[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
                    RENEWABLE ENERGY TECHNOLOGIES--
                    RESEARCH DIRECTIONS, INVESTMENT
                    OPPORTUNITIES, AND CHALLENGES TO
                     COMMERCIAL APPLICATION IN THE
                 UNITED STATES AND THE DEVELOPING WORLD

=======================================================================

                             FIELD HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON ENERGY

                          COMMITTEE ON SCIENCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             AUGUST 2, 2006

                               __________

                           Serial No. 109-59

                               __________

            Printed for the use of the Committee on Science


     Available via the World Wide Web: http://www.house.gov/science




                    U.S. GOVERNMENT PRINTING OFFICE

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                                 ______

                          COMMITTEE ON SCIENCE

             HON. SHERWOOD L. BOEHLERT, New York, Chairman
RALPH M. HALL, Texas                 BART GORDON, Tennessee
LAMAR S. SMITH, Texas                JERRY F. COSTELLO, Illinois
CURT WELDON, Pennsylvania            EDDIE BERNICE JOHNSON, Texas
DANA ROHRABACHER, California         LYNN C. WOOLSEY, California
KEN CALVERT, California              DARLENE HOOLEY, Oregon
ROSCOE G. BARTLETT, Maryland         MARK UDALL, Colorado
VERNON J. EHLERS, Michigan           DAVID WU, Oregon
GIL GUTKNECHT, Minnesota             MICHAEL M. HONDA, California
FRANK D. LUCAS, Oklahoma             BRAD MILLER, North Carolina
JUDY BIGGERT, Illinois               LINCOLN DAVIS, Tennessee
WAYNE T. GILCHREST, Maryland         DANIEL LIPINSKI, Illinois
W. TODD AKIN, Missouri               SHEILA JACKSON LEE, Texas
TIMOTHY V. JOHNSON, Illinois         BRAD SHERMAN, California
J. RANDY FORBES, Virginia            BRIAN BAIRD, Washington
JO BONNER, Alabama                   JIM MATHESON, Utah
TOM FEENEY, Florida                  JIM COSTA, California
RANDY NEUGEBAUER, Texas              AL GREEN, Texas
BOB INGLIS, South Carolina           CHARLIE MELANCON, Louisiana
DAVE G. REICHERT, Washington         DENNIS MOORE, Kansas
MICHAEL E. SODREL, Indiana           DORIS MATSUI, California
JOHN J.H. ``JOE'' SCHWARZ, Michigan
MICHAEL T. MCCAUL, Texas
MARIO DIAZ-BALART, Florida
                                 ------                                

                         Subcommittee on Energy

                     JUDY BIGGERT, Illinois, Chair
RALPH M. HALL, Texas                 MICHAEL M. HONDA, California
CURT WELDON, Pennsylvania            LYNN C. WOOLSEY, California
ROSCOE G. BARTLETT, Maryland         LINCOLN DAVIS, Tennessee
VERNON J. EHLERS, Michigan           JERRY F. COSTELLO, Illinois
W. TODD AKIN, Missouri               EDDIE BERNICE JOHNSON, Texas
JO BONNER, Alabama                   DANIEL LIPINSKI, Illinois
RANDY NEUGEBAUER, Texas              JIM MATHESON, Utah
BOB INGLIS, South Carolina           SHEILA JACKSON LEE, Texas
DAVE G. REICHERT, Washington         BRAD SHERMAN, California
MICHAEL E. SODREL, Indiana           AL GREEN, Texas
JOHN J.H. ``JOE'' SCHWARZ, Michigan      
SHERWOOD L. BOEHLERT, New York       BART GORDON, Tennessee
               KEVIN CARROLL Subcommittee Staff Director
          DAHLIA SOKOLOV Republican Professional Staff Member
         CHRISTOPHER KING Democratic Professional Staff Member
                    MIKE HOLLAND Chairman's Designee
                     COLIN HUBBELL Staff Assistant


                            C O N T E N T S

                             August 2, 2006

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Judy Biggert, Chairman, Subcommittee 
  on Energy, Committee on Science, U.S. House of Representatives.    10
    Written Statement............................................    11

Statement by Representative Michael M. Honda, Ranking Minority 
  Member, Subcommittee on Energy, Committee on Science, U.S. 
  House of Representatives.......................................    12
    Written Statement............................................    14

                               Witnesses:

Dr. Steven Chu, Director, Lawrence Berkeley National Laboratory; 
  1997 Nobel Prize in Physics
    Oral Statement...............................................    16
    Written Statement............................................    19
    Biography....................................................    23

Dr. Arno A. Penzias, Venture Partner, New Enterprise Associates, 
  Palo Alto, California; 1978 Nobel Prize in Physics
    Oral Statement...............................................    24
    Written Statement............................................    26
    Biography....................................................    28

Mr. Christian B. Larsen, Vice President for Generation, Electric 
  Power Research Institute, Palo Alto, California
    Oral Statement...............................................    29
    Written Statement............................................    30
    Biography....................................................    40
    Financial Disclosure.........................................    41

Mr. David Pearce, President and CEO, Miasole, Santa Clara, 
  California
    Oral Statement...............................................    42
    Written Statement............................................    44
    Biography....................................................    56

Mr. Ron Swenson, Co-founder, ElectroRoof
    Oral Statement...............................................    56
    Written Statement............................................    58

Discussion.......................................................    78


    RENEWABLE ENERGY TECHNOLOGIES--RESEARCH DIRECTIONS, INVESTMENT 
 OPPORTUNITIES, AND CHALLENGES TO COMMERCIAL APPLICATION IN THE UNITED 
                    STATES AND THE DEVELOPING WORLD

                              ----------                              


                       WEDNESDAY, AUGUST 2, 2006

                  House of Representatives,
                            Subcommittee on Energy,
                                      Committee on Science,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 12:30 p.m., in 
the Council Chambers, San Jose City Hall, 200 East Santa Clara 
Street, San Jose, California, Hon. Judy Biggert [Chairman of 
the Subcommittee] presiding.


                         field hearing charter

                          SUBCOMMITTEE ENERGY

                          COMMITTEE ON SCIENCE

                     U.S. HOUSE OF REPRESENTATIVES

                    Renewable Energy Technologies--

                    Research Directions, Investment

                    Opportunities, and Challenges to

                     Commercial Application in the

                 United States and the Developing World

                       wednesday, august 2, 2006
                          12:30 p.m.-2:30 p.m.
                           san jose city hall
                      200 east santa clara street
                       san jose, california 95113

1. Purpose

    On August 2, 2006, the Subcommittee on Energy of the House 
Committee on Science will hold a field hearing on renewable energy 
technologies.

2. Witnesses

          Dr. Steven Chu is the Director of the Lawrence 
        Berkeley National Laboratory and a 1997 Nobel Prize winner in 
        Physics. He is currently spearheading a new Laboratory research 
        initiative focused on solar energy.

          Dr. Arno Penzias is a Venture Partner with New 
        Enterprise Associates in Palo Alto, CA. While at Bell 
        Laboratories, he won the Nobel Prize for Physics in 1978. Today 
        he is a venture capitalist with interests in renewable energy 
        technologies.

          Mr. Christian Larsen is Vice President for Generation 
        for the Electric Power Research Institute in Palo Alto, CA. His 
        division provides data on cost and performance analyses and for 
        renewable, distributed, and hydropower energy generation 
        technologies to the electricity industry.

          Mr. David Pearce is President and CEO of Miasole, a 
        Santa Clara, CA based company that manufactures industrial-
        scale solar products using thin film solar cell technology 
        developed in Department of Energy national laboratories.

          Mr. Ron Swenson is co-founder of ElectroRoof, a solar 
        equipment installation company, and EcoSage, an educational 
        services company developing a program to build solar-powered 
        satellite teaching centers in remote areas of the world in 
        conjunction with solar education programs in schools.

3. Overarching Questions

    The hearing will address the following questions:

        1.  What is the current state of adoption of renewable energy 
        technologies in the United States? What factors are limiting 
        the rate of adoption of renewable energy technologies?

        2.  What is the outlook for potential improvement in market 
        penetration of renewable energy technologies? What are the main 
        research efforts that could improve that outlook?

        3.  What should the Federal Government be doing (or not doing) 
        to encourage the commercialization of, and demand for, new 
        renewable energy technologies? How well aligned are the 
        Department of Energy's activities with what the investment 
        community is doing?

        4.  What opportunities and challenges exist for the sale and 
        use of renewable energy generation in developing countries? How 
        do these opportunities and challenges differ from those in 
        developed countries?

4. Brief Overview

    Renewable energy could significantly reduce the environmental 
impact of energy production, and in most cases it is produced 
domestically (although some of the related technology may be imported). 
The United States has only two percent of the world's oil reserves and 
three percent of the world's natural gas reserves, while U.S. renewable 
energy resources are vast and largely untapped. Renewable energy can 
reduce the demand for imported energy, reducing costs and decreasing 
the variability of energy prices.
    In addition, some renewable energy technologies have other unique 
advantages. For example, solar energy, while difficult to store, 
generally follows the changes in demand during the day: its peak output 
is in the middle of the day, about when air conditioning and other 
demands also peak. Because utilities tend to use their least efficient 
(and often most polluting) plants at peak load (they want to run them 
as little as possible), energy market experts say that small reductions 
in peak demand can result in very large reductions in price and 
emissions.

5. Background

Current State of Renewable Energy
    In 2004, the United States consumed nearly four trillion kilowatt 
hours (KWh) of electricity.\1\ Of that total, 6.5 percent came from 
hydroelectric power plants and only 2.3 percent came from all other 
renewable energy resources combined, including geothermal, solar 
thermal, photovoltaic, wind, ethanol and other biomass sources. Given 
the large number of resources that are added to reach this value of 2.3 
percent, the total installation of each type is quite small. The total 
U.S. installation of solar electric generation, for example, was only 
340 MW peak,\2\ and the output of that capacity was a negligible 
fraction of the total electricity consumed nationwide that year. (See 
Figure 1.)
---------------------------------------------------------------------------
    \1\ See http://www.eia.doe.gov/cneaf/electricity/epa/figes2.html
    \2\ Solar Energy Industries Association: Our Solar Power Future--
The U.S. Photovoltaics Industry Roadmap Through 2030 and Beyond. Peak 
wattage is the output of energy when sunlight conditions are favorable; 
most solar devices can operate during cloudy conditions at reduced 
output.



    Renewable energy sources also play a small role when compared to 
the overall U.S. domestic energy consumption, including transportation. 
Energy from renewable sources constituted six percent of all energy 
used in the U.S. in 2004, with biomass and hydroelectric power making 
up the bulk of that total. Wind energy accounted for two percent and 
solar energy accounted for just one percent of all renewable energy 
used that year. (See Figure 2.)



Projected Growth in Total Energy Usage by 2030
    According to the Energy Information Administration (EIA), total 
U.S. energy use will increase by about 27 percent from 2004 to 2025, or 
about 1.2 percent per year. Oil demand is projected to grow at about 
the same rate, by 26 percent, or around 1.1 percent per year; but 
natural gas use is expected to grow by only 20 percent, or around 0.7 
percent per year. Electricity demand is forecast to grow faster than 
overall energy demand, by 1.6 percent per year, or a growth of 40 
percent to 2025. Broken down, electricity demand is expected to grow by 
75 percent by 2030 in the commercial sector (due to rapid growth in the 
service industries), by 47 percent in the residential sector, and by 24 
percent in the industrial sector. These growth rates assume that some 
efficiency gains will be realized in both the residential and 
commercial sectors as a result of new standards in the Energy Policy 
Act of 2005 and higher energy prices that prompt more investment in 
energy-efficient equipment.\3\
---------------------------------------------------------------------------
    \3\ Energy Information Administration: Annual Energy Outlook 2006
---------------------------------------------------------------------------
    In electricity generation, the natural gas share of total 
production is projected to increase from 18 percent in 2004 to 22 
percent around 2020, before falling to 17 percent in 2030. The coal 
share is projected to decline slightly, from 50 percent in 2004 to 49 
percent in 2020, before increasing to 57 percent in 2030. Nuclear 
electricity is projected go grow by 10 percent over the period, or 
about one-half percent per year. (Very little oil is used for 
electricity production.) Under this scenario, emissions of carbon 
dioxide are projected to rise by 29 percent.
    Projected growth rates for renewable energy, in contrast, are 
relatively high, but because renewable energy is a small part of the 
mix, the high growth rates projected still result in a relatively small 
contribution to the mix. Ethanol demand is projected to rise over 300 
percent, or about five percent per year; after this increase ethanol 
will constitute about five percent of the total gasoline demand. 
Photovoltaic solar generation is projected to rise 26 percent per year 
in the utility sector, and 10 percent for electricity that is not sold 
into the grid; however, EIA projects that the percentage of solar 
photovoltaic power supplied to the grid would still be far less than 
one percent of the total supply by 2025.
Potential for Renewable Energy
    Renewable energy industry representatives and other advocates, 
unsurprisingly, argue that the potential is much greater and the 
prospects much better for renewable energy than EIA predicts.\4\ 
Critics of EIA forecasts point out that EIA is limited by its 
assumptions: EIA forecasts assume no changes in current policy and a 
rate of technological improvement that is unaffected by the level of 
research and development (R&D) investment. Critics note that changes to 
these assumptions would produce different results. They also note that 
EIA's models do not allow for market penetration of technology if its 
output price is not competitive, even if other attributes are more 
important in niche markets. For example, solar energy has made inroads 
in applications where tying to the grid is costly, such as remote or 
portable power supplies.
---------------------------------------------------------------------------
    \4\ This is true of other industries as well. The nuclear industry 
also believes that EIA's forecasts do not reflect the prospects for 
nuclear. However, it is worth noting that EIA has little choice but to 
assume current policy will continue.
---------------------------------------------------------------------------
    Given these limitations and their perspective on the current state 
of the technology, the Solar Energy Industries Association's U.S. 
Photovoltaic Industry Roadmap projects that installed peak solar 
electric generation can increase to 200,000 megawatts (MW) by 2030, up 
from only 340 MW in 2004, with the industry installing 19,000 MW of new 
generation per year.\5\ In this case, solar power would be a 
substantial share of U.S. peak generating capacity. (For comparison, 
2004 installed capacity for coal was about 335,000 MW; however, solar 
needs a larger capacity to achieve the same total annual output of 
kilowatt hours, since its output is only during the day.)
---------------------------------------------------------------------------
    \5\ Op cit., Our Solar Power Future
---------------------------------------------------------------------------
    Others analysts depict the need to ramp up solar energy use as a 
matter of physical necessity if the U.S. is to meet overall demand. For 
example, Dr. Nathan Lewis, of the California Institute of Technology, 
has performed an analysis of the potential generating capacity that 
different renewable energy sources could supply in hopes of meeting the 
worldwide demand of 28 terawatts (TW) expected by 2050 and 40 TW by the 
end of the century.\6\ (A terawatt equals one billion kilowatts.) 
According to his findings, hydroelectric power has a technically 
feasible potential of 1.5 TW, onshore geothermal power could produce 
approximately 11 TW per year until the wells ``run out of steam,'' 
(projected to be five years for the average well.) U.S. land- based 
wind production could produce about 0.5 TW, and biomass may produce 
five to seven TW. He concludes that solar energy, with a potential of 
120,000 TW and a practical capacity of around 600 TW worldwide, is the 
only renewable resource that could single-handedly meet not just U.S. 
electricity needs, but could power the entire globe. Lewis emphasizes 
that his analysis is an accounting of technical potential, not 
necessarily what is practical based on price without significant 
breakthroughs in technology and deployment patterns.
---------------------------------------------------------------------------
    \6\ http://nsl.caltech.edu/energy.ppt
---------------------------------------------------------------------------
U.S. Actions in International Perspective
    Renewable energy is a growth industry around the world. However, 
the United States has not been investing as heavily as other countries, 
and has been losing market share in many renewable industries, 
especially in the solar power industry. Since 1996, the U.S. market 
share in the solar industry dropped from 44 percent of the world market 
to 13 percent in 2003. In 2003, the U.S. Government spent $139 million 
for research, development, demonstration, and commercial application 
and other incentives; in the same year Japan spent more than $200 
million and Germany provided more than $750 million in low-cost 
financing for solar photovoltaic projects. Germany and Japan each had 
domestic photovoltaic industries that employed more than 10,000 people 
in 2003, while in the same year the United States photovoltaics 
industry employed only 2,000 people.
Current Federal Activities in Energy Efficiency and Renewable Energy 
        R&D
    In the State of the Union address, the President announced the 
Advanced Energy Initiative, which calls for greater federal investment 
in research on coal, nuclear and renewable energy and in energy 
efficiency. For renewable energy, the initiative includes increases for 
R&D on biomass, solar and wind energy, and batteries for energy storage 
(especially targeted at high-mileage plug-in hybrid electric cars). The 
President also asked for large increases in hydrogen research, a fuel 
that must be derived from other sources, including potentially from 
renewable energy sources.
    House and Senate appropriations bills for fiscal year (FY07 have 
included most of the requested funds for key renewable energy programs, 
including solar energy and biomass. The House-passed bill includes the 
requested increases of 65 percent for biomass R&D and 79 percent for 
solar energy R&D. The full Senate has not yet voted on FY07 
appropriations, but the Senate Appropriations Committee also approved 
large increases for biomass (more than doubling funding to $213 
million), and solar energy (up 79 percent to $148 million). In 
addition, the Senate Committee mark would preserve the geothermal R&D 
and hydropower R&D programs ($23 million and $4 million, respectively), 
which the Administration and the House have proposed to eliminate. The 
Senate mark would also sustain the wind energy program at the FY06 
funding level of $39 million. (See table below.)



How Will Solar Energy Achieve Greater Adoption?
    There are several barriers to the adoption of solar energy 
systems--primarily cost, efficiency, and the intermittent nature of 
sunlight. The energy crisis of the 1970's saw the beginning of major 
interest in using solar cells for power, but prohibitive prices 
(approximately 30 times current prices) made most applications 
unfeasible. These prices have declined to the point where electricity 
from solar energy is about double the cost of retail rates for 
electricity. For a number of reasons, solar prices are expected to 
continue to decline. First, manufacturing efficiencies should allow 
improved prices, that is, as production volume increases, cost will 
continue to decrease. This economy of scale benefit may be limited 
periodically by short-term shortages of materials used in photovoltaic 
technologies. For example, the availability of single-crystal silicon 
is currently a concern to the industry. Industry projections indicate 
that market growth coupled with the adoption of favorable public 
policies could result in electricity costs of 5.7 cents per KWh by 
2015, a cost that is lower than current retail rates for many 
customers.
    In addition to driving down costs, advances in materials will 
increase the efficiency of photovoltaic systems. New technologies such 
as plastic solar cells, nanostructured materials, and dye-sensitized 
solar cells offer the potential to move well beyond the efficiency of 
current materials systems, dramatically lower cost and raise 
performance. The Photovoltaic Industry Roadmap projects a doubling of 
conversion efficiency for individual solar cells, of modules made up of 
multiple cells, and for systems as a whole by 2030.
    Improvements in battery technologies for electricity storage are 
helping to deal with intermittency--an ever present problem for solar 
energy. Early generation solar systems were only useful during the 
daytime, but advanced batteries can store electricity generated by the 
sun for later use, thus making photovoltaics a more reliable energy 
source.
The Role Renewable Energy Can Play in the Developing World
    Much of the increased demand for energy worldwide is anticipated to 
come from developing nations, as economic growth drives energy 
consumption toward levels in the developed countries. EIA estimates 
project the developing world's energy consumption to almost double in 
the next 20 years, driven largely by economic growth in China and 
India. Cost-effective renewable energy sources such as solar and wind 
may present a cleaner way to bring electricity to the poorest regions 
of the world, and meet the demands of rapid economic expansion of 
others. World Bank figures indicate that approximately 1.6 billion 
people worldwide are ``energy poor,'' having no access to electricity 
(70 percent of Sub-Saharan African and 59 percent of South Asian 
populations are in this category), with hundreds of millions more using 
only intermittent, unreliable or heavily polluting sources of energy.
    Greater adoption of renewable energy technology in the developing 
world can benefit developed countries as well. U.S. companies can reap 
the rewards of manufacturing and exporting technologies. If rapidly 
growing economies can offset growing thirst for fossil fuels with 
renewable technologies, they will help to reduce global competition 
for-and therefore prices of-fossil fuels. Furthermore, renewable 
technology adoption in developing countries can avoid increases in 
carbon dioxide emissions.

6. Witness Questions

Dr. Steven Chu

        1.  What are the limitations of current renewable energy 
        technologies? Are these limitations inherent to the kind of 
        technologies that are being used? What types of technologies 
        can overcome these limitations?

