This is just one of the dangerous "bets" (Joe Biden's words) that the Obama administration is making in the alternative energy industry. Odds are the American taxpayer will lose many of these bets, wasting wealth of the nation in the process. These bets are going to be lost because, as always, the Obama administration continues to think very tactical about life, never doing their necessary strategic thinking ahead of time that might result in more efficient use of taxpayer resources. Consider a few different approaches that might be a better use of our tax dollars in the strategic energy field:
1) Several years ago, the Nova television on public television did an excellent piece regarding solar energy (http://www.pbs.org/wgbh/nova/solar/house.html). Their approach was to completely retrofit a typical southern California home with solar energy technology at that time, with the intent to make that one home as nearly energy independent as possible. If my recollection is correct, they accomplished this task for the cost of about $60,000. (side note - the payback for the project in electricity savings was less than eight years)
Let's make a few simple assumptions and see where some basic math leads us. Let's assume that one third ($20,000) of that installation cost was for labor and two thirds ($40,000) was for materials, primarily the solar panels that were installed on the roof of the house. We know from the many Solyndra news reports, that a primary reason the company failed is that the cost of Chinese solar panels have dropped over 30% in the past year, with some reports indicating the price drop has been closer to 40%.
Let's assume that the actual cost drop was one third so that that original solar panel cost of $40,000 is now about $26,000. Thus, to replicate the Nova experiment today, the installation cost would not be $60,000 but closer to $46,000. This $46,000 cost would be for a sure thing since Nova already proved in the concept from a technology perspective years ago. In other words, there would not be any Joe Biden "bets" involved, it would b e a sure thing.
Now we know from yesterday that Solyndra has already cost the American taxpayer about $530 million. We know that another Federal government loan to a company that involves Nancy Pelosi's brother-in-law involves $737 million. This project will attempt to build a massive solar energy farm in the Nevada desert, certainly not a sure thing. If it is successful, it will eventually provide electricity to 43,000 homes.
$530 million and $737 million worth of "bets" comes out to a grand total of $1.267 billion. Theoretically, if the Obama administration had been honest (i.e. cronyism was not part of their agenda) and had thought strategically, they could have diverted that $1.267 billion and could have made about 27,000 U.S. homes very close to energy independence ($1.267 billion divide by the $46,000 cost per house discussed above). This approach:
- Would have been a sure thing (not a "bet") since we know this technology already works from Nova.
- Would have contributed to energy independence almost immediately, we would have not had to wait for years for a theoretical solar farm to be constructed in the Nevada desert.
- Would have protected the some of the perceived honesty of government and political class, which would not have been called into question because of the cronyism and favoritism of the current approach.
- The 27,000 actual households affected would have accounted for about 60% of the theoretical households that the Nevada project may affect. If we slightly changed the approached and had the Federal government finance only half of the installation and made each homeowner finance the other half, that 27,000 number jumps to over 50,000 households, more than what the Nevada solar farm could impact.
The Cato Institute has done an outstanding job going through every government department and function, identifying those that need to be changed, downsized, or terminated. Their detailed work can be found at their website. They strongly recommend that the Energy Department be terminated immediately and their annual budget of about $38 billion be redirected.
If we use the Nova model discussed above, over just a ten year period, the annual redirected Department of Energy budget could be used to retrofit over 8 million U.S. homes with existing solar technology to make them nearly energy independent. If the homeowner picked up half the cost, then in only ten years, over 16 million U.S. homes could be made solar powered.
Ten years, a sure bet. Compare that to massive solar and wind farms that have not even been designed yet, never mind construction started.
3) As another example of how the Obama administration thinks only tactically, consider President Obama's own words from the press conference he conducted on Solyndra n early October:
"What's also a problem, as I said, is that other countries are subsidizing these industries much more aggressively than we do. Hundreds of billions of dollars the Chinese government is pouring into the clean energy sector, partly because they're projecting what's gonna happen ten or twenty years from now."
So let me get this straight. We need to make "bets" of hundreds of MILLIONS of dollars on clean energy while the Chinese are spending hundreds of BILLIONS of dollars on clean energy? It is like bringing a gun to a knife fight, we have the knife and the Chinese have the gun, who wins that battle? If the Chinese government is spending a thousand times more (hundreds of billions vs. hundreds of millions), they have the winning gun and we have the losing knife in this fight.
All we end doing in this situation is waste taxpayer money, millions will almost always lose out to billions. As the old saying goes, it is like spitting in a hurricane, the impact will never be felt. The Chinese have already won, placing losing bets of hundreds of millions of dollars to political cronies only buys you campaign donations, it does nothing to help the country's energy situation. And it is certainly not strategic thinking.
4) Consider an example of the types of problems that arise when you do not have an overarching strategic energy plan. The Obama administration is busy with these tactical efforts without considering how and if they fit into an overall plan.
In an article in the October 14, 2011 issue of Business Week, the writer points out a major problem with solar and wind power, namely there is no good way to store the energy when the wind does not blow and the sun does not shine. Thus, even if the large Nevada solar farm comes online, it will only be a part of the puzzle. The ability to store the energy from these alternative sources will not be solved for many years, according to the article.
Thus, even if every one of these Obama energy bets come to pass, it may not matter if there is not a solution to the grid storage problem and the ramifications of the problem as laid out in the article. If a good strategic plan was in place, the grid storage problem would be done in synch with the energy generation problem.
Also, if we as a nation had a good strategic energy plan, it would have already identified the reality that the Chinese own the generation technology. They have already solved that puzzle and they own that part of the market.
Our nation's strategic plan, however, would have also identified the opportunity to excel in the unsolved grid storage problem for alternative energy technology. That is where we should be investing, from a strategic perspective. Without a national strategic energy plan, the political class is just spitting in that hurricane with their cronyism friends and long shot bets.
Obama is investing in the wrong area of the market strategically, although he is investing in the right area of the market politically. Unfortunately, that wastes taxpayer money with no return. He should have read Steps 23, 24, and 25 from "Love My Country, Loathe My Government." These steps provide a process for putting that strategic energy plan together and keeping that plan in harmony with the environment. Better yet, it does not involve Obama style cronyism.
We will try to stay away from the stench and waste of Solyndra and related Obama cronyism for a little while. However, I doubt this is the last time we will review the issue, cronyism is a cancer that refuses to die a peaceful death, especially in an election year.
Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available, at http://www.loathemygovernment.com/. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.
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http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment.com/
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