have the
tracking mechanism.
So it's probably not the best use for commercial--for
residential application. You don't want to put a sun tracker on
your rooftop. But, you know, it's perfect for medium size and
large size utility, you know, solar park commercial
applications.
The Chairman. What are the largest applications that are
currently operating? Are there some demonstrations of this that
are commercial scale?
Mr. Hou. Yes. This is the very dilemma we are facing. This
is an emerging technology. So we are the first mover to this
technology. Currently the photovoltaics is--probably silicon is
the mainstream. Ninety percent of the market is served by
silicon solar panels, the other 10 percent is by thin film.
The concentrator photovoltaic is an emerging technology.
EMCORE started developing this system about a year and a half
ago. It takes some time for the market to accept this
technology. In Europe, say in Spain and Italy and Greece, the
acceptance is faster. But in the United States we have worked
with several companies in the last 18 months to commercialize
this technology.
But the barrier we have is always they say point me to a
system that has been operating there for 40 years. We don't.
This is emerging technology. We don't have the heritage. Then
they ask us to bear all the burden, you know, to say, well,
you've got to provide a performance bond, performance and
service and this and that.
So we already invested tremendously to develop this
technology. Now we've got the technology ready. We're facing
the barrier to go to the market because, you know, the end
users, they're very conservative. This is a new technology,
emerging, I don't want to touch it until you cover all the
warranties for performance for the next 20, 25 years.
The Chairman. So Doug's suggestion that the government
could play a useful role in supporting the demonstration, that
would be applicable to your circumstance?
Mr. Hou. That would be a wonderful idea. You know, this
really doesn't need 40 years of demonstration. If we have a
solar park, say, established in New Mexico near Albuquerque, if
Sandia can be--the leading premier research institution can be
a clearinghouse, you know, whoever has this technology, they
are facing the same or similar dilemma we have, you know, to
get in the solar park to validate their performance.
Once the system goes through a full weather cycle, you
know, a year, then a lot of issues can surface out and the
problem can be fixed and the heritage will be established.
The Chairman. OK. Very good. All right. I think all this is
very useful and very interesting testimony. If any of you have
additional points that have occurred to you that we ought to
bring out, I'm glad to hear them. Otherwise we'll call it
successful.
Let me just advise everybody, I'm told that there's going
to be a lunch next door after this hearing, it's going to be at
11:30. So we've got a little time to kill. But I think this has
been very useful.
Let me particularly think Jill Halverson for all of her
help getting this organized also. She's worked hard, she works
with us here in our Albuquerque office, and has worked with
Jonathan on getting this hearing organized.
Thank you all very much and we will conclude the hearing
with that.
[Whereupon, at 10:20 a.m., the hearing was adjourned.]