        2.  What is the long-term potential for renewable energy 
        technologies? What research and development work needs to be 
        performed to lay the groundwork for the commercial application 
        of a new generation of renewable energy sources?

        3.  What is the appropriate division of labor for this work 
        among government, industry, and academia? How much money do you 
        estimate these efforts will cost?

        4.  What steps is your lab taking to improve its ability to 
        move technologies from concept through development and to the 
        marketplace?

Dr. Arno Penzias

        1.  Are companies that are developing advanced renewable energy 
        technologies generally viewed as good investment opportunities 
        by the venture capital community?

        2.  What kinds of technologies are seen as good short-term 
        investments and as good long-term investments by venture 
        investors?

        3.  What role do you think the Federal Government can play to 
        encourage growth in this sector?

Mr. Christian Larsen

        1.  What is the electric utility industry's perspective on 
        renewable energy generation? Which renewable technologies have 
        been most widely adopted by the industry to date?

        2.  What is the utility industry's plan for the future adoption 
        of renewable energy sources? Does that plan depend on any 
        changes in current policies, perhaps such as the regulation of 
        greenhouse gas emissions? If it does, please explain the policy 
        changes you are taking into consideration in your planning.

        3.  What is the electric utility industry's view of distributed 
        generation, either as a business model or as a means to provide 
        stability to the grid and avoid transmission bottlenecks?

Mr. David Pearce

        1.  What are the limitations of today's renewable energy 
        technologies? Are these limitations inherent to the kind of 
        technologies that are being used?

        2.  What types of technologies can overcome these limitations? 
        How soon do you expect to see the widespread commercial 
        application of the next generation of renewable energy 
        technologies?

        3.  What challenges do companies like yours face in bringing a 
        new technology from the laboratory stage to manufacturing? Are 
        there particular challenges inherent in locating your 
        manufacturing in the United States, specifically the Bay Area?

        4.  Is there additional research and development work that 
        should be performed to expand the range of technology options 
        for renewable energy sources? What is the appropriate division 
        of labor for this work among government, industry, and 
        academia? How much money do you estimate these efforts will 
        cost?

Mr. Ron Swenson

        1.  What kinds of projects have you been involved with to 
        deploy renewable energy in developing economies? Which 
        renewable energy technologies did these projects use?

        2.  Are there challenges to widespread application of renewable 
        energy technologies in developing economies that do not exist 
        in the U.S.? How have government agencies, non-governmental 
        organizations, industry, and academia here and abroad been 
        involved in these projects? What role do you feel these sectors 
        have to play in encouraging the greater use of renewable energy 
        sources?

        3.  How important is education in expanding the use of 
        renewable energy? How do you think these efforts should be 
        structured and undertaken?

        4.  Does the distributed nature of renewable energy electricity 
        technology have any particular advantage in developing 
        economies? What impact might this have on the political and 
        socioeconomic systems of those countries? How might this affect 
        the willingness of governments and industry to encourage the 
        use of renewable energy? How might this affect export 
        opportunities?
    Chairwoman Biggert. The hearing of the Energy Subcommittee 
of the Science Committee will come to order. I'll recognize 
myself for five minutes for an opening statement.
    I want to welcome everybody here to this hearing of the 
Energy Subcommittee, the House Science Committee, on the status 
of efforts to develop renewable energy technologies and expand 
their use in the United States and around the world.
    It's an honor for me to be here in California, in the 
district of my friend and colleague, and the Ranking Member of 
this subcommittee, Mr. Honda, and I hope we make life a little 
easier by bringing this hearing across the continent to you, 
rather than making you come to Washington today where the 
temperature is expected to be 102.
    There's no better place to explore the contributions of 
renewable energy research than here in the Golden State of 
California. California has made extensive use of hydro, 
geothermal, solar and wind resources, which supply over 10 
percent of the state's electricity, compared to just two 
percent nationally. In other words, we still have a long way to 
go. But, California is fortunate to have an abundance of each 
of these renewable resources. I can't say that the same is true 
in my home State of Illinois. It's too flat to make significant 
use of hydro power. It has no geothermal resources, unless you 
count some of the steam tunnels that run under the City of 
Chicago, and the sun when it shines just doesn't shine enough; 
and while the windy city has one renewable resource that is its 
namesake only recently has technology enabled us to capture the 
strong and volatile winds in Chicago and in other parts of the 
state.
    When you say renewable energy in Illinois, most people 
think of corn, and ethanol, and soy beans, and biodiesel. 
Renewable energy is a growing global industry, and our 
international competitors are taking renewable energy R&D very 
seriously. Government investments in renewable energy in Europe 
and Japan have meant growing market shares for the world and 
solar generation equipment for those countries, while the U.S. 
market share is declining. As a nation, we can't afford to sit 
on the sidelines.
    That's why I introduced H.R. 5656, a bill that focuses 
federal research efforts on some of the greatest challenges to 
expand our use of renewable energy. Among other things, the 
bill directs researchers to focus their efforts on making solar 
electricity cost competitive by 2015. In addition, the bill 
would establish a program to demonstrate advanced solar 
technologies in every state. In this way, we may actually learn 
to capture the power of the sun, even in places like Illinois 
in the wintertime.
    In addition to targeting federal research efforts at 
improving the efficiency of turbines and the cost-effectiveness 
of wind power, the bill also supports the development of the 
genetic and biological technologies to make ethanol from 
feedstock other than corn.
    I'm happy to say that the Science Committee approved the 
bill unanimously, and it now awaits action in the Full House 
when we go back in September.
    As we discuss our investments in this kind of renewable 
energy research, the challenge is to ensure that we not forget 
the demand side of the equation. Energy use of all kinds has 
environmental consequences. We should be aware of them, 
understand the tradeoffs and make decisions that are fully 
informed by the facts. That is why renewable energy R&D, the 
topic of our hearing today, is so timely.
    Americans want affordable energy and a clean and safe 
environment, and yet, because we've under valued renewable 
energy research we act as the two are mutually exclusive. This 
is not true of the witnesses we will hear from today. They 
understand the potential of renewable energy technologies. They 
invested in the necessary renewable energy R&D, some 
independently and some in partnership with the Federal 
Government. But, in all cases they have success stories. I want 
to thank this remarkably accomplished panel for sharing their 
insights with us as we assess the challenges and opportunities 
associated with the development of renewable energy generation 
both domestically and in developing countries.
    Before I introduce our panel, I'd like to turn to the 
Subcommittee's distinguished Ranking Member, Mr. Honda, for his 
opening statement.
    [The prepared statement of Chairman Biggert follows:]
              Prepared Statement of Chairman Judy Biggert
    I want to welcome everyone to this hearing of the Energy 
Subcommittee of the House Science Committee on the status of efforts to 
develop renewable energy technologies and expand their use in the 
United States and around the world.
    It's an honor for me to be here in California today in the district 
of my friend, colleague, and the Ranking Member of this subcommittee, 
Mr. Honda. I hope we made life a little easier by bringing this hearing 
across the continent to you, rather than making you come to us in 
Washington, where the temperature is expected to top 102 today.
    There's no better place to explore the contributions of renewable 
energy research than here in the Golden State. California has made 
extensive use of hydro, geothermal, solar and wind resources, which 
supply over ten percent of the state's electricity compared to just two 
percent nationally. In other words, we still have a long way to go.
    California is fortunate to have an abundance of each of these 
renewable resources. I can't say that the same is true of my home State 
of Illinois. It's too flat to make significant use of hydro power. It 
has no geothermal resources unless you count some of the steam tunnels 
that run under the city of Chicago. And the sun, when it shines, just 
doesn't shine enough. And while the Windy City has one renewable 
resource that is its namesake, only recently has technology enabled us 
to capture the strong yet volatile winds in Chicago and in other parts 
of the State. When you say ``renewable energy'' in Illinois, most 
people think of corn and ethanol and soybeans and biodiesel.
    Renewable energy is a growing, global industry, and our 
international competitors are taking renewable energy R&D very 
seriously. Government investments in renewable energy technologies in 
Europe and Japan have meant growing market shares for wind and solar 
power generation equipment for those countries, while the U.S. market 
share is declining. As a nation, we can't afford to sit on the 
sidelines.
    That's why I introduced H.R. 5656, a bill that focuses federal 
research efforts on some of the greatest challenges to expanding our 
use of renewable energy. Among other things, the bill directs 
researchers to focus their efforts on making solar electricity cost 
competitive by 2015. In addition, the bill would establish a program to 
demonstrate advanced solar technologies in every state. In this way, we 
may actually learn to capture the power of the sun even in places like 
Illinois in the wintertime.
    In addition to targeting federal research efforts at improving the 
efficiency turbines and the cost competitiveness of wind power, the 
bill also supports the development of the genetic and biological 
technologies to make ethanol from feedstocks other than corn. I'm happy 
to say that the Science Committee approved the bill unanimously, and it 
now awaits action in the full House.
    As we discuss our investments in this kind of renewable energy 
research, the challenge is to ensure that we not forget the demand side 
of the equation. Energy use of all kinds has environmental 
consequences. We should be aware of them, understand the tradeoffs, and 
make decisions that are fully informed by the facts.
    That is why renewable energy R&D, the topic of our hearing today, 
is so timely. If we are to be successful in addressing the threat of 
climate change, we have to reduce emissions of greenhouse gases. That 
means not only improving energy efficiency, but also greatly expanding 
our use of renewable and non-greenhouse gas-emitting energy 
technologies such as nuclear power. And because of population growth 
and economic expansion, we must expand our use of renewable energy and 
energy efficiency technologies faster than the growth in our 
consumption of energy. As you can see, making progress on the 
development of renewable energy is every bit as important as making 
progress in increasing energy efficiency.
    We also should keep in mind that energy efficiency improvements do 
not automatically lead to reduced energy use. In 1900, a light bulb 
cost roughly $20 in today's money; today it costs 40 cents, lasts at 
least 10 times longer and uses a fraction of the electricity to 
generate the same amount of candlepower.
    As the price of light--that is fixtures, the bulbs and the power to 
operate them dropped--over time, we have figured out ways to use more 
light--and more energy. Think of just how many new sources of lights 
there are in the home: recess lighting, task lighting, lighting in and 
under cabinets in the kitchen, lights on appliances, lights in the 
yard. You should see Chicago from the top of the Sears Tower: there are 
lights as far as the eye can see in every direction except Lake 
Michigan. Only a century ago, the term ``light pollution'' would have 
been laughed at.
    That brings us back to why we are here today. Americans want 
affordable energy and a clean and safe environment, and yet, because 
we've undervalued renewable energy research, we act as though the two 
are mutually exclusive. That's not true of the witnesses we will hear 
from today. They understand the potential of renewable energy 
technologies. They invested in the necessary renewable energy R&D--some 
independently, and some in partnership with the Federal Government. But 
in all cases, they have success stories. I want to thank this 
remarkably accomplished panel for sharing their insights with us as we 
assess the challenges and opportunities associated with the deployment 
of renewable energy generation both domestically and in developing 
countries.
    But before I introduce our panel, I'd like to turn to the 
Subcommittee's distinguished Ranking Member, Mr. Honda, for his opening 
statement.

    Chairwoman Biggert. The gentleman is recognized for five 
minutes.
    Mr. Honda. Thank you, Madam Chair, and welcome to San Jose, 
and also welcome back to close to the site of your alma mater, 
Stanford University. And, I know that you are enjoying our 
wonderful weather, and maybe we can talk a little bit more 
about that as we listen to our witnesses.
    I'd like to thank everyone in attendance for being here 
today for this hearing about a topic that I believe is 
essential to the future of our nation, our world, which is 
renewable energy.
    Chairwoman Biggert, I thank you for traveling out to 
Silicon Valley to join us and to hear what folks from this 
region have to contribute to this important endeavor.
    I extend my warmest thanks and welcome to Cindy Chavez, 
Vice Mayor of the city of San Jose, who made it possible for us 
to hold this hearing in this wonderful space today. Cindy, 
would you stand up and please be recognized, and I want to 
thank you and your Council for receiving us here today. It's a 
wonderful, friendly, natural lit chamber.
    I also wanted to thank all the witnesses for agreeing to 
testify before us today. I think that we have assembled an 
eminently qualified panel that represents the spirit and 
breadth of expertise and experience that makes Silicon Valley 
and the whole Bay area the special place that it is.
    I'm the kind of person who drives a hybrid car and wants to 
keep the battery charged with a solar cell when I don't drive 
it for a while. I'm also in the process of doing some work on 
my house, and my plans involve installing solar photovoltaics 
on the roof. Sadly, the rest of the Nation is not doing the 
same. The United States was once leader in solar technologies. 
The first solar cell that produced a useful amount of 
electricity was invented here, but last year only 11 percent of 
the photovoltaic generating capacity was manufactured here.
    Our track record at installing solar generation is equally 
poor. By the end of 2004, the United States' total installed 
photovoltaic generating capacity was only about equal to what a 
standard coal-fired power plant produces, or approximately 
400ths of one percent of U.S. electricity produced. We have 
fallen behind other nations, such as Germany and Japan, which 
saw solar installation increase as a result of meaningful 
government incentive programs. But, all is not lost, because 
nature gives us an advantage. The United States has far greater 
potential for solar power than Germany, and this means that the 
U.S. has tremendous growth potential for solar energy.
    Here in California, we are taking a lead with over 100 
megawatts of installed grid capacity to date. It took a 
commitment to get to this point; and because a typical home 
photovoltaic system is not cheap to purchase and install, to 
succeed and advance in solar technology cost must be reduced.
    Fortunately, as more cells are manufactured, the cost has 
decreased five to seven percent per year. As more consumers 
install these systems, with the help of federal and State 
incentives, prices will continue to fall and the cost of power 
will become comparable to other sources.
    Research and development can help to increase the 
efficiency and decrease the cost of renewable energy. For 
example, in the areas of biofuels, research can help develop 
dedicated energy crops that are cost effective, easy to 
sustain, and produce greater energy yields.
    In the area of photovoltaics, new fields such as nano 
technology offer the opportunity to develop solar cells that 
can generate electricity using more wave lengths of the sun's 
light and collect all light more efficiently.
    With the right resources, the global scientific and 
engineering community can continue down the path to progress. 
It needs to be a global effort, because developing countries 
don't have the luxury of thinking about expensive energy 
solutions. For the poorest countries, energy is a source of 
their poverty. Thirty eight of the poorest countries are net 
importers of oil, and 25 of them import all of their oil. At 
oil prices at over $70 per barrel, these countries are being 
disproportionately impacted.
    Renewable energy in its various forms has many 
characteristics that make it particularly useful in the 
developing world, as well here in the U.S. Using the 
distributed renewable resources of electricity that generate 
power where it is needed means that large investments in 
infrastructure can be avoided. In developing countries, this 
distributed generation is essential to rapid success, and 
that's where infrastructure links between rural communities or 
remote settlements are not well developed.
    Photovoltaics and small wind generation are well suited to 
the distributed generation approach, because they can be 
installed simply and unobtrusively in remote locations, and 
they can be scaled to whatever the local energy needs are.
    Biofuels can capitalize on agricultural strengths of 
developing countries, providing a cleaner, more sustainable 
alternative to oil, while improving the situation of small 
farmers who cannot compete in the global market as it exists 
today.
    Brazil is a great example of how nations can use our 
approach to make energy a source of opportunity, rather than a 
source of oppression.
    When I was there last year, I learned how Brazilian 
Government has provided the necessary support to make ethanol, 
derived from sugar cane, a common source of fuel. By the end of 
last year, 70 percent of new cars sold in Brazil were flexfuel 
vehicles, like the ones that the Chairwoman and I saw in her 
field hearing in Naperville, Illinois in June, that vehicle can 
use ethanol as well as gasoline.
    In our job, one of the things that we have to worry about 
is international relations. Both energy and climate change are 
pieces of this bigger picture. Fortunately, renewable energy 
offers opportunities to make the big picture a little bit less 
complicated. When developing nations depend on other countries' 
natural resources, they are unable to invest in improvements 
within, leading to humanitarian crisis which require 
international responses and human suffering. Using renewable 
energy, developing countries could instead use their own live-
in resources to power their development and enhance their 
economies.
    Throughout history, wars have been fought over non-
renewable natural resources. In a world focused on using 
renewable energy, these conflicts could be avoided and greater 
stability achieved. But, we need to convince consumers here and 
in developing countries to choose to adopt renewable energy, 
and to do so we need to make renewables cost effective and 
improve their performance.
    So, I look forward to hearing the insights our witnesses 
will provide today, about what the future holds for renewable 
energy, and to a lively discussion following their testimony.
    Thanks again to everyone who is here today, and I yield 
back my time.
    [The prepared statement of Mr. Honda follows:]
         Prepared Statement of Representative Michael M. Honda
    I'd like to everyone in attendance for being here today for this 
hearing about a topic that I believe is essential to the future of our 
nation and our world, renewable energy. Chairwoman Biggert, I thank you 
traveling out to Silicon Valley to join us and to hear what folks from 
this region have to contribute to this important endeavor.
    I extend my warmest thanks and welcome to Cindy Chavez, Vice Mayor 
of the City of San Jose, who made it possible for us to hold this 
hearing in this wonderful space today. Cindy, please stand up and be 
recognized. Thank you so much for reserving the Council Chambers for 
us.
    I also want to thank all of the witnesses for agreeing to testify 
before us today. I think we have assembled an eminently qualified panel 
that represents the spirit and breadth of expertise and experience that 
makes Silicon Valley and the whole Bay Area the special place that it 
is.
    I'm the kind of person who drives a hybrid car and wants to keep 
the battery charged with a solar cell when I don't drive it for a 
while. I'm also in the process of doing some work on my house, and my 
plans involve installing solar photovoltaics on the roof. Sadly, the 
rest of the Nation is not doing the same. The United States was once 
the leader in solar technologies. The first solar cell that produced a 
useful amount of electricity was invented here, but last year, only 11 
percent of the photovoltaic generating capacity was manufactured here.
    Our track record at installing solar generation is equally poor. By 
the end of 2004, the United States installed photovoltaic generating 
capacity was only about equal to what a standard coal-fired power plant 
produces, or approximately 0.04 percent of U.S. electricity production. 
We have fallen behind other nations, such as Germany and Japan, which 
saw solar installation increase as a result of meaningful incentive 
programs.
    But all is not lost, because nature gives us an advantage--the 
United States has far greater potential for solar power than Germany. 
This means that the U.S. has tremendous growth potential for solar 
energy. Here in California, we are taking the lead, with over 100 
megawatts of installed grid capacity to date. It has taken a commitment 
to get to this point, because a typical home photovoltaic system is not 
cheap to purchase and install.
    To succeed in advancing solar technology, cost must be reduced. 
Fortunately, as more cells are manufactured, the cost has decreased 
five to seven percent per year. As more consumers install these systems 
with the help of federal and State incentives, prices will continue to 
fall and the cost of power will become comparable to other sources.
    Research and development can help to increase the efficiency and 
decrease the cost of renewable energy. For example, in the area of 
biofuels, research can help develop dedicated energy crops that are 
cost-effective, easy to sustain, and produce greater energy yields. In 
the area of photovoltaics, new fields such as nanotechnology offer the 
opportunity to develop solar cells that can generate electricity using 
more wavelengths of the sun's light and collect all light more 
efficiently. With the right resources, the global scientific and 
engineering community can continue down the path to progress.
    It needs to be a global effort, because developing countries don't 
have the luxury of thinking about expensive energy solutions. For the 
poorest countries, energy is a source of their poverty. Thirty-eight of 
the poorest countries are net importers of oil, and 25 of them import 
all of their oil. At oil prices of over $70 per barrel, these countries 
are being disproportionately impacted.
    Renewable energy in its various forms has many characteristics that 
make it particularly useful in the developing world, as well as here in 
the U.S. Using distributed renewable sources of electricity that 
generate power where it is needed means that large investments in 
infrastructure can be avoided. In developing nations, where 
infrastructure links between rural communities or remote settlements 
are not well developed, this is essential to rapid success.
    Photovoltaics and small wind generation are well suited to the 
distributed generation approach, because they can be installed simply 
and unobtrusively in remote locations, and they can be scaled to 
whatever the local energy needs are. Biofuels can capitalize on the 
agricultural strengths of developing countries, providing a cleaner, 
more sustainable alternative to oil while improving the situation of 
small farmers who cannot compete in the global market as it exists 
today.
    Brazil is a great example of how nations can use agriculture to 
make energy a source of opportunity rather than a source of oppression. 
When I was there last year, I learned how the Brazilian government has 
provided the necessary support to make ethanol derived from sugar cane 
a common source of fuel. By the end of last year, 70 percent of the new 
cars sold in Brazil were Flex Fuel Vehicles like the one that the 
Chairwoman and I saw at her field hearing in Naperville, Illinois in 
June that can use ethanol as well as gasoline.
    In our job, one of the things that we have to worry about is 
international relations. Both energy and climate change are pieces of 
this bigger picture. Fortunately, renewable energy offers opportunities 
to make this big picture a little bit less complicated. When developing 
nations depend on other countries' natural resources, they are unable 
to invest in improvements within, leading to humanitarian crises which 
require international responses and human suffering. Using renewable 
energy, developing countries could instead use their own living 
resources to power their development and enhance their economies.
    Throughout history, wars have been fought over non-renewable 
natural resources. In a world focused on using renewable energy, these 
conflicts could be avoided and greater stability achieved. But we need 
to convince consumers here and in developing countries to choose to 
adopt renewable energy, and to do so, we need to make renewables cost 
effective and improve their performance.
    So I look forward to hearing the insights our witnesses will 
provide today about what the future holds for renewable energy and to a 
lively discussion following the testimony. Thanks again to everyone for 
being here today.

    Chairwoman Biggert. Thank you very much, Mr. Honda. Any 
extension of remarks may be added to the record.
    At this time I'd like to introduce all of our witnesses. 
Thank you for coming to join us today. Let's start with Dr. 
Steven Chu, who is the Director of Lawrence Berkeley National 
Laboratory and a 1997 Nobel Prize winner in Physics. He is 
currently spearheading a new laboratory research initiative 
focused on solar energy. We have Dr. Arno Penzias, who is a 
Venture Partner with New Enterprise Associates in Palo Alto. 
While at Bell Laboratories, he won the Nobel Prize for Physics 
in 1978. Today, he's a venture capitalist with interests in 
renewable energy technology. Mr. Christian Larsen is Vice 
President for Generation for the Electric Power Research 
Institute in Palo Alto. His division provides data on cost and 
performance analyses for renewable distributed and hydro power 
energy generation technologies to the electricity industry. Mr. 
David Pierce is President and CEO of Miasole, I hope I'm close, 
a Santa Clara-based company that manufactures industrial scale 
solar products using thin film solar cell technology developed 
in the Department of Energy National Laboratories. And finally, 
Mr. Ron Swenson is co-owner of ElectroRoof, a solar equipment 
installation company, and EcoSage, an educational service 
company developing a program to build solar-powered satellite 
teaching centers in remote areas of the world in conjunction 
with solar education programs in schools.
    And, with that, I would turn over to our Ranking Member, 
Mr. Honda, for introductions.
    Mr. Honda. Thank you, Madam Chair.
    Just very quickly I'd like to acknowledge that we have 
Scarlett Li Lam; Forrest Williams, who is a Council Member for 
the city of San Jose; a Council Member from Sunnyvale, Chris 
Moylan, who is also a high-tech guy; and we have Bern Beecham 
from the Palo Alto City Council, the home site of Stanford 
University; and we have our Vice Chair, Cindy Chavez, who 
secured this place for us.
    Thank you, Madam Chair.
    Chairwoman Biggert. Thank you.
    Spoken testimony of the witnesses will be limited to five 
minutes each, after which the Members will have five minutes 
each to ask questions in rotation, and we will begin with Dr. 
Chu.

   STATEMENT OF DR. STEVEN CHU, DIRECTOR, LAWRENCE BERKELEY 
 NATIONAL LABORATORY; ACCOMPANIED BY DR. ARNO PENZIAS, VENTURE 
   PARTNER, NEW ENTERPRISE ASSOCIATES, PALO ALTO, CALIFORNIA

    Dr. Chu. Thank you, Chairman Biggert, thank you, Member 
Honda, and Members of the Committee. It's a great pleasure that 
I'm here again to testify before the House Science Committee on 
this issue of critical importance. The last time I was here, I 
was testifying on behalf of the National Academy of Sciences 
Report, chaired by Norm Augustine that's known as ``Rising 
Above the Gathering Storm,'' and in that hearing I was 
advocating that we consider very seriously starting an energy 
initiative research program.
    You should also know that, because it does have some 
bearing on this hearing, that I'm also currently co-chairing an 
InterAcademy Council study on, the title is, ``Transitions to 
Sustainable Energy.'' The InterAcademy Council represents over 
60 national academies around the world. The other co-chair is 
Jose Goldemberg, who was formerly the Secretary of Science and 
Technology of Brazil, and is currently now the Secretary of 
Environment for the State of Sao Paulo. He was a major 
architect in the Brazilian cane story pertaining to the `85 
ethanol for Brazil that is now selling for less than commercial 
gasoline without any subsidy.
    It is also important I should point out that that event 
happened in an environmentally responsible way, so that these 
are really truly long-term sustainable sugar cane plantations. 
They are not in there for ten years and the soil is depleted.
    In my remaining few minutes I would want to race through 
the slides, and so if I could first have the second slide, oh, 
I have total control, good, I'm the Director of Lawrence 
Berkeley Lab, which is a national laboratory adjacent to U.C.'s 
Berkeley Campus, and it's--I don't have total control, okay, 
there's a next--good enough, it's, okay, let me--although this 
isn't about this I just wanted to remind us why we are here. 
There are some dire predictions of climate change that could 
have very serious consequences, not only to the health of the 
Nation but the health of the world. The probability that these 
predictions are, is it a certainty, no, is it half, two-thirds, 
three-fourths, we can debate that, but the predictions are so 
serious that if someone told you there is an 80 percent chance 
you will die in 10 years if you didn't stop smoking you might 
think about stopping smoking. So, whether it's an 80 percent, 
or 90 percent, or 60 percent, these are the questions.
    So, going to that, I think that a dual strategy has to be 
adopted very aggressively by the United States, by both 
conserving and also developing new sources of clean energy.
    On the conservation side, that is energy efficiency, the 
Lawrence Berkeley Lab has really led the way, starting with the 
movement of a high-energy physicist named Art Rosenfeld, and in 
the middle of 1970 he gave up his career in high energy physics 
to devote to energy efficiency. He did a number of things that 
really dramatically turned around, first the State of 
California, and the United States, but to remind you, the State 
of California, since the middle 1970s, has been held constant 
in terms of the average amounts of electricity used per citizen 
in California, while the rest of the United States went up by 
six percent.
    One of the things that Rosenfeld did was, he instituted 
refrigerator standards. That brown curve is the size of 
refrigerators that went from 18 to 22 cubic feet. The standards 
marked the way of increasing efficiencies by four and a half 
times. During that time, the inflation adjusted cost of 
refrigerators had gone down by more than a factor of two. How 
much electricity did this save? Well, if you look at this bar, 
we would have used close to three billion kilowatts per year, 
and we are using about one-fourth of that. That compares to all 
the conventional hydro in the United States and about a third 
of the nuclear power which is 20 percent of all electrical 
generation.
    But, this is actually misleading. It's better than that. If 
you consider what is delivered in value to the home, the end-
user, and you look in terms of money, the dollars saved from 
just refrigerators was nearly double all of the U.S. hydro, and 
is now becoming comparable to all of U.S. nuclear, just 
refrigerators.
    And so, efficiency remains the lowest hanging fruit. This 
is the stuff we can do best and we should aggressively do this.
    Now, on the supply side, I want to focus on what we at 
Berkeley Lab think we can do, and it lends to our expertise, 
and it has to do with harnessing solar energy in various forms. 
So, we started this program called Helios, which includes 
several pathways, and I'm just going to talk about two. One is 
plants to cellulose, and then cellulose to chemical fuels that 
can replace oil. I'm going back and talking about the 
management.
    So, the idea here is that in the last several billion years 
nature has found a way to convert sunlight, carbon dioxide, 
water and nutrients into chemical energy. When you take that 
closed synthetic product, turn it into a chemical fuel and burn 
it, you then release the carbon dioxide, but in principle it 
can be as good as 95 percent CO2 neutral, in the 
sense that if you include all the energy you need to invest in 
terms of distribution, transportation, the growing of the crop, 
and what you then release as CO2, it will be at 
least 90 percent, probably 95 percent, CO2. So, 
that's the idea.
    Is there enough land in the world to do this, because, 
after all, we have to feed people. So, between 1950 and 1995, 
the world went from about two billion to six billion people. 
Had there not been any agricultural improvements we would have 
followed that red line, but instead we followed the blue line. 
The amount of land put under agriculture production to increase 
the number--feeding the number of people by a factor of three, 
was only 10 percent.
    So, there are further agricultural things. We haven't 
really worked at all at raising crops to produce energy, and so 
there now lies within rapidly developing science the ability to 
transfer a set of genes to make plants self-fertilizing, which 
is very energy intensive to make fertilizer, drought-resistant 
pest-resistant, and then once you have those plants how do you 
convert it much more efficiently into chemical fuels for 
transportation.
    If you--here is an estimate, you can argue by about a 
factor of two, but let's take a certain plant, miscanthus, the 
record is 45 dried tons per acre in Nebraska, in a field test, 
so we can take 30, you can be very conservative and take 15, 
100 gallons of ethanol per dried ton is what is commercially 
available today. If you take 100 million acres out of the 
roughly 400 to 450 million acres that we either have under 
cultivation or we pay farmers not to plant, that corresponds to 
300 billion gallons of ethanol a year, which when compared to 
the total U.S. gasoline consumption is actually more than that.
    So, there is the potential for replacing minimally half of 
the gasoline, and all of the gasoline imports, with biomass. 
And, as said, you can be very conservative, divide by a factor 
of two, it's still a very compelling number.
    Where are the great gains? Well, one of the biggest gains 
is that right now the conversion of cellulose material into 
biofuels is very energy intensive, and one can do much better. 
There is a new field called synthetic biology, which imports a 
whole set of genes. One of the poster examples, poster child 
examples of this synthetic biology, was something one of our 
laboratory scientists did, Jay Keasling, he took an active 
ingredient of a plant, which was a miracle malaria cure, and 
he's taught e. coli bacteria how to make this plant. It's been 
very successful. It's now being commercialized and it will soon 
be distributed to Third World countries at a cost of .20 cents 
a cure.
    That same technology can be used to engineer organisms to 
produce ethanol, methanol, butanol, or other hydrocarbon fuels.
    There are other technologies, micro interface technologies, 
where you can use these to have, essentially, an accelerated 
directed evolution for the microbes and for the genetic plants, 
but mostly for the microbes, so again, this is a very rapidly 
changing area of technology.
    And finally, one can think of, and we are, and others are 
beginning to think about, algaes that naturally occur, but to 
engineer them so that they grow suitable biofuels at much 
higher efficiency than we think--that we know are possible 
today, and we think compares by a factor of ten.
    So, let me close and say that national and international 
concerns, as we all know, national security ranks very high, 
but national security is intimately tied to energy security. 
There is the economic prosperity of getting out of our 
dependency on foreign oil, but also having energy that's 
affordable, and finally, environmental issues, local and 
global.
    [The prepared statement of Dr. Chu follows:]
                    Prepared Statement of Steven Chu

Chairman Biggert, Ranking Member Honda, and Members of the Committee,

    I am Steve Chu, Director of Lawrence Berkeley National Laboratory, 
and it is again my pleasure to testify before the House Science 
Committee on an issue of such critical importance to the United States 
and to the world. The last time I appeared before your committee I was 
privileged to represent the National Academy of Sciences, National 
Academy of Engineering, and Institute of Medicine's Committee on 
Prospering in the 21st Century and to discuss the recommendations of 
the committee's report Rising Above the Gathering Storm: Energizing and 
Employing America for a Brighter Economic Future.
    Because of its direct bearing on this Hearing, I wanted to let you 
know that I am currently serving as Co-Chair of the InterAcademy 
Council's study panel on Transitions to Sustainable Energy. The 
InterAcademy Council was created by the world's academies of sciences 
to bring together the best scientists and engineers worldwide to 
provide high quality advice to international governmental and non-
governmental organizations. It is the charge of the Transitions to 
Sustainable Energy panel to provide scientific advice to policy-makers 
on moving toward adequately affordable, sustainable and clean energy 
supplies. My Co-Chair is Jose Goldemberg, formerly the Secretary of 
Science and Technology and the Secretary of the Environment for Brazil, 
and an expert in sustainable energy technologies who helped to shepherd 
Brazil's sugar cane-based energy phenomenon. The panel has given me a 
broad and varied view of the many energy challenges and opportunities 
facing our world. Our final report should be completed by early 2007 
and I will make sure that a copy is transmitted to the Committee once 
available.
    Today, I'm excited to share with you developments in science, 
particularly at Berkeley Lab, that I believe hold great promise for 
addressing the world's energy and environmental challenges. My comments 
or written testimony are not intended to represent the policies or 
positions of the Department of Energy.

The Challenge and the Opportunity

    There is now general consensus that humanity faces an energy and 
environmental crisis. Global energy use has grown to the point where 
the by-products of man's energy consumption are significantly 
influencing the atmosphere and climate, with costly and potentially 
disastrous consequences. Experts forecast that the ability to locate 
viable sources of energy will increasingly determine the degree of 
economic and technological development. Motivated by a strong desire to 
provide solutions to these problems, and encouraged by the findings of 
the Gathering Storm report, the President's American Competitiveness 
and Advanced Energy Initiatives, and new research funding opportunities 
within the Department of Energy, concerned scientists and engineers 
from across a diverse range of disciplines and institutions are 
developing new and innovative approaches to energy research. This is 
what we are also doing at Berkeley Lab.
    There has been an ongoing effort for decades on the part of the 
scientific community to find a solution to the renewable energy 
problem. So is there any reason to believe that the problem is more 
amenable to solution now? The answer is yes. Major recent advances in 
science and technology have dramatically improved the prospects for 
finding a technical solution. The multi-billion dollar investment in 
the National Nanotechnology Initiative that was so ardently proposed 
and supported by Congressman Honda and this committee has led to 
dramatic advances in the synthesis and control of materials that are 
crucial to the problem. Large scale advances in genomics have led to 
whole genome sequencing, as well as to the new field of synthetic 
biology, a new scientific discipline in which Berkeley Lab is a 
pioneer.

The Helios Project

    Answering the call of the Congress and the Administration to 
discover new and cleaner energy sources, we at Berkeley Lab are 
embarking on an exciting new initiative called the Helios Project. 
Hoping to do for the supply-side of the equation what we've done at 
Berkeley Lab on the demand-side, the objective of Helios is to 
accelerate the development of renewable and sustainable sources of 
energy using sunlight. We are approaching this goal with a clear 
commitment, intent on developing solutions from basic science through 
to practical uses.
    Although there is currently no ``magic bullet'' to solve the energy 
problem, we believe that utilization of the sun holds significant 
untapped promise for reducing the need for fossil fuels. Using Helios 
as an example, my testimony will describe exciting new scientific and 
technological opportunities that are available to researchers to 
address the fundamental barriers to developing sustainable energy 
alternatives.
    The ultimate goal of Helios, simply stated, is to use sunlight to 
manufacture a transportation fuel. Transportation fuels would be the 
most costly form, but the most valuable form, of solar energy. Helios 
recognizes that there are several routes to accomplish this goal, and 
various approaches require materials and techniques that will have 
significant impact in other solar applications. For example, one 
approach is to use photovoltaics to capture sunlight that then can be 
used with photoelectric cells to convert carbon dioxide and water into 
liquid fuels or hydrogen. Scientists and engineers will collaborate to 
make more efficient and less-costly photovoltaic systems and 
electrochemical systems. Either of these new systems will have vast 
implications for other clean energy routes and stand-alone processes.
    A comprehensive and accelerated program of basic science and 
technology development, such as Helios, can make great strides. Much 
like the development of the transistor at Bell Laboratories, Helios 
will be managed in a way that ensures progress toward its applied 
technology goals. Because of the ability to marshal resources, focus 
scientific research and build broad teams of multi-disciplinary 
expertise, a national laboratory is uniquely organized to attack big 
scientific challenges like the present energy crisis. Berkeley Lab is 
well suited for this task because of our long history in biological and 
chemical systems research such as photosynthesis, as well as our world-
leading and pioneering work in nanotechnology and synthetic biology.
    Even so, the scientific problems to solve and the technological 
barriers to overcome are huge and other Labs and research universities, 
along with an engaged and proactive commercial sector, will be required 
to ensure the successful translation of science and technological 
achievement into the marketplace.

The Four Pathways

    The overarching goal of the Helios Project is to revolutionize the 
means by which we harvest the energy of sunlight, so that this source 
will satisfy a majority of our energy needs. Figure 1 illustrates the 
four major pathways for going from sunlight to fuel that Helios will 
explore: two based on living systems, and two based on artificial 
systems. A great advantage of the Helios Project is that all programs 
and research pathways will be closely integrated. We have analyzed each 
of the four pathways, to determine the present status, the 
requirements, the major roadblocks, and the benefits that may arise as 
each roadblock in each path is solved.



Path I: Sunlight to Fuel via Biomass

    Biomass is the most abundant renewable carbon source on the planet 
and has long been a major combustible fuel for mankind. While biomass 
has the potential to meet most, if not all, of the transportation fuel 
needs, there are several difficulties in using biomass for production 
of fuels. The first problem is that current biomass crops are far from 
optimal for energy- and water-efficient production. The second problem 
is the expense and inefficiency of the process for converting biomass 
to fuels. Helios will address both problems.
    Currently ethanol for transportation is produced primarily from 
sugar cane and corn. Possibly we can find a way to create new plants 
that will ``grow energy'' by incorporating genes that will make the 
plants self-fertilizing, and drought- and pest-resistant. The creation 
of crops efficiently raised for energy will also take full advantage of 
our great American agricultural capacity. Also, by designing microbes 
which will behave in new ways, our scientists hope to convert cellulose 
into chemical fuel more efficiently, so that biomass fuel can be 
obtained at a cost-effective price, and to keep the overall cycle as 
carbon-neutral as possible.

Path II: Microbial synthesis of biofuels using photosynthesis

    Another approach is to skip production of the intermediate biomass 
and produce the fuels directly from sunlight using photosynthetic 
microorganisms. This model will use nature's mechanism as the refinery. 
While there are microbes and plants that utilize sunlight directly to 
produce oils and alcohols, they are not efficient enough to supply a 
significant fraction of U.S. energy need. They need to be optimized for 
their fuel production role. Berkeley Lab's strengths in photosynthesis 
since the early discoveries by Nobel Laureate Chemist Melvin Calvin 
will be put to use to increase photosynthetic efficiencies. DOE's Joint 
Genome Institute (JGI) and the Berkeley Lab Genomics Division will also 
play integral roles in this endeavor.

Path III: Sunlight to Electricity: Nanotechnology enabled solar cells

    There are many possible routes to achieve solar energy utilization. 
However, all known potential routes are limited now by two types of 
serious roadblocks: one is the need for fundamentally new and optimized 
materials for use in solar collectors, efficient processing steps, and 
energy handling. The other is that because of daily, seasonal, and 
other variations, the use of solar energy must involve the development 
of efficient storage strategies. The Helios Project is devoted to 
developing the basic science needed to overcome these roadblocks.
    Because the elementary steps of conversion of sunlight to 
electricity in either biological or non-biological pathways takes place 
on the nanometer scale, the advent of new methods to control and 
pattern matter on the nanoscale has created tremendous new 
opportunities for solar cell design. Two broad areas of activity will 
be pursued: with new nanotechnology based solar cells, it is possible 
to explore concepts for how to dramatically increase the power 
efficiency of solar cells; second, low cost high volume solar cell 
fabrication techniques will be enabled. By controlling the size, shape, 
dimensions, and connectivity of nanoscale building blocks, it is 
possible to control the basic energy levels of a system, allowing for 
the design a new type of solar cell.

Path IV: Direct Photochemical or Photoelectrochemical Solar to Fuel 
                    Conversion

    Finally, nature's photosynthetic machinery constitutes proof of 
principle that solar fuels can be generated by direct chemical 
conversion in a single device. However, there are energy costs in the 
production and handling of huge amounts of biomass. The goal of this 
research is to develop single devices that mimic the pathways of 
natural plants in producing fuel from water and sunlight but which are 
stable and have significantly greater efficiency. The recent progress 
in the understanding of the design principles of natural photosynthesis 
coupled with the rapid emergence of new nanostructured inorganic, 
organic and biological/non-biological hybrid materials has opened up 
opportunities to develop engineered solar to fuel systems that will 
meet the efficiency and durability requirements of a practical system. 
In many ways this path may hold the greatest long term promise, but is 
consequently probably the most difficult research objective.

Cross-Cutting Areas

    In addition to the four pathways, we have identified cross-cutting 
areas of fundamental science and engineering which will be further 
developed for the Helios Project to succeed. Breakthroughs in these 
crosscutting areas will have a positive impact on more than one of the 
four paths. The cross-cutting areas are: Catalysis, Separations, 
Theory, Synthetic Biology, and Manufacturing.
    As an example, synthetic biology is an emerging field that will 
play a tremendous role in the success of the Helios Project and other 
alternative fuel research initiatives. In July 2003, Berkeley Lab 
established the world's first Synthetic Biology Department, which seeks 
to understand and design biological systems and their components to 
address a host of problems that cannot be solved using naturally-
occurring entities. University of California at Berkeley Professor and 
Lab Scientist Jay Keasling heads this department and is one of the 
pioneers of synthetic biology. He is also one of the leaders of the 
Helios Project.
    The overarching role of the cross-cutting synthetic biology 
component of Helios is to create biological components that can be used 
across the whole spectrum of Helios activities. For example, this 
approach will enable us to rapidly and reproducibly engineer cells to 
convert renewable resources (sunlight, cellulose, starch, and lignin) 
into fuels.
    The discipline's specific aims are 1) to develop the foundational 
understanding and standard, interchangeable, biological components 
(parts, devices, and chassis) that will allow us to routinely build 
large numbers of useful biological systems; 2) to develop mathematical 
models and computing methods to organize and analyze data, predict the 
behavior of biological components, and design new biological components 
and large integrated systems; and 3) to utilize state-of-the-art 
molecular profiling technologies to better understand biological 
systems and to optimize their function.

When will the Helios Project produce results?

    Helios is focused on revolutionary research to accomplish 
significant advances. The risk for any individual project is 
substantial, but with all approaches taken together the probability of 
making significant advances in the overall goal of developing 
sustainable energy alternatives is high. We cannot know in advance 
which approach or research area will be most valuable, and which will 
pay off earliest. So we have given great thought to our management 
plan, and have built in the flexibility to respond to new results and 
the freedom to veer toward something new, away from the current 
approach, if that seems to be the more promising route.
    We realize that timeliness is essential. To ensure the timely 
success of the Helios Project, we have adopted an active management 
strategy. The technical requirements for each path have been clearly 
defined, as are the known major bottlenecks. These will be re-examined 
twice yearly. Helios investigators will be required to develop core 
research areas but also to directly contribute to advancing at least 
one of the four paths. As the project advances, it will be necessary to 
focus the effort into those directions that appear most promising. With 
a tightly managed program, the Helios Project will produce a range of 
advances in specific sectors (like improved photovoltaics or a better 
way to break down cellulose) within five years, with the goal of a 
major breakthrough within ten years.

Conclusion

    The mission of the Department of Energy is to advance basic science 
and to explore energy solutions and promote environmental stewardship. 
Because of increased funding scheduled for basic sciences and energy 
research at DOE and with the public's growing awareness of the energy 
crisis and the environmental consequences of inaction, we believe that 
now is the right time for Helios.
    Over the past three decades, Berkeley Lab has been a leader in 
developing energy efficient technologies, standards and practices that 
have a significant impact on the demand side of the energy equation. 
Technologies developed at Berkeley Lab have saved the U.S. economy tens 
of billions of dollars in energy costs--these technologies include the 
development of dual-paned, gas-filled energy-efficient windows; the now 
ubiquitous energy-efficient electronic ballasts for lighting; software 
tools for better building design; and the development of appliance 
standards to save energy and water.
    I strongly believe that the most immediate and substantive gains in 
addressing the energy challenge are available through energy efficiency 
and conservation.
    However, addressing the demand side alone will not fully provide 
the solutions necessary to address the energy and environmental crisis 
we face today. You must also address the supply side.
    It has been my pleasure to describe our initiative to you today, 
and I look forward to keeping you updated as we work to build a 
systematic and well-focused program of transformational energy 
technologies development.
    Chairman Biggert, Ranking Member Honda, and Members of the 
Committee, thank you for the opportunity to provide testimony on this 
critical topic.
    I would be glad to respond to any questions.

                        Biography for Steven Chu
    Steve Chu, 57, became Berkeley Lab's sixth Director on August 1, 
2004. A Nobel Prizewinning scholar and international expert in atomic 
physics, laser spectroscopy, biophysics and polymer physics, Dr. Chu 
oversees the oldest and most varied of the Department of Energy's 
multi-program research laboratories. Berkeley Lab has an annual budget 
of more than $520 million and a workforce of about 4,000.
    His distinguished career in laboratory research began as a 
postdoctoral fellow in physics at the University of California's 
Berkeley campus from 1976-78, during which time he also utilized the 
facilities of Berkeley Lab. His first career appointment was as a 
member of the technical staff at AT&T Bell Laboratories in Murray Hill, 
N.J. where, from 1978-87, his achievements with laser spectroscopy and 
quantum physics became widely recognized. During the last four years 
there he was Head of the Quantum Electronics Research Department, 
during which time he began his ground-breaking work in cooling and 
trapping atoms by using laser light. In 1987, he became a Professor in 
the Physics and Applied Physics Departments at Stanford University, 
where he continued his laser cooling and trapping work.
    This work eventually led to the Nobel Prize in Physics in 1997, an 
honor he shared with Claude Cohen-Tannoudji of France and United States 
colleague William D. Phillips. Their discoveries, focusing on the so-
called ``optical tweezers'' laser trap, were instrumental in the study 
of fundamental phenomena and in measuring important physical quantities 
with unprecedented precision.
    At the time, Dr. Chu was the Theodore and Francis Geballe Professor 
of Physics and Applied Physics at Stanford University, where he 
remained for 17 years as highly decorated scientist, teacher and 
administrator. While at Stanford, he chaired the Physics Department 
from 1990-93 and from 1999-2001.
    He is a member of the National Academy of Sciences, American 
Philosophical Society, American Academy of Arts and Sciences, Academia 
Sinica, and Honorary Lifetime member, Optical Society of America. He is 
also a foreign member of the Chinese Academy of Sciences and the Korean 
Academy of Sciences and Technology.
    Dr. Chu has won dozens of awards in addition to the Nobel Prize, 
including the Science for Art Prize, Herbert Broida Prize for 
Spectroscopy, Richtmeyer Memorial Prize Lecturer, King Faisal 
International Prize for Science, Arthur Schawlow Prize for Laser 
Science, and William Meggers Award for Laser Spectroscopy. He was a 
Humboldt Senior Scientist and a Guggenheim Fellow and has received six 
honorary degrees.
    Born in St. Louis and raised in New York, Dr. Chu earned an A.B. in 
mathematics and a B.S. in physics at the University of Rochester, and a 
Ph.D in physics at UC-Berkeley. He maintains a vigorous research 
program and directly supervises a team of graduate students and 
postdoctoral fellows. He is author or co-author of more than 160 
articles and professional papers, and over two dozen former members of 
his group are now professors at leading research universities around 
the world.

    Chairwoman Biggert. Thank you very much.
    Dr. Penzias, you are recognized for five minutes.

     DR. ARNO A. PENZIAS, VENTURE PARTNER, NEW ENTERPRISE 
               ASSOCIATES, PALO ALTO, CALIFORNIA

    Dr. Penzias. Thank you for allowing me to speak today. 
Again, I'm going to leap on the side of shortness, so I keep in 
the five minutes, and then it can be added into the stuff I 
gave you.
    I framed my testimony in response to the questions that 
were sent the witnesses. The first question, what is the 
current state of adoption of renewable energy in the United 
States? And, what's limiting that rate of adoption?
    Right now, I think it's high cost and limited supply. High 
cost, and to me dollars--this is why I have mixed feelings 
about subsidies, they were right as an interim step, but 
dollars are probably the best test of whether something works 
or not. And so, you don't have to do any calculations to know 
that there's less energy going into the ethanol in Brazil, 
because it costs less. You know that nobody is wasting energy 
there, there's no subsidy, so it's a great thing. We don't 
always want to do that, but that's what happens in that case.
    And, I think right now it's fair to say that that really is 
the problem. But, what's the outlook, and what research or 
innovation could prove that outlook? For me, I think the 
outlook is extraordinarily positive. I have been an alternative 
energy skeptic for decades. I started in alternative energy 
some 30 years ago, about the same time as that same little hook 
with the first Arab oil boycott in the early 1970s. That's just 
about 30 years ago. And, during that time, that period, I was 
frustrated by the lack of progress, and not for want of 
resource, not for want of will, not for want of bright people, 
it just takes time, the surprises come, in my experience, from 
other areas. It isn't the people that are looking at 
alternative energy.
    The thing I will show you later is made from an automobile 
headlight, and nobody would have thought that that was going to 
be a way of cutting the price of silicon, not by five or seven 
percent, but by 70 percent. That's dramatic, and that's the 
kind of thing that happens when creative people get together. 
It's what we do here in Silicon Valley wonderfully; and this 
is, you know, I'm a zeal of a convert. I worked for the largest 
corporation in the world, and the world's best research 
laboratory for 37 years, and when I got out here, one reason I 
came was because I knew too many things that didn't work. And, 
boy, have I been surprised since I've been here.
    Now, so let me move on to some examples of where I think 
these opportunities are. Silicon was the one I spoke about, 
silicon I just mentioned, and here by the way is the automobile 
headlight. This is one piece of a much larger solar 
concentrator. At the back of it, and we can look at that later, 
at the back of it there is a very small, very efficient, 
extremely expensive, solar cell, smaller than the tip of my 
finger. On an area basis, there would be no way of using it. 
This thing, for a tiny area you have to pay $6. But, because 
you are able to use this automobile headlight shaped glass 
technology, you get a 500 to one improvement. So, it looks to 
the sun as if it's 500 times bigger.
    So, it's private enterprise together with the folks that 
built this, which by the way was a government laboratory, NREL, 
this triple junction solar cell, which is by the way fueling a 
whole new generation of solar concentrators, not just the 
company.
    And then, there is a research component as well, as I find 
in almost every company, which comes from the university, 
Professor Roland Winston at the University of California at 
Merced, who invented something called non-imaging optics. As a 
physicist, I was shocked that you really can fool Mother Nature 
into collecting more light than I would have expected as an 
astronomer. You can have both broad field of view and enormous 
magnification, as long as you don't have to see what's there. 
The solar cell doesn't care what it sees, it doesn't matter 
where the light is coming from, it still converts it. So, this 
thing here by the way has only eight parts, which is only one 
more than the .89 cent nail clippers you can buy on a key chain 
at WalMart.
    So, the cost would be $6 on here, which works out to about 
.50 cents a watt, is the biggest single cost, and I need hardly 
remind you, silicon is like $4 or $5 a watt, if you can get it. 
So, this is a big advance, this is a big advance, and it's 
coming, just a simple example at Silicon Valley. There are lots 
of other examples, I can give you examples in fuel cells, you 
know about some of those and others, but I thought that was one 
example, we are not talking about details here today.
    So finally, what should the government do? First and 
foremost in my judgment, and I can't mention this strongly 
enough, and that is to continue the tradition of supporting our 
country's research universities. I'm old enough to have 
benefitted from the Korean War GI Bill, and that started the 
whole post war boom, from which the United States had an 
acceleration which has kept us way ahead of the rest of the 
world. The universities are at the heart of all this, and just 
as mentioned, Stanford, they mention Berkeley as well, 
everybody wants a Silicon Valley, and every Silicon Valley, 
wherever they are in the world, has a great university at 
heart.
    Another thing, the subsidies, there's a wide variety of 
them. I really like variety. Some come from the states, some 
come from all sorts of other places. They spur demand. They get 
people interested, but the interesting thing, while some people 
think that is needless duplication, what it does is it 
encourages exactly the kind of exploration and opportunistic 
advances that have made our country's venture a buzzword, you 
know, essentially, the unmatched model for progress in the 
entire world.
    I've gone to many countries. Everybody says, how do we get 
our own Silicon Valley, or how do we make ours like the one 
there? And, one size fits all buzzwords are great, because they 
lead people into the future, but you don't want to lead people 
too fast unless you really know where you are going, things 
like hydrogen economy for example, you know, I think we ought 
to be moving past some of those things, and I think we are.
    Now, another thing, there's the vast and diverse needs of 
the Federal Government, those triple junction solar cells were 
spurred by the high prices of them. They are used for 
aerospace, for defense, other purposes, they weren't ready for 
commercialization, but they are available now, because all this 
stuff from the Federal Government that comes, those needs 
generate a very important demand. And, some of that demand is 
going to renewable energy, for more efficient, lighter weight, 
lower consumption, even for diverse sources of diesel oil for 
the U.S. Navy through, perhaps, biodiesel--all sorts of things 
that are moving this ahead.
    And then, so it's great that federally-funded sales 
sometimes showcase energetic products as well.
    And so, the last thing is the partnering between the 
federal labs and the private industry. I think in some cases 
it's very good. One of my companies, for example, has a very 
nice CRADA, and I now understand what Cooperative Research and 
Development Agreement, you know, what it stands for, with the 
National Renewable Energy Laboratory; and that's worked 
wonderfully to get this company jump started. So, that's a nice 
thing.
    And finally, you mentioned the developing countries, there 
are opportunities and challenges there, and for me the 
opportunities in developing countries for us to sell to them, 
we have the inter-company partnering. We have local 
manufacturing, local distribution, local support, and as 
those--and as unit costs drop, because they can't afford 
subsidies for that stuff, that will continue.
    But, it isn't just colonialism, it is the other side of 
that. Because other countries have lower levels of 
infrastructure, it may not be that the centralized 
manufacturing and distribution models, I mean, Dr. Chu showed 
this fantastic ethanol plant, you know, cellulosic ethanol 
plant, in other places you may want to go with something which 
is more labor intensive and could be done locally.
    By example, in a country like India, the southern half, 
which has heavy rainfall, would be very good to produce ethanol 
through sugar cane. You don't need a microbe, you just have 
local people cut it up, because ethanol can be made very 
quickly from sugar in local areas, transportation costs are 
saved, and there is labor for the farmers who then make their 
own fuel on the spot. And so, there's a lot of opportunity 
there. The transportation cost is terrible in some of these 
remote areas, so, it helps.
    In the northern area, you probably would go with Jatropha, 
one of the species in the Genus Jatropha, which makes an 
inedible nut, which can be squeezed and used directly as 
biodiesel, and so you would find on that end the local--just a 
simple calculation that shows that a farmer, an unusable acre 
can give a farmer about $1,000 a year of cash income in a Third 
World area for a part-time job, just harvesting nuts, hiring 
somebody in a pick-up truck to take them to the local little 
processing plant, which doesn't have to be much bigger than 
something that can be fit in a container. So, that kind of 
thing is wonderful in the Third World, not something we are 
going to use here, but we can export that technology and folks 
in India are really moving very fast with it anyway, we don't 
have to teach--they have places like IIT, you don't have to 
worry that they understand those things.
    Chairwoman Biggert. Doctor, would you sum up, please?
    Dr. Penzias. I'm done. Thank you.
    [The prepared statement of Dr. Penzias follows:]
                 Prepared Statement of Arno A. Penzias
    Thank you for allowing me to contribute to this important hearing. 
I have framed my prepared testimony to respond to the four questions 
posed in the Charter for this hearing.

1.  What is the current state of adoption of renewable energy sources 
in the United States? What factors are limiting the rate of adoption of 
renewable energy technologies?

    Right now, I think it's fair to say that relatively high cost and 
current supply constraints associated with currently-available 
renewable energy technologies are limiting adoption.

2.  What is the outlook for potential improvement in market penetration 
of renewable energy technologies? What are the main research efforts 
that could improve that outlook?

    Based upon what is currently happening in this technology area, I 
see the outlook for dramatic improvements in market penetration as 
being very positive. As an active venture investor and advisor for the 
past ten years, I can recall few investment areas which have engendered 
a degree of investment interest comparable to what we now see in the 
renewable energy arena. Speaking personally, I very much share this 
point of view, so much so, that I now devote the major portion of my 
efforts to investments in this area.
    I have been concerned about energy issues for some thirty years, 
and have worked to seek and perfect alternatives to our country's 
dependence upon fossil fuels, but felt frustrated by the lack of viable 
alternative approaches to this vexing problem. It wasn't a question of 
resources or interest. Even given the best intentions, talent and 
resources, program after program yielded little in the way of concrete 
results. In the last few years, however, this situation has taken a 
dramatic turn for the better, thanks to a growing array of novel ways 
is which advances in a wide variety of seemingly-unrelated technology 
areas--as well as in several areas of applied science--are being 
employed to overcome my earlier concerns about conventional approaches 
to green energy.
    Silicon solar cells, for example, work well but cost too much to 
produce and install. Despite some incremental progress in silicon 
device costs, I see other photovoltaic technologies poised to grow far 
more rapidly--notably large-area PV modules based upon thin crystalline 
films and organic materials, as well as novel approaches to even higher 
efficiencies through a combination of emerging advances in sunlight 
concentration, with small but extremely efficient multi-junction 
devices.
    I can illustrate this last point in detail, by citing three key 
elements of a solar concentrator recently completed by SolFocus--our 
firm's most recent energy investment. These innovations should give you 
the flavor of what went into their design. First: the use of an 
innovative imaging geometry called non-imaging optics (created and 
perfected by Professor Roland Winston of the University of California, 
Merced) allows each module to capture more solar energy per square inch 
of area than the most perfect conventional magnifier one can buy. 
Second: the precision optics necessary to implement this minor miracle 
can be formed and assembled out of a total of only eight parts per 
module, including the detector, at a manufacturing cost comparable to 
that achieved by the makers of today's sealed automotive headlights 
(the enabling technology in this instance). Third: The concentrated 
light is converted into electricity with unsurpassed efficiency by a 
unique triple-junction solar cell invented at the National Renewable 
Energy Laboratory (far more expensive per unit area than other types of 
solar cells, a tiny device serves a surface area some five hundred 
times larger).

3.  What should the Federal Government be doing (or not doing) to 
encourage the commercialization of, and demand for, new renewable 
energy technologies? How well aligned are the Department of Energy's 
activities with what the investment community is doing?

    First and most important, in my judgment, the Federal Government 
can encourage the commercialization of new renewable technologies 
through continued support for our country's universities, the source of 
America's innovation edge, a tradition of support that traces back to 
the land grant colleges of the 19th century and the GI Bill that fueled 
our country's emergence as the world's unquestioned leader in science 
and technology. There is hardly a place on the face of this Earth that 
doesn't hope to have its own ``Silicon Valley,'' rooted in the presence 
of a great university. With the demise of vertical integration as the 
economic base for corporately supported long-term applied research, the 
task of fueling continued innovation has fallen upon our university 
system.
    The wide variety of mandates, subsidies and other incentives for 
the creation and use of alternative energy, enacted at the federal and 
State level, serve to spur demand for new technologies of various 
kinds, thereby spurring innovation, investment, market testing and 
further innovation, in virtuous circles. The great virtue of what some 
might see as needless duplication encourages exactly the kind of 
exploration and opportunistic advances that has made our country's 
venture capital system the unmatched model for progress in the global 
economy. One-size-fits-all buzzwords, such as ``hydrogen economy'' can 
help focus attention, as long as they don't constrain behavior.
    The vast and diverse needs of federal agencies and suppliers 
frequently offer ideal early test beds for new solutions to under-
solved problems. Given the necessarily complex nature of federal 
procurement regulations, I'm pleased that federally-funded sales of 
innovative products have often proven to be an early means of show-
casing new alternative-energy ideas and products.
    At Bell Labs, I encouraged active partnerships between efforts in 
my research organization with those business-oriented organizations, by 
making sure that both sides had skin in each game. In the same way, I 
now see successful examples of alignment between DOE Labs and the 
investment community, in the increasing use of CRADA's, particularly at 
NREL.

4.  What opportunities and challenges exist for the sale and use of 
renewable energy generation in developing countries? How do these 
opportunities and challenges differ from those in developed countries?

    Opportunities include inter-company partnering, particularly in the 
case of local manufacture, distribution and support, for energy 
technology developed in the U.S. These opportunities should grow 
dramatically as unit costs drop to more attractive levels Challenges 
include difficulty in applying common business practices and the 
protection of intellectual property.
    Given the lower levels of infrastructure in the developing world, 
the centralized manufacture and distribution models favored in our 
country may not apply as universally. On the other hand, labor 
intensive installation costs ought to prove less of a barrier to 
adoption in developing economies.
    In biofuels, for example, short term opportunities in the U.S. 
would include using existing feed stocks--such as corn for ethanol, and 
waste grease and edible seed oils for biodiesel, possibly followed 
later by cellulosic ethanol. In the developing world, we are more 
likely to see special plants (especially Jatropha) in arid areas such 
as northern India, and sugar cane in areas of abundant rainfall. These 
crops appear especially useful in the developing world, where 
transportation favors local processing on small scales, with the work 
of harvesting done by local farmers as an additional source of income.

                     Biography for Arno A. Penzias
    Arno Penzias is a Venture Partner at New Enterprise Associates. In 
this role, he prowls Silicon Valley and similar places, seeking out 
promising technology futures and catalyzing their applications. His 
present Board memberships include Glacier Bay, Ion America, and 
Konarka. In addition to helping NEA portfolio companies on an as-needed 
basis, in areas such as technology, strategy, and intellectual 
property, Arno serves on--and frequently chairs--Technical Advisory 
Boards for a number of NEA companies such as Alien Technology, 
Heliovolt, Hillcrest Labs, Luxtera, Motion Computing, SolFocus, 
Spreadtrum Communications, Telegent Systems, and Teneros. A long-time 
skeptic on the commercial viability of ``alternative energy'' 
technologies, he now finds his earlier conclusions outdated by the 
advances made in number of seemingly-unrelated technologies, and their 
exploitation by a relatively-small handful of entrepreneurs. Having 
found a few already, he earnestly hopes to find--and help finance--more 
of them.
    Dr. Penzias began his scientific career in 1961 when he joined Bell 
Laboratories as a Member of Technical Staff. He conducted research in 
radio communication and took part in the pioneering Echo and Telstar 
communications satellite experiments. As a scientist, he is best known 
for his work in radio astronomy--most notably, the discovery of Cosmic 
Background Radiation, which earned him the Nobel Prize for Physics, in 
1978, together with Robert Wilson--as well as his pioneering work in 
the detection and study of a rich variety interstellar molecules, 
thought to be a possible basis for the development of life.
    He left Bell Laboratories in 1998, having led its world famous 
research organization, and then serving as its Chief Scientist.
    The author of over one hundred scientific and technical papers, he 
is also a sought-after speaker on emerging trends, and has written a 
number of articles on information technology, especially its impact on 
business and society. His highly acclaimed book on the subject, ``Ideas 
and Information'' was published by W.W. Norton. A second book, entitled 
``Digital Harmony: Business, Technology, and Life After Paperwork'' 
published by Harper Collins, charts the course of the Information 
Revolution and its demands for higher levels of system integration.
    A member of both The National Academy of Sciences, and The National 
Academy of Engineering, Dr. Penzias received a Bachelor of Science 
degree from the City College of New York, after serving in the U.S. 
Army Signal Corps he attended Columbia University where he received his 
Master's and doctorate degrees. He has also received a number of 
honorary degrees, as well as other awards for his contributions to 
science, R&D management, and public service.

    Chairwoman Biggert. Okay, thank you.
    Mr. Larsen, you are recognized.

   STATEMENT OF MR. CHRISTIAN B. LARSEN, VICE PRESIDENT FOR 
   GENERATION, ELECTRIC POWER RESEARCH INSTITUTE, PALO ALTO, 
                           CALIFORNIA

    Mr. Larsen. Chairman Biggert, Mr. Honda, I represent the 
Electric Power Research Institute, which is a non-profit 
collaborative R&D organization conducting electricity-related 
research in the public interest. Our public and private members 
account for about 90 percent of the kilowatt-hours sold in the 
U.S., and we now serve over 1000 electricity and governmental 
organizations worldwide, in about 40 countries.
    EPRI appreciates the opportunity to address the future 
prospects for renewable energy, and I really appreciate the 
invite.
    I'd like to make several key points. The U.S. must keep all 
of its energy options open to meet the uncertainties of the 
future. For electricity, this means improving the economics, 
the integration and utilization of renewables and energy 
efficiency as well as building and sustaining a robust 
portfolio of affordable generating options for the future, and 
this means also ensuring the continued use of coal, nuclear and 
natural gas.
    EPRI believes that prudent investment decisions for power 
plants in the future need to include considerations associated 
with generating power in a carbon constrained future. Whether 
decision-makers assume the future cost of CO2 to be 
zero as it is today in the U.S., or $30/ton, or $50/ton, this 
all dramatically changes the relative cost of the various 
supply options. A carbon-constrained future could and would 
make renewable energy more economically competitive and more 
important.
    Currently renewable generation, excluding large hydro, 
contributes less than two percent of the Nation's electricity 
supply. Until recently, the expected future role of renewable 
energy in the U.S., based on projections from the Energy 
Information Agency using the NEMS model and other models, has 
not been significant. Long-term estimates for contribution of 
renewables to total electric energy remain around two percent.
    Recently, some new EPRI modeling shows that the role of 
renewables, as well as other low and non-emitting resources, 
could be expected to increase substantially. In one base case 
scenario in an EPRI model, the estimates showed the 
contribution for renewables by 2050 in the range of five to six 
percent. Now, this represents 700 to 800 percent increase over 
today's megawatt hours, and this should be noted that this was 
not taken into account in the introduction of a disruptive 
technology that could significantly decrease the cost of these 
renewables.
    Various distributed generation technologies, which include 
renewable energy sources, such as roof-top solar, are being 
developed and they will enhance the current distribution 
system. These will add power system flexibility, increase end-
use efficiency. Distributed generation and central station 
generation are not either/or alternatives; EPRI believes that 
they will have to complement each other in the future power 
delivery system.
    There also needs to be recognition that future renewable 
technologies as solar, wind and, eventually, ocean energy are 
not dispatchable, i.e., controllable, resources and that there 
will be a cost associated with the integration of these 
resources into the system. This cost is small today, when the 
significant portion of available generation, such as nuclear 
hydro or gas turbines, is dispatchable. However, as the 
percentage of renewable generation increases, so will the cost 
of grid integration.
    Finally, technology breakthroughs will undoubtedly enable 
renewable energy to meet the electricity demand in new and 
better ways. Economic roof-top solar, clean fuels from biomass, 
effective energy storage with hydrogen, or advanced batteries, 
would help diversify U.S. energy resources and bring new 
opportunities to the electricity industry.
    In summary, given the expected growth and demand for 
electricity and the many uncertainties in our energy future, we 
believe that developing diversity in electric generation is 
critical as an objective for the country, also striving for 
cleaner and more sustainable resources will bring more 
renewable energy into the mix, and future breakthroughs in 
cleaner fuels, photovoltaics, and energy storage will change 
the nature of the electric grid. These will not replace the 
need for the electric grid, but they will increase its 
flexibility and value to the country.
    Thank you for the opportunity to speak today.
    [The prepared statement of Mr. Larsen follows:]
               Prepared Statement of Christian B. Larsen

Chairman Biggert and Members of the Committee:

    I represent the Electric Power Research Institute, which is a non-
profit collaborative R&D organization conducting electricity-related 
research in the public interest. EPRI has been supported voluntarily by 
the electricity industry since our founding in 1973. Our public and 
private members account for more than 90 percent of the kilowatt-hours 
sold in the U.S., and we now serve more than 1,000 energy and 
governmental organizations in more than 40 countries.
    EPRI appreciates the opportunity to address the future prospects 
for renewable energy. I would like to make several key points in my 
testimony.

Key Points

        1.  The U.S. must keep all of its energy options open to meet 
        the uncertainties of the future. For electricity, this means 
        improving the economics, integration and utilization of 
        renewables and energy efficiency as well as building and 
        sustaining a robust portfolio of clean, affordable generating 
        options for the future--ensuring the continued use of coal, 
        nuclear and natural gas.

        2.  EPRI believes that prudent investment decisions for power 
        plants in the future need to include considerations of the 
        economies associated with generating power in a carbon 
        constrained future. Whether decision makers assume the future 
        cost of CO2 to be zero as it is today in the U.S., 
        or $30/ton, or $50/ton, dramatically changes the relative cost 
        of the various supply options. A carbon-constrained future 
        could make renewable energy more economically competitive and 
        more important.

        3.  Currently renewable generation, excluding large hydropower, 
        contributes less than two percent to the Nation's electricity 
        supply. In 2005 the majority of global renewable installed 
        capacity (excluding hydropower) came from wind, biomass 
        combustion, and photovoltaic solar. The remainder of the global 
        renewable installed capacity includes some biomass 
        gasification, thermal solar and ocean energy demonstrations. 
        Until recently the expected future role of renewable energy in 
        the U.S.--based on projections from Energy Information Agency 
        (EIA), the National Energy Modeling System (NEMS), and other 
        models--has not been significant. Long-term estimates for the 
        contribution of renewables to total electric energy have 
        remained around two percent. Even when the current renewable 
        portfolio standards adopted in 23 states are applied through 
        2017, the contribution of renewable resources would not likely 
        exceed three percent of the total electric energy that will be 
        needed in 2017.
        
        

        4.  However, recent EPRI modeling shows that the role of 
        renewable, as well as all other low and non-emitting resources, 
        could be expected to increase substantially. New renewable 
        energy resources, primarily wind, solar and biomass, are 
        expected to exceed the current portfolio standard requirements. 
        In a base case scenario EPRI estimates renewable contribution 
        to electric energy by 2050 in the range of five to six percent. 
        This represents a 700-800 percent increase over today's 
        contribution of 100 MMW-Hs, reaching roughly 750 MMW-Hs by 
        2050.

        5.  Various distributed generation technologies which include 
        renewable energy sources, such as roof-top solar, are being 
        developed that will enhance the current distribution system. 
        These will add power system flexibility, increase end-use 
        efficiency with technologies such as combined heat and power, 
        and reduce power delivery losses. Distributed generation and 
        central station generation are not either/or alternatives; EPRI 
        believes they will complement one another in the future power 
        delivery system.

        6.  There needs to be recognition that future renewable 
        technologies as solar, wind and, eventually, ocean energy are 
        not dispatchable resources and that there will be a cost to 
        integrate these resources into the electricity system. The cost 
        is for the supporting generation that will be needed to match 
        supply and demand instantaneously, to follow energy demand 
        ramping, and to provide the reserves required to maintain grid 
        reliability. This cost is small when a significant portion of 
        available generation resources are dispatchable, such as hydro 
        and gas turbines. However, as the percentage of renewable 
        generation increases so will the cost of grid integration.

        7.  Technology breakthroughs will undoubtedly enable renewable 
        energy to meet electricity demand in new and better ways. For 
        example, economic roof top solar, clean fuels from biomass, 
        effective energy storage with hydrogen, or advanced batteries, 
        would help diversify U.S. energy resources and bring new 
        opportunities to the electric industry.

Summary

    Given expected growth in the demand for electricity and the many 
uncertainties in our energy future, we believe that developing 
diversity in electric generation is a critical objective for the 
country. Also, striving for cleaner and more sustainable resources will 
bring more renewable energy into the mix. Future breakthroughs in 
cleaner fuels, photovoltaics, and energy storage will change the nature 
of the electric grid. These will not replace the need for the electric 
grid but will increase its flexibility and value to the country.
    Thank you for the opportunity to provide these comments to the 
Subcommittee.

















                   Biography for Christian B. Larsen
    Chris Larsen is Vice President of Generation at the Electric Power 
Research Institute. He joined EPRI in November 2004 as President and 
Managing Director of EPRI International, Inc., a wholly owned 
subsidiary and transitioned into his current role in January, 2006.
    Prior to joining EPRI, Larsen spent the majority of his career with 
GE Energy working in the nuclear energy division. Larsen started his 
career as an applications project manager, servicing nuclear power 
plants at customer sites internationally. Larsen then transitioned into 
the GE corporate Six Sigma initiative as a Master Black Belt focused on 
the process improvement for the new and refurbished parts services 
business. Larsen's last role prior to joining EPRI was General Manager 
of the Reactor Services business unit which was responsible for 
providing Inspections, Outage Services and Reactor Modifications for 
nuclear utilities worldwide.
    Larsen received a Bachelor's degree in Mechanical Engineering from 
Georgia Tech.


    Chairwoman Biggert. Thank you very much.
    Mr. Pearce, you are recognized for five minutes.

 STATEMENT OF DAVID PEARCE, PRESIDENT AND CEO, MIASOLE, SANTA 
                       CLARA, CALIFORNIA

    Mr. Pearce. Thank you for the opportunity to present here 
today. Madam Chair, you did get the name correct, it's Miasole, 
which loosely translates into my sun.
    I'm here to talk about solar electricity. If I could have 
the next slide, please, but just a quick overview on Miasole, 
we are a Santa Clara-based California manufacturer of thin-film 
solar cells, a bit unique in that we are trying to bring 
manufacturing jobs back to the Silicon Valley, with an 80,000 
square foot facility. We expect to be in volume commercial 
production later this year.
    Myself and my team have a very long history of high volume 
thin-film component manufacturing, going back to the `80s where 
we made the hard disk drives for data storage applications, 
more recently, optical components for fiber optic 
communication, seeing the same core technology to produce thin-
film solar cells.
    We are backed by several leading venture capitalists, the 
most significant of which are Kleiner Perkins and VantagePoint 
Venture Partners.
    Next slide, please.
    So, a little background on the solar industry. One, the 
industry has been experiencing a 43 percent compounded growth 
rate for the last five years, so it's caught a lot of attention 
of the investment community, and is certainly making great 
strides. There is increasing adoption worldwide of incentives 
and subsidies to support the growth of the solar industry. Just 
last week, the country of France introduced some major 
incentives, very close to those being implemented right now by 
Germany. And certainly, the State of California leads in the 
U.S., in terms of the size of its total electric program.
    The very high demand, though, for solar has created 
shortages for one of the key feedstocks, the basic silicon 
material that is used to make the dominant form of solar cells, 
this is based on crystalline silicon technology. This is a 50-
year-old technology that today represents 94 percent of the 
market.
    We believe at Miasole, and as do many of our competitive 
start-ups, that there is an emerging class of thin films that 
hold tremendous potential to dramatically lower the cost of 
solar. In particular, the thin-film technology allows the 
capability of building flexible solar cells, flexible modules, 
opens up the opportunity for a great number of new 
applications, easing of installation processes, and, basically, 
opportunities to attack the entire value of solar.
    Miasole's thin-film technology, we believe, will be capable 
of supporting a 60 to 70 percent reduction in the price of 
solar, and generating a reasonable profit margin for the 
company in the process. At that point, solar is competitive 
with grid generated electricity from conventional sources, in 
the range of .8 to .10 cents a kilowatt hour, and we believe 
this goal will be reached well within the time frame of the 
U.S. Department of Energy's Solar American Initiative, which 
has set a goal to achieve price parity by 2015.
    And, I mentioned we are not alone, we have several, you 
know, very strong venture-backed entrepreneurial companies that 
have also entered this market. We think the entire industry is 
on the cusp of some major changes, and it's exciting to see the 
investment coming in, it's exciting to see the attraction of 
very senior management that bring with them a breadth of 
manufacturing and high-volume experience. So, I think the stage 
is very much ripe for disruptive change.
    So, I'll speak a minute now about thin films. Thin films 
represent a class of semiconductor material that by its very 
name it's very thin film, of approximately 1/100th the 
thickness of standard silicon solar cells. There's no 
dependence from the silicon feedstock that are currently in 
limited supply.
    In our case, it's a continued deposition process. We 
literally take a meter-wide coil of stainless steel, about two 
miles in length, and continuously coat all the solar films on 
it, at a rate of two linear feet a minute. We are currently 
building two of these very high-volume roll coaters in Santa 
Clara, and expect to populate our factory with eight of the 
systems by the end of 2007. If we achieve those ambitious 
goals, it would make Miasole the largest producer of thin film 
solar cells in the world.
    Laboratory efficiencies for the material we are working 
with, which is, the acronym is CIG, of the elements in the 
semiconductor, very high efficiency, 191/2 percent achieved in 
the government lab, very close to that of a polycrystalline 
silicon. The issue has been while the laboratories have done 
tremendous research work, it hasn't really translated in a 
significant way into the commercial marketplace. What the 
commercial market has lacked is high-volume manufacturing 
technology, and that's what is starting to happen with 
companies like Miasole and some of our competitors. We are all 
taking slightly different angles, but we are trying to leverage 
other industries to bring high-volume manufacturing 
technologies to what's been proven in the government lab, and 
that is a tremendous stepping stone to have all that 
fundamental research done and behind us.
    The flexible solar cell in our case from this very thin 
stainless coil allows for flexible modules, again, easy to 
install, lower the cost throughout this valued thing, and I 
think the most important thing that is going to happen to solar 
over the next five years is, we are going to see a major move 
to improve building integrated photovoltaics, where PV becomes 
the ubiquitous with the installation of a new roof on a new 
home or a new commercial building. Right now, the vast majority 
of the market is retrofit, and we need to have a paradigm shift 
there.
    And, here's the final slide, what can Congress do to help? 
Well, I think already some big steps are being made. There is 
currently out for solicitation the Solar America Initiative, 
which is virtually a doubling in funding for solar research, 
about $148 million a year. A major portion of that would be 
granted to the most promising private companies to accelerate 
research activities.
    I believe there's an opportunity with the Department of 
Energy's Building Program. This is a program that to a large 
extent is focused on efficiency and zero energy homes, with a 
goal of achieving by 2020 a zero energy new residential 
construction.
    Well, with the shift in population in the U.S., to the 
south, the west, and the desert southwest, they have tremendous 
new residential developments. I visited one just a month go in 
Albuquerque, that's proposing 37,000 new homes. That's a 
tremendous opportunity to put solar on every one of those 
roofs, and if we miss that opportunity it's 20 years before we 
get another shot at it, because that roof is not going to be 
replaced for 20 years.
    So, I think maybe a closer look at the Building Program and 
how we could marry that up closer with the Solar American 
Initiative.
    Last year, the Energy Bill included a provision for 30 
percent investment tax credit for solar installation. It was 
capped at $2,000 for residential. First, it's very impressive 
that we got that level of investment tax credit through, but 
I'd like to see it expanded through 2015 as presently proposed, 
and also an expansion of the residential credit, because $2,000 
is insufficient to cover the typical electrical needs of 
residential homes.
    And finally, at the commercial building level, I think 
there's opportunities for a federal loan guarantee program. We 
have such facilities for large power plants, but if we could 
down size that and make it available to commercial buildings to 
large-scale distributed solar generation I think there's a 
significant opportunity.
    Right now, as a business owner, and I look at opportunities 
to spend my capital budget, I, like most of my brethren, look 
at a two or three-year payback. You just can't get that with 
solar, because you are really buying an asset that generates 
free electricity for 25 years. So, if there was some financial 
facility that made it possible for the commercial building 
owner, be it the big-box retailer, or the big warehouse, to put 
solar on in a mechanism to kind of get that off their balance 
sheet so they could justify the financial investment. I think 
that would go a long way to making commercial installation much 
bigger.
    Thank you.
    [The prepared statement of Mr. Pearce follows:]
                   Prepared Statement of David Pearce
    Thank you for the opportunity to testify before the distinguished 
Committee on Science. By way of background I am the CEO of Miasole, a 
Santa Clara, California based manufacturer of thin-film solar cells. 
Miasole has been in operation since late 2001 and exclusively focused 
on thin-film solar cells since early 2003. Miasole occupies an 80,000 
square foot manufacturing facility in Santa Clara and expects to 
commence high volume commercial production in the forth quarter of this 
year. The company's employment has grown from 16 employees this time 
last year to 58 in Santa Clara today. We expect to have over 100 local 
employees by year-end.
    Miasole is backed by several leading Bay Area venture capital firms 
including Kleiner Perkins Caulfield and Byers and VantagePoint Venture 
Partners, both of whom have a significant focus on alternative energy 
investments. Floyd Kvamme, a Kleiner partner, serves as co-Chairman of 
the Presidents Counsel of Advisors for Science and Technology. I have 
had the honor of speaking before this distinguished group regarding the 
potential for thin-film solar and have also met with Samuel Bodman, 
Secretary of Energy and Under Secretary, David Garman. There is wide 
spread support for Miasole's activities and for the potential for thin-
film technologies to significantly reduce the cost of solar generated 
electricity.
    Miasole's technology is highly disruptive and is expected to result 
in a 60-70 percent reduction in the cost of installed PV systems within 
five years, thus allowing PV to be competitive with conventional fossil 
fuel sources of electricity without the continuing need for subsidies. 
Our technology is based on thin-film solar cells incorporating 1/100th 
the amount of expensive semiconductor material used in conventional 
crystalline silicon solar cells. Miasole's PV modules will be made of 
flexible laminates, eliminating heavy glass encasements and frames 
required for today's silicon technology. We expect to integrate 
electronic functions into the PV module, further reducing costs and 
simplifying installation. Finally the form factor for Miasole's solar 
material is highly flexible enabling truly building integrated 
photovoltaics ranging from residential roofing shingles that have the 
appearance of composition shingles to membrane roofing systems for 
commercial applications.

Solar Industry Background

    The Department of Energy has funded solar research for more than 30 
years with a total investment approaching $3 billion. Unfortunately the 
U.S. does not have much to show for its investment. After discovering 
the photovoltaic effect at Bell Labs 51 years ago, the U.S. enjoys only 
limited market penetration and a small share of global production. Last 
year Japan represented approximately half of all global production and 
Germany more than half of all PV installations.
    The U.S. has the potential to regain manufacturing and market 
leadership with a new class of photoactive materials characterized as 
``thin-films.'' Thin-films have been well researched and have been 
widely viewed as having the potential for dramatic reductions in costs. 
What the industry has lacked is high volume manufacturing technology to 
leverage the achievements of government funded research. Miasole 
believes the age of thin-films has arrived and that the industry is on 
the verge of major disruptive changes. Miasole is one of several 
venture capital funded startups that are bringing high volume 
manufacturing technologies to bear on this market opportunity.
    The early days of photovoltaics served primarily off-grid 
applications. In recent years the on-grid market has dominated driven 
by high subsidies and favorable legislation such as net metering which 
provides a credit mechanism for excess electricity fed back into the 
grid. The on-grid market is dominated by the retrofit market where PV 
systems are installed on existing roofs. For truly cost effective solar 
technology PV needs to become ubiquitous with new construction. This 
will eliminate retrofit labor and materials and a labyrinth of 
distributor markups while producing an aesthetically pleasing product 
that can be more easily financed.
    Cost effective building integrated photovoltaics (BIPV) is a 
challenge with conventional crystalline silicon based solar cells since 
they must be encapsulated with tempered glass to protect the fragile 
silicon wafer. The resulting PV modules are heavy and therefore limited 
in size. Thin-films can be manufacturing on thin flexible substrates 
and encapsulated with flexible materials. Form factors can be easily 
adapted to different building requirements with the substantially 
lighter weight allowing for larger modules and simplified installation.
    Ninety-four percent (94 percent) of the photovoltaics market is 
based on crystalline silicon technology, a fifty year old technology. 
Another five percent is based on amorphous silicon technology, a more 
than thirty-year-old thin-film technology that suffers from inherently 
low efficiency. Two emerging classes of thin-film technologies have 
demonstrated high conversion efficiencies in government labs 
approaching that of polycrystalline silicon. These are cadmium-
telluride and copper-indium-gallium-selenide (CIGS). Of these two 
technologies CIGS is the most efficient and is the technology of choice 
for most new entrepreneurial startups.
    Compounded PV system growth rates exceeding 40 percent per year for 
the last five years have resulted in a significant shortage of 
polysilicon, the basic feedstock for crystalline silicon solar cells. 
This shortage has resulted in a doubling in feedstock prices and price 
increases at the PV module level of approximately 50 percent. Subsidies 
which were intended to stimulate the market by allowing economies of 
scale are having the opposite effect. The Senate recently requested a 
study of the impacts of supply constraints in the polysilicon feedstock 
industry with the understanding that polysilicon availability posed 
both a limitation to the growth of the PV industry and a floor to how 
low prices could go. There is growing concern that crystalline silicon 
based PV technologies will not be able to achieve the Department of 
Energy's goal for solar generated electricity achieving price parity 
with the grid by 2015. A disruptive change is required with both the 
Senate and DOE providing indications that they view thin films as a 
very strong solution to the polysilicon shortage.
    The solar industry has recently attracted substantial private 
financing. Venture capitalists have been very active financing new 
management teams and the public financial markets have been quite 
receptive to initial public offerings and follow-on offerings. Equally 
important the opportunities in alternative energy and solar in 
particular are attracting a new class of highly experience management 
teams, some of which are steeped in high volume, low cost 
manufacturing. Most of these new entrants are focusing on thin-film 
technology. With the accomplishments of federally funded thin-film 
research, significant inflows of private capital and the attraction of 
experienced management teams, the stage is set for disruptive change.
    It is important to note that most major technical innovations or 
disruptive business models have not come from venerable established 
corporations, but from entrepreneurial startups. Examples of industry 
changing startups that displaced mature organizations include Google, 
Cisco Systems, Apple, Genentech and Southwest Airlines, to name a few.

What can Congress do?

    Congress should support the Solar America Initiative by fully 
funding the request of the Department of Energy. The current request 
for solar research, including funding national laboratories is $148 
million per year, a substantial increase from prior funding levels. 
Awards should be granted to the most promising cost effective high 
volume technologies. A byproduct of this is expected to be strong 
support for disruptive thin-film technologies and a favoring of 
entrepreneurial companies over mature industry incumbents focused on 
50-year-old crystalline silicon technology.
    Congress should reevaluate the funding level of the Department of 
Energy's Building Program currently slated to receive $19.7 million of 
funding in fiscal 2007. This program focuses on energy efficiency with 
a goal of providing energy and technology programs needed to achieve 
``Zero Energy Homes'' (ZEH) by 2020. With a shift in population to the 
south, west and desert southwest where solar irradiance is high there 
is a tremendous opportunity to adapt BIPV in new residential 
construction, however, there appears to be a disconnect between the 
technology goals of the Solar America Initiative and the level of 
emphasis in the Building Program. Every new major residential 
development without PV represents a lost opportunity as it will be 
twenty years before a roof replacement is needed. PV retrofits are not 
nearly as cost effective as new construction. Congress should consider 
a step increase in the Building Program with the incremental funds 
dedicated to BIPV applications for new large scale residential 
development.
    Congress should approve the extension of the investment tax credit 
for PV systems and lift the cap on the size of residential systems 
which at the current two KW limit is insufficient to meet the 
electrical needs of most residential housing. Congress should consider 
a more aggressive funding level in support of solar installations on 
new residential buildings, perhaps a direct buy down of the builder's 
cost of PV systems in new construction.
    There is a tremendous opportunity to install PV systems on 
commercial roofs, particularly with new thin-film technology that 
allows PV modules to be built into membrane roofing systems. Membrane 
roofs represent a $10 billion a year industry in the U.S. The challenge 
with commercial roofs is capital. For example consider a big box 
retailer with acres of roof space. Senior executives of these companies 
often have a myriad of capital projects and make funding decisions only 
for projects with two to three years payback. Solar is akin to buying a 
new car and prepaying the gas for the next ten years even with cost 
parity to the grid. The PV system goes on to produce essentially free 
electricity for twenty-five years or more but virtually the entire cost 
must be paid up front. Businesses would have far more incentive to 
install PV systems if additional financing options were available such 
as third party financing backed by federal loan guarantees. The Federal 
Government already provides loan guarantees for large scale utility 
plant construction. Congress should give consideration to a financing 
program that encourages smaller scale distributed PV systems on 
commercial rooftops. Consideration should also be given to a funding 
mechanism for manufacturing assets for PV manufacturers that operate in 
the U.S. This would allow the U.S. to compete for PV manufacturing jobs 
that are now going to Europe and Asia due to very large capital grants 
and/or heavily subsidized income tax rates.
    Thank you for the opportunity to voice my opinions on behalf of 
Miasole and the solar industry.

Addendum

                Additional Detail on the Solar Industry

                  and Emerging Thin-film Technologies

The crystalline silicon PV industry

    The photovoltaics industry has grown in excess of 40 percent per 
year for the past five years, largely stimulated by government 
incentives. These subsidies were expected to lead to an increase in the 
rate of market adoption which in turn would lead to economies of scale 
and lower installed system prices. Unfortunately high demand has had 
the opposite effect of increasing costs and increasing industry profit 
margins. During the past two years a significant shortage of 
polysilicon feedstock, the basic material for making a silicon solar 
cell, has emerged causing a major run-up in the price of the feedstock, 
silicon wafers, solar cells and PV modules. A significant reduction in 
the cost of installed PV systems is required to realize the potential 
of solar technology and to make significant inroads in reducing our 
dependence on fossil fuel sources for electricity generation.
    Silicon PV suppliers are trying to bring down their costs through 
several means which include greater economies of scale (plants are 
already of significant size), reduced wafer thickness to lessen the use 
of expensive polysilicon feedstock (with increased manufacturing 
complexity and higher losses due to breakage), improved photovoltaic 
conversion efficiencies (a relatively mature 50-year-old technology) 
and more efficient manufacturing processes, offshore manufacturing, 
etc. Compounding the problem is that the polysilicon feedstock 
industry, which supports both solar and semiconductor industries, is 
demanding and getting higher prices while also requiring long term 
commitments to insure supply. Polysilicon feedstock costs have more 
than doubled in the last three years and represent a significant 
portion of the cost of a completed silicon PV module. Polysilicon 
feedstock shortages are expected to be address by 2008/9 but high costs 
are being locked in for five years or longer under long-term supply 
agreements.
    Before the advent of the polysilicon feedstock shortage, the solar 
industry historically realized four to five percent per year price 
declines. In order for PV systems to be competitive with conventional 
sources of electricity without subsidies PV modules prices need to 
decline from the prevailing rate of approximately $4.00 per peak Watt 
to the range of $1.00-$1.50 per peak Watt. The goal of the Solar 
America Initiative is to achieve price parity with the grid by 2015. 
This will require a compounded price decrease of more than 10 percent 
per year for the next nine years. Many doubt that crystalline silicon 
technology can reach this goal.
    Besides the expense of making crystalline silicon cells there is 
considerable added expense associated with silicon technology. First, 
silicon based PV manufacturing plants are staggeringly capital 
intensive, on the order of $2-$3 million for each megawatt of annual 
capacity with factories needing several hundred million dollars of 
fixed assets to achieve scale. Second, the rigid and fragile silicon 
wafer must be protected with a tempered sheet of glass. This 
requirement limits module size due to weight considerations, requires 
aluminum frames for mounting, bulky mounting hardware, poor aesthetics 
and high installation costs. Thin-films offer a disruptive path to 
significantly lower manufacturing costs, simplified and light weight 
module packaging, ease of installation and the potential for truly 
``building integrated'' photovoltaics (BIPV) where solar becomes 
ubiquitous with installing a roof during new construction.
    To summarize:

          Crystalline silicon solar cells are a 50-year-old 
        technology representing 94 percent of solar industry sales

          Crystalline silicon manufacturing processes are 
        relatively mature; significant economies of scale have already 
        been achieved

          Manufacturing costs have been rising due to 
        polysilicon feedstock shortages; new supply is coming on line 
        in two to three years but at high contracted long-term prices

          Market based subsidies have created high demand which 
        in turn have caused escalating costs and have enabled expanding 
        margins

          Crystalline silicon costs aren't likely to decline 
        fast enough to meet the goals of the Solar America Initiative. 
        . .i.e. price parity with the grid by 2015.

Thin-film photovoltaics

    Thin-film photovoltaics involves the deposition of a thin film of 
photoactive semiconductor material on a low cost substrate. The amount 
of semiconductor material in a thin-film solar cell is approximately 1/
100th that of a crystalline silicon cell. In addition, thin-film solar 
cells can be manufactured over large areas, including roll-to-roll 
continuous deposition processes. To put this in perspective, 
crystalline silicon cells are nominally six inches by six inches in 
size and are manufactured in discrete, batch oriented processes. 
Contrast this to Miasole's process which continuously deposits thin 
films on meter wide rolls of stainless steel foil two miles or longer 
in length moving at two feet per minute.
    Thin-film solar materials have been researched for more than 30 
years and have been in modest volume production for the past ten years 
for both commercial and residential use. The most mature thin-film 
technology is amorphous silicon. The first significant markets for 
amorphous silicon were hand-held calculators. Today amorphous silicon 
represents about five percent of the rooftop solar market. The 
principal draw back to amorphous silicon is its inherently low 
conversion efficiency equal to about half that of crystalline silicon. 
Amorphous silicon deposited on thin flexible metal substrates and 
encapsulated with flexible laminates yields a PV module that is light 
weight, flexible and easy to install. It is this unique flexible module 
capability that has generated most of the demand for amorphous silicon 
rooftop applications.
    There are two other classes of thin-film technologies currently in 
commercial scale production which together represent about one percent 
of the world market: Cadmium-Telluride and Copper Indium-Gallium di-
Selenide (CIGS). The U.S. has long led the world in thin-film solar 
research holding the world records for high efficiency cad-telluride 
and CIGS solar cells. What the market has lacked is a high volume 
manufacturing process to leverage the progress made at the laboratory 
level for these technologies. Entrepreneurs have seized the opportunity 
in the past several years with the formation of several new startups 
funded by the venture capital industry all with the intent of pursuing 
high volume, low cost manufacturing technologies. The majority of these 
startups are pursuing CIGS solar cell technology since CIGS has 
demonstrated the highest conversion efficiencies of any thin-film 
technology, very close to that of polycrystalline silicon (19.5 percent 
for CIGS vs. 20.3 percent for polycrystalline silicon).
    Production processes for cadmium-telluride and CIGS thin-films 
remain relatively immature. This situation is expected to change 
rapidly as volumes increase and manufacturing learning curves improve 
product performance, production yields and lower costs. Equally 
important, thin-film processes typically require dramatically lower 
fixed asset expenditures for a given level of production.
    Unisolar, a division of Energy Conversion Devises, is the world 
leader in amorphous silicon and First Solar is the world leader in 
Cadmium-Telluride. Miasole believes it will quickly become the world 
leader in high volume, low cost CIGS production.
    Thin-films represent the opportunity for the U.S. to regain the 
lead in solar technology, cost competitiveness, volume production and 
market penetration. With these goals achieved, widespread market 
adoption becomes possible without the need for continued subsidies.
    To summarize:

          Thin-film solar technologies have been widely 
        researched and have achieved laboratory conversion efficiencies 
        closely matching polycrystalline silicon technology

          The industry has lacked a high volume manufacturing 
        platform to leverage the discoveries made in a laboratory 
        environment

          Entrepreneurs and investors are aggressively pursing 
        the high volume manufacturer of thin-film solar with CIGS based 
        solar cells the technology of choice amongst most startups

          Thin-films offer the potential for substantially 
        lower costs per peak Watt, up to a 70 percent cost reduction 
        from crystalline silicon for installed systems.

Challenges to commercializing thin-film technologies

Challenges associated with scaling laboratory technology 
        demonstrations:
    Most government and university thin-film research has focused on 
optimizing the efficiency of thin-film solar cells and improving the 
understanding and characterization of these films. Unfortunately most 
of the laboratory processes are not easily scaled. Little effort has 
gone into researching large scale production platforms. Miasole is 
leveraging the core experience developed by NREL but is using a 
different vacuum deposition process known as ``sputtering.'' Sputtering 
is widely used in the architectural glass industry (sheets of glass 12' 
x 20' in size) and the data storage industry for making hard disks. In 
Miasole's case a significant portion of the Company's technical team 
came from the data storage industry augmented with engineers from the 
glass coating industry and engineers and scientist with specific CIGS 
experience.
    One of the challenges to the high volume production of thin film 
solar cells is that commercial production equipment does not exist. The 
industry is similar to the early days of the semiconductor industry 
where companies developed their own manufacturing tools. Today there is 
a discrete and separate semiconductor capital equipment industry. 
Fortunately Miasole has years of experience designing and manufacturing 
high volume vacuum deposition systems with several core patents 
covering major elements of its technology.
Challenges associated with the time to develop high volume processes:
    A second challenge is that each high volume process has its unique 
properties that are different than laboratory processes. It frequently 
takes several years to develop a production tool and an equal amount of 
time to perfect a production process. Government funded research offers 
an excellent platform for getting started, but substantial additional 
process and system development is required. Historically most of the 
solar startups were founded by scientist out of government and 
university research programs. While these scientists had a core 
understanding of the technology, they lacked volume manufacturing and 
general business experience. Venture capitalists tend to back 
experienced management teams and had difficultly backing early 
scientist turned entrepreneurs. All of this is changing with the advent 
of a large scale solar industry and more plentiful investment dollars. 
The industry is now attracting experienced management teams, several of 
which have deep domain experience in high volume manufacturing, and 
significant private equity.
Challenges to locating manufacturing in the U.S.:
    There are challenges to locating factories in the U.S. and 
California in particular. Silicon based PV cells and modules are 
relatively labor intensive favoring overseas production in low labor 
cost countries. Thin-film processes, if properly executed, are less 
people intensive but labor costs remain an issue in a highly cost 
sensitive marketplace. Many countries offer significant financial 
incentives for establishing PV manufacturing plants. Several European 
countries offer capital grants equal to 50 percent of the cost of a 
factory. With large scale PV factories costing hundreds of millions of 
dollars, these subsidies are very substantial from both a unit cost 
standpoint and the amount of capital required. Asian countries favor 
tax holidays with some countries offering five year income tax 
holidays, another five years at 7.5 percent tax rates and permanent 
long-term income tax rates of 15 percent. Often countries that 
subsidize factories also offer some of the highest market incentives 
and thus represent large domestic outlets for production.
    At the state level, California not only has inherently high labor, 
facility and utility costs, but it also is one of only eight states in 
the U.S. to tax manufacturing assets. Miasole anticipates spending 
approximately $30 million for fixed assets next year for installation 
at its Santa Clara facility plus an additional $2.5 million for use tax 
that the Company would not incur if operating in most other states. 
California talks about wanting high paying manufacturing jobs but does 
little to encourage industry to expand, particularly those that are 
fixed asset intensive. On the plus side, California's PV market 
incentives are among the best in the country.












                       Biography for David Pearce
    Mr. Pearce serves as President and Chief Executive Officer of 
Miasole, a Santa Clara, California venture backed solar photovoltaics 
company he founded in 2001. Mr. Pearce has served at the President/CEO 
level of both private and public high-technology companies for the past 
20 years. He is a serial entrepreneur, having founded four venture-
backed companies and accomplished two IPOs.
    Mr. Pearce's accomplishments include major breakthroughs in the 
production of hard disks for the data storage industry, low cost 
optical filters for fiber optic communications and now, thin-film solar 
cells that dramatically lower the cost of solar generated electricity. 
Mr. Pearce holds a BS in Industrial Management from Georgia Tech and an 
MBA from the University of Texas.
    Mr. Pearce's employment history over the past twenty years is as 
follows:
2001-present--Founder, President & CEO of Miasole

1999-2001--Founder, President & CEO of OptCom, an optical components 
        manufacturer of thin-film filters for fiber optic 
        communications

1997-2001--Founder, President & CEO of SciVac, a manufacturer of 
        precision thin-film vacuum deposition equipment

1994-1997--President, Exclusive Design Corporation, a manufacturer of 
        capital equipment serving the hard disk industry

1992-1994--Founder and President of JTS Corporation, a manufacturer of 
        hard disk drives

1990-1992--President & CEO, Kalok Corporation, a manufacturer of hard 
        disk drives

1985-1990--President & CEO, Domain Technology, a manufacturer of thin-
        film media for the data storage industry

    Chairwoman Biggert. Thank you very much.
    Mr. Swenson.

     STATEMENT OF MR. RON SWENSON, CO-FOUNDER, ELECTROROOF

    Mr. Swenson. Thank you very much. I appreciate the 
opportunity to speak today about international renewable energy 
education, and I especially appreciate the thoughtful questions 
that were raised by yourselves and the staff.
    It's appropriate that we are holding this meeting in 
California. Since the `49ers gold rush mystique spread far and 
wide, California has changed the world several times. Hollywood 
and Silicon Valley symbolize these dramatic changes. And, Dr. 
Rosenfeld, as Dr. Chu showed, is leading in that direction 
still.
    Now, Silicon Valley is rising to a new challenge to save 
the world from global warming produced by carbon energy to 
global sustainability produced by silicon energy.
    Since 1992, I've been involved in renewable energy 
education projects, primarily applications of solar 
electricity, in Mexico, Uganda, Bolivia, South Africa, Ecuador, 
Butan in the Himalayas and Peru.
    Coincidentally, just yesterday in Quito, Ecuador, the 
United Nations Development Programme announced that SolarQuest, 
which is our non-profit arm, has been given responsibility for 
planning a Renewable Energy Applications Laboratory in the 
Galapagos Islands. We call this the ``REAL-Lab'' by the 
acronym. Since 2002, we've been providing human capacity 
building, that is to say, training with young people and the 
staff of the electric utility there, in renewable energy, 
installing wireless internet first of all, then assessing 
energy conservation options for the community, installing solar 
with hands-on training, and monitoring the performance of the 
solar and the diesel generators which were in place before we 
arrived. Young people there have jumped on board 
enthusiastically and intelligently, and we call what we do 
``productivity-centered service learning,'' learning by doing 
in simpler terms.
    In the next phase of our work, we are integrating these 
international initiatives to transform energy in the islands to 
renewables, in order to reduce the risk of oil spills that 
would threaten the endemic wildlife there. With guidance from 
the UNDP, Ecuador's Ministry of Energy, and industry sponsors, 
we are teaming up with American universities as capacity 
partners. Each university here in the States brings unique 
skill-sets to bear on renewable energy research and renewable 
energy education, and they will in turn partner with the 
universities in Ecuador, and when we open the lab to broader 
membership, other nations will also enjoy these benefits.
    Renewables face many of the same obstacles in developing 
countries as we do, but there are some differences. In 
developing countries, the market is eager but capital is more 
scarce. In remote parts of the world, modern skills are 
lacking, and you can't just jump from the three Rs immediately 
to science and physics.
    Another thing is that fossil fuel subsidies penalize the 
economics of renewable energy there as it does here. In the 
Galapagos Islands, a National Fairness Doctrine means that 
electricity is the same price as on the Mainland, and yet, the 
electricity costs twice as much to produce from diesel there. 
According to the International Energy Agency, energy subsidies 
add up to about $200 billion worldwide each year. What if we 
were to invest that money to build lasting solutions instead of 
propping up the fossil fuel infrastructure which is failing us?
    You've also asked how we structure our renewable energy 
education programs. I've already hinted at it, but to say a 
little bit more, just the same way that Apple Computer 
developed a loyal following by supporting computers in schools, 
so we are matching up universities in the U.S. with 
universities in the REAL-Lab countries. Taking this one step 
further, consider what it might be like if we looked at the 
100,000 schools in Latin America that still have no 
electricity. The U.S. Government could sponsor solar systems 
installed in every one of these schools. Even $100 million for 
a small solar system on each of these impoverished schools 
would be a huge improvement.
    Government Industry Education Partnership would bring huge 
benefits to the U.S. economy and our political welfare.
    Renewable energy for developing economies has the advantage 
of being bite size, ubiquitous and grid independent. Solar can 
be started on a small scale and grown as resources become 
available. Coal or nuclear power requires a huge investment, 
but one family or a village can start with solar on a very 
modest scale. For example, we installed a two kilowatt system 
in a village school in Bolivia, only four watts per capita, 
that's less than a night light per capita, and yet, it made a 
huge difference in that community.
    The political and economic implications for renewable 
energy in the international arena are enormous. Renewables are 
carbon neutral, and they are nuclear free. The threats of 
developing nations from nuclear-based energy are as foreboding 
as climate change. The day may come when all political regimes 
are sufficiently orderly and stable to control weapons-grade 
nuclear materials, but humanity has not mastered this talent 
yet. Small nations use valid concerns for their energy future 
to justify the nuclear alternative, and they get persistent 
encouragement from the ambitious nuclear power industry, and if 
not from the United States, then from Russia, France, or 
others.
    If the U.S. and its responsible G8 partners were to offer 
these nations a large-scale and lasting renewable energy 
solution, the energy efficiency argument for nuclear power 
would fall aside and the world would be a far safer place.
    In light of all these concerns, renewable energy is the 
unique, unifying principle for rational energy export. We have 
a mandate ourselves to repower the Galapagos with renewables. 
Through education, we are exploiting bridges of understanding 
packaged with U.S. energy solutions.
    So, imagine a $100 million scholarship from the National 
Science Foundation to train foreign students in solar energy at 
U.S. universities. We would create partners in development, not 
just consumer markets.
    Renewable energies are mature. Coal and nuclear power may 
be valid as measures of last resort, but they are just 
temporary measures. The sun is delivering 120,000 Terawatts for 
us as we speak to meet our existing 13 Terrawatts of demand. We 
have a lot of margin to work with.
    So, I would invite you to join us in the Galapagos Islands 
to see the REAL-Lab and our productivity centered service 
learning, and I would say further that if people want to look 
at more detail of some of my comments, you can go to 
SiliconEnergy.org, where I posted some other remarks.
    [The prepared statement of Mr. Swenson follows:]
                   Prepared Statement of Ron Swenson
    I appreciate the opportunity to speak today about international 
renewable energy education. I especially appreciate the thoughtful 
questions which have been raised by yourselves and your staff.

1. My Renewable Energy Projects in Developing Countries

    Since 1992, I have been involved in renewable energy education 
projects, primarily applications of solar electricity, in Mexico, 
Uganda, Bolivia, Ecuador, Bhutan and Peru. (I am providing a list as 
Attachment 1.) Coincidentally, just yesterday in Quito, Ecuador, the 
United Nations Development Programme announced that SolarQuest (our 
non-profit arm) has been given responsibility for planning a Renewable 
Energy Applications Laboratory in the Galapagos Islands. We call it the 
``REAL-Lab.'' Since 2002 we have been providing human capacity building 
for renewable energy in the Islands--installing wireless Internet, 
working with secondary school students to assess energy conservation, 
install solar with hands-on training, and monitor the performance of 
solar and diesel generators there.
    In the next phase of our work, we are integrating international 
initiatives to transform energy in the islands to renewables, reducing 
the risk of oil spills that threaten the unique endemic wildlife there. 
With guidance from the UNDP, Ecuador's Ministry of Energy, the 
Galapagos National Institute, and the e8 Network, we are teaming with 
universities in the U.S. to serve as our capacity partners. Each 
university will bring unique skill-sets in renewable energy research 
and education into partnership with universities in Ecuador. When we 
open the lab to broader membership, other nations will also enjoy these 
benefits.

2. Unique Challenges for Renewable Energy in Developing Countries 
                    Renewables face many of the same obstacles in 
                    developing countries as in the USA and other OECD 
                    countries. Some differences come into play:

          Money: In the USA there is capital but the market has 
        been slow to embrace the technology. In developing countries 
        the market is eager but capital is scarce. Ironies persist in 
        our complex world!

          Skills: In all large cities around the world, it is 
        possible to find skilled technicians, engineers and scientists. 
        Cities can't work without commercial forms of energy and 
        personnel trained in the field. Throughout the remote parts of 
        the world, however, understandably there are few people with 
        significant education in modern science or engineering.

           Nor can core competencies (e.g., the three R's) be taken for 
        granted. En route to building capacity in solar energy, a 
        student can't leap from reading simple hand-me-down texts to 
        understanding physics and engineering concepts.

           Blending education in core competencies with specific skill-
        sets applicable to renewables, our students excel. Not 
        surprisingly, when offered access to tools and tangible 
        opportunities to serve their communities, young people respond 
        intelligently and enthusiastically to our initiatives. We call 
        this productivity centered service learning.

          Subsidies: Fossil fuel subsidies penalize the 
        economics of renewable energy. In the Galapagos Islands, a 
        national fairness doctrine makes electricity the same price as 
        on the mainland, even though diesel-electric costs twice as 
        much. According to the International Energy Agency, energy 
        subsidies add up to $200 billion per year. What if we invested 
        that much to build lasting solutions instead of propping up the 
        failing fossil fuel infrastructure?

3. Renewable Energy Education in Developing Economies

    As warnings of global warming are increasingly validated by 
catastrophic events, human capacity building in the energy sector is 
becoming essential for the rapid substitution from carbon-based energy 
to carbon-neutral sources. If banks, industry and governments continue 
to favor carbon-based energy over carbon-neutral solutions, it may 
ultimately fall upon youth to educate their elders. It's like, if your 
computer isn't working, get your teenager to fix it for you!

How to Structure Renewable Energy Education in Developing Economies

    Structuring renewable energy education in developing countries 
could make a crucial impact on international relationships for the USA 
Government.

          Markets Lost: The potential for USA industry to 
        capture renewable energy markets worldwide is enormous. But 
        time is against us: even though most renewable technology has 
        been developed in the USA, our advantage has been lost. Europe 
        and Japan took the lead by encouraging commercialization in 
        their own domestic markets, and that prepared them for 
        dominance in the international markets.

          Creating Market Potential: Just as Apple Computer 
        developed a loyal following by supporting computers in schools, 
        we are matching up universities in the USA with universities in 
        the REAL-Lab member countries. The member nations joining our 
        Renewable Energy Applications Laboratory will designate their 
        own universities to partner with our U.S. university capacity 
        partners. Markets for U.S. solar energy products will 
        accelerate when ten universities in the USA are matched with 
        ten universities in ten member countries. Their intellectual 
        strengths will be coupled with American strengths to develop 
        robust human capacity.

          Hands-on: In the USA, because of liability issues, it 
        has been very difficult for us to provide opportunities for 
        young people to learn by doing. On the other hand, in 
        developing countries we have been able to bring together teams 
        of young people with little experience and teach them the 
        basics of electricity, solar energy, satellites and computers 
        in short order. Hands-on experience has been the key to 
        motivation and knowledge retention.

          Large-Scale: Taking this one step further, consider 
        the 100,000 schools in Latin America with no electricity. The 
        U.S. Government could sponsor solar systems to be installed on 
        every one of those schools. Even $100 million for a small solar 
        system on each of these impoverished schools would be a huge 
        improvement over nothing. We would motivate future scientists 
        and engineers who appreciate Americans when we combine this 
        hardware investment with curriculum delivered by our University 
        capacity partners. A government-industry-education partnership 
        would bring huge benefits to the U.S. economy and our political 
        welfare.

4. Advantages of Distributed Renewable Energy in Developing Economies

          Bite-Sized and Ubiquitous: Solar can be started on a 
        small scale and grown as resources become available. Coal or 
        nuclear power requires a huge investment, but one family or 
        village can start with solar on a very modest scale. We 
        installed two kW at a village school in Bolivia--only four 
        watts per capita for 500 people. It made a huge difference. 
        Anywhere in the world, a family with one solar panel can have 
        basic communications and lighting.

          Grid Independent: Renewable energy can be installed 
        where no grid exists. In the USA and other developed economies, 
        copper was mined and laid out in wires across the entire 
        landscape many decades ago. In less developed nations the 
        electricity grid is far weaker--where it even exists. The grid 
        is non-existent for roughly a third of the human population. 
        With more pressing priorities and limited buying power, less 
        developed nations are unlikely to be able to mimic our 
        sophisticated grid infrastructure in the foreseeable future.

Political and Economic Impacts

    Political and economic implications for renewable energy in the 
international arena are enormous.

          Solar facilitates fairness; Oil breeds conflict: 
        Coal, oil and natural gas are unevenly distributed but solar 
        energy can be distributed equitably to the entire human 
        population.

          Carbon Neutral: As demand for electricity and 
        transport grows around the world, the threats to developing 
        nations from carbon-based energy sources are unfathomable. My 
        flight to Bhutan in 2002 landed in Dhaka, the capital of 
        Bangladesh. I was shocked to find myself in a Water World. 
        Already surviving on a thin margin between land and ocean, 
        Bangladesh and many other countries will suffer massive 
        dislocations if the pace of global warming isn't stopped soon. 
        While the USA has so far suffered the highest profile losses 
        from global warming, there are numerous developing countries 
        that have suffered as well. Hurricane Mitch devastated Honduras 
        when the role of global warming was less obvious. Ironically, 
        Chinese and Indian energy policies threaten their own highly 
        developed low-lying coastal regions as they engage in the 
        madness of coal-fired economic growth.

          Nuclear Free: The threats to developing nations from 
        nuclear-based energy are as foreboding as climate change. The 
        day may come when political regimes are sufficiently orderly 
        and stable to control weapons-grade nuclear materials, but 
        humanity has not mastered this talent yet. Small nations use 
        valid concern for their energy future to justify nuclear, and 
        they get persistent encouragement from the ambitious nuclear 
        power industry (if not from the U.S., then from Russia, France 
        and others). If the USA and its responsible G8 partners were to 
        offer these nations a large-scale and lasting renewable energy 
        solution, the energy deficiency argument for nuclear would fail 
        and the world would be a far safer place.

Government and Industry Willingness to Encourage Renewables

    We hear talk of energy independence, and of course people are 
increasingly concerned about the high price of gasoline. But there are 
serious implications if responses to these concerns ignore other 
concurrent challenges.

          Peak Oil and Carbon Intensive Responses: Do rising 
        oil prices derive from political instability and economic 
        challenges or do they represent early signs of reaching the 
        intrinsic limits to physical oil supplies? There are ominous 
        signs that natural limits are contributing to the challenge to 
        find more oil. Extraction is declining rapidly from the North 
        Sea and from Cantarell, Mexico's largest field. Indonesia 
        recently became a net importer of oil. New discoveries replace 
        only a fraction of annual consumption. While it is a laudable 
        goal, the quest for energy independence so far has led to 
        policies that encourage carbon-intensive forms of energy, 
        including coal-to-liquids, tar sands, oil shale, corn ethanol 
        and nuclear power. (Some of these energy forms are erroneously 
        represented as carbon-neutral, which further complicates the 
        debate. www.energycrisis.com/nuclear)

          Global Warming: There are credible warnings that 
        glaciers in Greenland and the Antarctic will continue melting, 
        leading to a significant rise in sea level, even if we act 
        quickly. In the face of this and other climate catastrophes, we 
        can only hope to minimize impacts by immediately exploiting 
        alternatives to carbon-based energy sources. We also need to 
        understand the potential costs and environmental impacts that 
        such catastrophic events may impose on the global economy and 
        to compare those costs against profound investments in carbon-
        neutral renewable technologies.

           The challenge is acute in China, where coal-fired power 
        plants are coming online at an alarming rate and renewable 
        energy, especially solar water heaters and solar electricity, 
        are also growing rapidly.

Export Opportunities

          Exporting bridges of understanding: In light of all 
        these concerns, renewable energy is the unique unifying 
        principle for rational energy exports. We have a mandate to re-
        power the Galapagos with renewables. Through education, we are 
        exporting bridges of understanding, packaged with energy 
        solutions.

          Linked to Energy Efficiency: An integrated approach 
        to energy is a key strategy to differentiate U.S. solar 
        initiatives from those of competing interests. With low energy 
        appliances--skipping light bulbs altogether in villages getting 
        electricity for the first time and going directly to LEDs, for 
        example--literally could make all the difference. Electricity 
        alone doesn't do the job; it's the foundation for services that 
        need to be integrated from the start. We can point to all kinds 
        of failures--tractors that can't be repaired for lack of parts 
        inventories, refrigerators delivered to places with no 
        electricity. Electricity in combination with efficiency can 
        build strong markets for a broad array of American products.

          Rapid Deployment: We need rapid deployment of 
        renewables to meet the environmental challenges we face. We 
        need to stimulate the renewable energy business in every 
        sector, from finance to manufacturing to operations and 
        maintenance, to intensive capacity building.

           My team has a mandate to re-power the Galapagos with 
        renewables. What if the National Science Foundation were to 
        invest $100 million in education to re-power developing nations 
        worldwide? The USA would get an enormous return.

          Renewables are mature: Coal and nuclear power may be 
        valid as measures of last resort but they are at best temporary 
        measures with potentially dire consequences. The sun is 
        delivering 120,000 Terawatts for us to meet 13 Terawatts of 
        demand. We have a lot of margin to work with.

    I invite you to join us in the Galapagos Islands to see the REAL-
Lab and productivity centered service learning in action.
    For additional information, visit my website at http://
www.SiliconEnergy.org/us/.
































                               Discussion

    Chairwoman Biggert. Thank you very much. Maybe we can 
organize a science trip to go and see what you are doing down 
there.
    Mr. Honda. I'm there.
    Mr. Swenson. Love to have you.
    Mr. Honda. Madam Chair, you may want to also notify the 
audience and our witnesses that we have a very tight schedule.
    Chairwoman Biggert. Yes.
    Mr. Honda. We need to leave at 2:30 sharp.
    Chairwoman Biggert. We'll proceed now with the questions, 
and we will each take five minutes and then rotate. So, if we 
can have short questions and short answers that would help to 
get through all that we have.
    This past year, we had a--there was a demonstration on the 
Mall in Washington of solar houses that were built under a 
competition from DOE and sponsored by numerous corporations. 
And, the university students participated, and they came and 
put up 850-foot houses, and put them all together to 
demonstrate how you could have an all solar powered house.
    Now, they happened to pick a week in Washington that it 
rained the whole week, absolutely the whole week. Now, that 
reminded me, you know, and I live outside of Chicago, in the 
wintertime, particularly, I think January and February, we seem 
to be able to go for weeks and weeks without ever seeing the 
sun.
    So, and being here in this beautiful California all the 
time, is there--is it practical to use solar energy in the 
higher latitudes with more diverse climates, like in Chicago, 
or where you have a lot of rain?
    Mr. Pearce?
    Mr. Pearce. Yes. The world's biggest market for solar is 
Germany, that was 57 percent of all installations last year 
worldwide, and they have a climate that is as bad, if not 
worse, than Chicago.
    Chairwoman Biggert. Yes.
    Mr. Pearce. So, even in the rain solar systems are going to 
be producing electricity. Obviously, it's going to be not as 
much like the sun shining brightly, but definitely it may drop 
there.
    Chairwoman Biggert. Thank you.
    Then, Mr. Larsen, you say that EPRI has different 
projections for the market for renewable energy than the Energy 
Information Administration. This Subcommittee sponsored a forum 
on energy modeling last year, and talked about how important 
assumptions are to the modeling results.
    Why do you think your models and those assumptions differ 
from EIA?
    Mr. Larsen. I believe part of the answer is that, well, the 
basis for the model that we created was the NEMS model, so we 
took the output from that model and then introduced regional 
differences, the renewable portfolio standards, and other 
economic inputs into our model to try and shape an output for a 
2050 outcome.
    So, really, we took in regional differences across the 
country, across the states, to really start drilling down into 
what was different with various RPS inputs and assumptions, as 
well as various assumptions on the cost of electricity.
    And again, there was no assumption on a dramatic change in 
the technology or any disruptive input that would significantly 
reduce that cost.
    Chairwoman Biggert. Do you see anything adding to that, 
with the changed technology that we seem to be moving forward 
on so many of these things that we haven't in the past?
    Mr. Larsen. Oh, absolutely. It's a--for us, when we create 
a model, it's difficult for us to take a good snapshot, since 
often times the technology is moving so quickly, as it is 
today.
    The model that we generated was based on 2005 data, and, I 
mean, six months ago, that's a long time ago with respect to 
what's happening in the industry and what we are seeing at the 
Valley today, with respect to solar technology development.
    Chairwoman Biggert. Well, if we say an over supply of only 
one to two percent of the oil demand if sustained can cause 
prices to drop dramatically, like in the late 1990s, what 
happens to all of those renewable energy investments if the 
price of conventional energy drops in two or three years, 
whether or not this is a deliberate OPEC tactic?
    Would anybody like to answer that? Doctor?
    Mr. Swenson. Yes, I can speak to that.
    Dr. Penzias. I thought----
    Mr. Swenson. Oh, excuse me, go ahead.
    Chairwoman Biggert. You both can, first Dr. Penzias.
    Dr. Penzias. The simple answer is price. The price of coal 
is a price in human lives, in railroads, you can't just drop 
the price of coal, and coal is what generates our electricity 
in this country. There isn't, natural gas is not controlled 
by--if we talk about electricity only, then that isn't the 
problem. But, the issue is still price, and a dramatic change 
in the cost of electricity generation will make a huge 
difference. And so, I think it's beyond on that side.
    On the petroleum side, that's a somewhat different story, 
and we can get into that, but if we talk about just electricity 
generation, I think it's almost--I think it's, essentially, 
independent of demand, because there's almost no petroleum used 
to generate electricity, if I remember from the chart.
    Chairwoman Biggert. Mr. Swenson.
    Mr. Swenson. Yes. The largest oil field in Mexico, 
Cantarell, is on the verge of dropping dramatically to maybe a 
quarter of what it was doing before within the next couple of 
years. The North Sea is declining, and I believe that there 
could easily be a reversal where the price of oil could go down 
for a short period of time, but we are seeing an inextricable 
change in the availability of oil, and it's not yet hit other 
than with price, but we are close to that point where the 
rubber band is stretched very tight, and a little perturbation 
could mean gas lines again and serious disruption.
    So, while there may be some temporary reversals, the trend 
is distinctly for higher prices in oil.
    Chairwoman Biggert. Thank you.
    Dr. Chu.
    Dr. Chu. Yes, going specifically to your question, we have 
an example in Europe, Danes actually were very successful in 
encouraging a wind power development, and the way they were 
able to do that is, they would guarantee some return on 
investment, so they would stabilize things. So, just in case 
the bottom does drop out, they would have a floor that said, 
okay, you can make a certain amount of money.
    A similar thing has to be done, if and when we ever go to 
let's say a carbon tax trade, if the price of carbon trading 
goes too far down that could snuff out a lot of investments, 
and so there should be concern about a minimum floor, otherwise 
because many of the things that you have heard you are talking 
about a three, five, even ten year investment. So, you have to 
be very conscious about guaranteeing some sort of investment 
over a stable period of time.
    Chairwoman Biggert. Thank you. I think that's what concerns 
me, I think we really have to move ahead, and we have in all 
kinds of renewable technology right. We really have the 
opportunity to do it, because people are concerned about not 
having enough of the conventional fuels that we have, and we 
have to move ahead, you know, the long-term to nuclear, the 
long-term to hydrogen, and ethanol and all those things in 
between, and solar can be a long-term--the development that 
needs to take place, but we have to be moving now to make sure 
of that. I think, people understand that it is a process that 
takes a while.
    Mr. Honda.
    Mr. Honda. Thank you, Madam Chair, and before I start my 
question I would just like to recognize four gentlemen up there 
in the red tee shirts, they are the Santa Clara University 
solar decathlon team, and we want to welcome you. This is not 
only solar energy we tap into, it's youth energy, too. So, 
welcome, thank you for being here.
    Mr. Larsen, could you discuss further the issue of grid 
integration of renewables and how they arrive at the projection 
that costs will go up, could you integrate us as to the 
percentage or the numbers of renewables in Brazil? I think I 
heard you say that, and I was curious about what they are 
thinking.
    Mr. Larsen. Yes, Mr. Honda. The issue with renewables in 
the state of the technology today is one related to dispatching 
and controlling that resource. So, for instance, we have wind 
or solar, which the wind blows certain times of day, the sun is 
out certain times of day, and we still have not fundamentally 
solved the bulk of large energy or electricity storage count 
from a technology standpoint.
    So, for instance, if you look at the peak coincidence, so 
the peak load versus peak demand, if you compare demand versus 
what we are dispatching with wind, the peak coincidence is 
probably in the single digit percentage points. So, when we 
have peak demand during our hot days or hot times, such as we 
did in the state a week or two ago, the wind may not be blowing 
at all times for us to be able to dispatch that wind power to 
support that demand.
    So, that presents a significant integration challenge to 
the grid. So if we don't have--if we are relying solely on a 
non-controllable resource, then we are going to have to get 
that energy somewhere else, and with today's state that would 
come from, in the State of California, most likely natural gas, 
or combusted turbines, or other dispatchable assets.
    The other issue with respect to wind would be just the ramp 
rates that we are seeing when the wind does blow, and when we 
are able to dispatch that energy. The ramp rate or the increase 
from zero to 100 percent on a lot of these wind farms is 
significant, that's a significant integration count to the 
grid.
    So, where we are today with two percent across the country, 
or less than two percent of renewable as a part of our 
generating portfolio, we have the capacity to make up for a 
situation where we can't dispatch wind, or we don't have that 
resource available. If that percentage increases significantly, 
then we will have to either achieve that gap, close that gap 
that we are going to have by end-use efficiency or other 
storage means in order to make up that lost demand or demand 
that we can't meet.
    Mr. Honda. So, it's really a juggling of the different 
sources, and I guess in terms of what you can control 
immediately with your grid.
    Mr. Larsen. Absolutely.
    Mr. Honda. That sounds like the back-up, so your peaks 
would reverse probably from a management perspective.
    Dr. Chu. Well, most of the grid decisions are made, we 
don't transfer electricity very far distances. If you look at 
how it is generated and where it's used, there is very little 
research being done in the United States on very high voltage 
DC transmission. The cost of DC transmission is very--is high. 
It's scaled $1 million a mile, but once you can think about 
transmitting electricity over 2,000 miles, a lot of the issues 
that you just heard about are greatly diminished.
    And so, one of the things is that renewables, wind, you 
know, it blows somewhere in the United States quite often, and 
so once you have very efficient long distance transmission this 
opens up so that renewables can be a larger part of the 
portfolio of our energy. This is something that's rarely 
discussed.
    Mr. Honda. Okay.
    Dr. Penzias. The northeast blackout, the way the present 
grid transits energy from one place to another is that 
everything has to stay 60 cycles, and that--when something gets 
a little out of whack, and one cycle is going up the other one 
down, all of a sudden the northeast United States becomes the 
darkest spot on the planet.
    So, a national security issue could be to separate pieces 
of the grid, even if you don't get the DC across the country, 
if you just put DC in the next area, instead of having all DC--
all AC connect others, there is technology there and, perhaps, 
EPRI can talk about that, but we don't stabilize the present 
grid because of the private enterprise, and they can't afford 
it.
    But, it may be, if you folks want to look into the 
possibility of making our grid more secure, and then also when 
it is more secure that also allows it, it can respond to the 
loss of energy in some way, and also respond to the loss of 
renewables. So, you get both at the same time, national 
security and the robustness display as well. That's another 
possibility.
    Mr. Honda. Thank you.
    Mr. Pearce, you said that the government labs did good 
fundamental research, but that the problem has been scaling it 
up to manufacturing scale. Do you think that DOE could work 
differently to address these areas, and then because DOE does 
not focus on this how does industry really look at the 
Department of Energy as compared to relying on internal labs or 
universities?
    Mr. Pearce. Well, I think DOE is starting to make some 
changes. In the last few weeks, there was a new major 
laboratory opened at the National Renewable Energy Lab, 
specifically designed for manufacturers to bring in their 
equipment, place it in the facility, and operate it there with 
NREL personnel. And, Miasole intends to put a system in that 
facility, just for the purposes of accelerating our process 
development for high-volume manufacturing technology.
    You know, so I think the DOE and, particularly, the NREL 
team is absolutely on the right track to make that happen.
    Mr. Honda. Mr. Pearce, on a personal basis, I'm thinking of 
doing my roof all over again, I heard you say that, you better 
do it when you are doing it then, so how do thin-film 
photovoltaics perform compared to silicon, and in terms of 
durability, long-term efficiency, average daily energy outputs 
and so on?
    Mr. Pearce. Well, right now most of the thin films are less 
efficient than the crystalline silicon, but, you know, you are 
comparing 50 years of technology maturity versus relatively 
new.
    The thin films are reported to do better in low light 
conditions, early in the morning.
    Mr. Honda. I see.
    Mr. Pearce. Late in the evening. So, some of that washes 
out. In most applications, you are not constrained by the 
amount of roof space. In fact, an area of about 400 square 
feet, about the size of a two-car garage roof, would be 
adequate to power the needs of most residential applications, 
even at 10 percent efficiency.
    I myself am holding out for Miasole solar panels on my 
roof. I hope you can hold out also.
    Mr. Honda. Well, I need my roof before the rainy season, 
and this is not the Gulf State.
    Dr. Chu, the Helios Project is a dramatic example of 
potential revolutionary technology advances in energy, and it 
may help to have a better understanding of the time frame of 
true market penetration of such revolutionary disruptive 
technology. So, do you have any idea what that is, five, ten, 
15 years?
    Dr. Chu. Well, we are hoping for something on the scale of 
ten years. If you think of, look at the Brazil experience of 
how it had to scale up its ethanol production using the 
existing technology, it still took more than a decade.
    Mr. Honda. Yes.
    Dr. Chu. So, I think one would think that right now most of 
our ethanol production in the United States is via corn, 
although in the long run that is not sensible. It can be viewed 
as a means of transition, so you get ethanol in the pipeline, 
you get it in the service stations, you get all that 
infrastructure going, in the meantime you develop very 
aggressively better plants and better means of converting that 
feedstock, bio feedstock, into fuel, which ethanol again is 
only a temporary stop measure.
    Dupont and DP are partnering saying butanol is much more 
desirable than ethanol. But you get it going. When it becomes a 
20, 30, 50 percent replacement for gasoline, this is of scale 
which will literally take a decade, maybe a decade and a half, 
even if it's aggressively pushed. If it's not aggressively 
pushed, it takes longer.
    Mr. Honda. One of the things that I'm concerned about is: I 
hear all the time the concern about other countries graduating 
300,000 engineers and scientists. My sense is that they are not 
all in the area of technology that we are discussing right now, 
it's probably more in the infrastructure science for the 
developing countries.
    But, the way I think that we can stay ahead is the way we 
teach, and looking at those who are creative and innovative in 
the industries; and you look at each company, you look at their 
employees, a handful have, if you did a bar thing you'd see 
maybe a handful of engineers and scientists having a lot of 
patents and the rest are less.
    Looking at these folks, and trying to understand how they 
think and how they perceive things, my question to you is, do 
you think that it's possible to look at these individuals and 
extract from them the skill-sets and be able to do that and 
teach those skill-sets from pre-kindergarten to post-graduate?
    I'll just start with Mr. Swenson.
    Mr. Swenson. Are you saying here in the United States, or 
are you thinking in terms of the international, or both?
    Mr. Honda. Whomever that we would identify as, you know, 
folks that we'd like to study in terms of looking at those 
skill-sets.
    Mr. Swenson. Well, in the developing world, the people have 
maybe the ability to do basic reading, and they have hand-me-
down tech and so forth. So, there's a huge gap to raise up the 
level where you have the background in math and so forth, to be 
able to start getting into science and technology.
    There are others here who could speak more effectively to 
the domestic circumstance, but I think that, as I said earlier, 
if there were some opportunity for the U.S. to encourage 
education in other countries, and to bring people here, send 
people there, that what would happen for the students here in 
this country is, they would be stimulated because you learn by 
teaching and you learn by doing, and I think that could make a 
big difference.
    Mr. Honda. I'll come back to that question again, if the 
Chair would like to go through another round.
    Chairwoman Biggert. Okay, thank you.
    Mr. Swenson, do you think it's possible that some 
developing nations will just leap frog the U.S. and other 
developed countries in using fossil fuels and go straight to 
economies based on renewable energy? If they could do that, why 
do we see, you know, China and India turning to fossil fuels 
and really having such a need for those?
    Mr. Swenson. Well, I hope that we can turn that situation 
around very quickly. I think that the debate is pretty well 
over about whether the use of coal is creating a hazard that is 
untenable.
    And so, to the extent that we can set an example here in 
this country, by doing an about face and ramping up in a big 
way our renewable technology, that will become possible in 
other countries. And, our experience is that these technologies 
are embraced, and when you consider that there's about two 
billion people who have no electricity at all, and the rural 
environments in which they live are very hard to provide 
infrastructure. I think that a small amount of solar could be a 
huge benefit. And as I mentioned it's ubiquitous; it can be put 
anywhere on the face of the Earth and you are ready to go.
    So, I think that it may be true that China is heading in 
that direction and India to some extent, but my hope is that 
their political leadership will join with ours in recognizing 
that we have to start protecting our atmosphere and ramp this 
up.
    And, I guess the other question is, can renewables be 
ramped up? And, my answer is very distinctly yes. It can be 
ramped up, and it has to be ramped up, I feel, at something in 
excess of 50 percent a year. We did that in the .com era, we 
pushed very hard and growth rates were enormous. I think we can 
do the same thing, particularly, with thin film PV as Mr. 
Pearce has suggested.
    Chairwoman Biggert. Well, we certainly, I think we are a 
very competitive country, and with the super computers, when 
Japan moved ahead with the largest computer or simulator I 
think then, that Microsoft came in and brought it back to the 
country as having the biggest computers. So, I'm sure we don't 
want to let anybody get ahead of us in the renewable energy 
either.
    I'd like to go back to wind just for a minute. Illinois has 
put on hold the windmills that they were planning on doing, 
talking about, it was going to affect the radar and the air 
flight over that area. Has California had any trouble with 
that, have they had to change patterns or anything?
    Mr. Larsen. I'll try first with the answer. I'm not aware 
of any issues like that in the State of California. I do think 
that there were issues or concerns about avian migration paths, 
but I'm not aware about that issue in the State of California.
    Dr. Chu. I had a discussion with John Roe, who is the CEO 
of Exxon, which does that, he actually--I heard a different 
story from him, and he said that the regulatory would not allow 
him to raise the rates by a quarter or less than a cent per 
kilowatt hour. They see themselves as consumer advocates.
    Chairwoman Biggert. I see.
    Dr. Chu. So, it was really people who set the rates and 
said ``no, let's increase the cost.''
    Chairwoman Biggert. Maybe that was an excuse then. I must 
say that I have an article that was written in May about 
putting rooftop turbines on city hall in Chicago, to generate 
wind power, and they say that already installed was one atop a 
hill in a museum courtyard in San Francisco, one in the Chicago 
suburb of Round Lake and one in Taos, New Mexico, and in East 
Troy, Wisconsin, I haven't heard much about them, but they said 
that safety was the big issue. The Aerotech Customer Relations 
Director said, ``The most important thing is to ensure that the 
turbines don't come loose and fly off,'' especially when you 
are in a downtown city, but I wondered if you'd heard anything 
about those turbines. I've not seen them in the cities, so I 
don't think that's there yet.
    While we are introducing people, I would like to note that 
Dr. Percy Drell, the Director of Research at the Stanford 
Linear Accelerator Center, is here, and her group from SLAC. 
We'd like to welcome all of you.
    Mr. Pearce mentioned some very specific policy options, 
including incremental funding for building integrated solar 
third-party financing, loan guarantees, federal purchase 
requirements, et cetera. If we had $10 billion to spend on 
these kind of policies, and I don't mean to imply that we do, 
I'm only an authorizer, not an appropriator, how do you think 
we should divide the spending up among the options? Which is 
likely to get us the most for our investment and why? Maybe we 
could do that, I'll start with you, Dr. Chu.
    Dr. Chu. That's actually a tough one, because I mean you, 
for example, heard today discussions about solar, and there 
were three approaches to solar, and so I would go back on the 
basic philosophy I and many others advocate, it's don't really 
pick one winner, but adjust the boundary conditions to spur the 
investment of industry. I'll go back to the, you know, have a 
guaranteed stabilization of what long-term investments will be.
    And again, it comes back to starting to put in the real 
costs of emitting carbon, and once you do something like that, 
then all sorts of things will build, and then industry, coupled 
with science, with national labs, with all the rest, will 
develop winners, and they'll find their way.
    Chairwoman Biggert. Good answer, thank you.
    Doctor?
    Dr. Penzias. Thank you. Again, I would echo what he said, 
and again, with the idea of creating a climate rather than 
picking any one thing. And so, the climate in which it is 
possible to put wind power, but wind power, to answer your 
earlier question, is most effective the larger the windmill 
becomes. And so, right now, the biggest windmill, the rotor 
size is now getting to be the size of a football field for a 
single machine. But, this is probably the best solar energy 
that your state can get, because after all wind is a way of 
converting solar energy into mechanical energy for you there.
    So, it's that general climate of not subsidies, but 
encouragement, so that we level this playing field in things 
like these other alternatives. It isn't just solar, there are a 
number of others, but again, and please continue your fine 
efforts on this.
    Chairwoman Biggert. Mr. Larsen.
    Mr. Larsen. We at EPRI firmly believe in investing in R&D, 
and we also firmly believe that we need to work to keep our 
options open. There are uncertainty in both the cost of the 
various fuels, there is uncertainty for the electricity 
industry today in carbon legislation, so keeping technology 
options open to generate economic power is important. So, 
picking a winner might constrain us or limit our ability to 
address an alternate future.
    That having been said, I think there is obviously 
investments that need to be made into the various renewable 
technologies, but we also can't lose sight of the grid issues 
and the integration into the grid of those technologies, 
because a lot of these do change the make-up and the operations 
of the system.
    Chairwoman Biggert. Thank you.
    Mr. Pearce.
    Mr. Pearce. Well, I would say ultimately, you know, the 
funding will come out of private enterprise, that the focus of 
government programs should be to stimulate the market 
conditions, to stimulate the early research, but there's 
nothing that is going to compare to the success of a very 
healthy alternative energy market as far as generating research 
dollars from private industry.
    Chairwoman Biggert. Thank you.
    Mr. Swenson.
    Mr. Swenson. Well, as I travel through the developing 
countries, I bump into Germans all the time, and then I was 
doing a project here in Salinas, a solar project, and one of 
the American companies told me, well, we have to consult our 
engineers in Germany to figure out how to do this, because I 
presented them with a tough issue.
    So, I think that what that shows you is that the 
subsidizing, I know Dr. Penzias is objecting to the subsidies, 
but the fact of the matter is round the world we have huge 
subsidies. In Egypt electricity is practically given away, in 
Venezuela, you know, gasoline is practically given away, and so 
when you compare these existing conditions, and then see what 
one country, Germany, has done with a lousy solar resource to 
augment the market, it wasn't about the cost of putting 
electricity together for Germany that in the final analysis 
mattered. What matters is that they have the high ground now in 
the market. Because they pushed it so aggressively 
domestically, now they have the expertise to go around, and 
they've got solar companies here in the United States. They are 
treating the United States as a Third World country, because we 
do not have the expertise that they do anymore. It's incredible 
how quickly it's happening.
    And, Mr. Pearce and his colleagues in this field of thin 
film have the potential for a huge leap, and if we gave them a 
boost it would give us a chance to get back, recapture that 
lead we once had in solar.
    But, the Germans are offering him and his people in the 
same business huge opportunities: discounts, and free space, 
and here, ``Come to our place and we'll put up a factory for 
you, and, you know, give you five years free rent, no taxes,'' 
and we are just not doing that.
    So, I think that the opportunity here exists. If we cover 
our domestic need, we will begin to have the ability to export 
again.
    Chairwoman Biggert. Thank you very much, point well taken.
    Mr. Honda.
    Mr. Honda. Thank you, Madam Chair.
    Starting out with Dr. Penzias, and then others, the idea 
that no area of this country felt the impact of the .com boom 
and the bust more than Silicon Valley, and there's a similar 
market frenzy developing around renewables, especially ethanol.
    How do lessons learned in the .com era apply to energy 
tech, and are we heading down that path already, and if we are, 
how do we avoid this phenomena we have experienced at that 
time?
    Dr. Penzias. I think there are two ways, two things to 
avoiding it. One is, again, this idea of not picking winners. I 
think in the .com bubble there was a focus on certain things, 
like consumer behavior which didn't happen, in a number of 
other cases the, what was it called, the deregulation of 
telephone companies is going to change the world, all kinds of 
stuff like that.
    So, here we have a huge market, which is not going to go 
away. There is a huge market in energy. It almost, the sun 
never shines in Denmark, and they are getting almost, they are 
getting 20 percent of their electricity today from solar in the 
form of wind. And, the solar that they are putting in today is 
the machines which are being put in today, talking about these 
football fields, they are getting bigger than that.
    The technology of something as old fashioned as a windmill 
has gone at an unbelievable pace in the last ten years. Look at 
all the dead stuff in Altamont Pass, it doesn't work, but 
today, this huge change in technology has made these things 
happen.
    So, I see this power of technology, plus the huge need for 
energy. I don't think the people in China are waiting for a cue 
from the United States, they desperately understand, they can't 
breath in Beijing. Sometimes their factories are turned off, 
they don't have enough electricity. They would use solar if it 
worked, and it will work, but not yet, and that's where we are 
going. So, stay tuned on solar, a number of other areas, there 
are enormous opportunities also in conservation, which we 
didn't mention. I can speak to some of those later, fuel cells, 
there are a great number of others. We have kept our eye on 
solar today, but the story is a march of technology coming to 
America, the diversity, and, oh, yes, in one of my solar 
companies we do partner with the Germans, for instance, but the 
innovation edge is still in the United States, and I think we 
are moving there.
    The only--and I think we are doing a lot of the right 
things, and we will learn from mistakes.
    Mr. Honda. Thank you.
    Dr. Chu.
    Dr. Chu. I think if you over subsidize you can do a real 
danger, just as if you don't do any subsidies in order to get 
it started.
    The idea of a subsidy, in whatever form, is to give long-
term stability and encouragement, but where a plan is in sight. 
So, take wind in California, in the `70s and `80s it was, quite 
frankly, it might have been over subsidized, and so a lot of 
inappropriate technology was just stuck up there, because you 
are going to get money even if you stick up something that 
doesn't work.
    So, Denmark did it right in the long term, and then that 
sustained the technological improvement that's leading to these 
huge windmills that are extraordinarily efficient.
    So, I think that's a very good question, you can't just do 
a huge subsidy, because that will possibly lead to a boom bust.
    Mr. Swenson. Well, I could speak to this a little further. 
I think that because of the subsidies that are now in place, 
that we have already picked ethanol as the winner, and the 
truth be known, because of the way it's produced it has high 
carbon content, that is to say that the power plants that run 
the mill use coal, that a lot of natural gas is used in the 
heating process, and so pretty much 80 to 90 percent of ethanol 
is fossil fuel, the way it's currently being fabricated.
    So, I think that therein lies the danger, and if we look at 
the example of ethanol in Brazil, if truth be known there, only 
if this were happening in the United States, it would be equal 
to about four percent of the energy that we use here, because 
they use vehicles about 10 percent as much as we do. Their 
transportation per capita is about 10 percent of ours.
    So, these lessons don't necessarily translate just by 
multiplying their success with ours, because our circumstances 
are very different.
    And, I'm quite concerned about the over emphasis on 
ethanol. If you put solar over every square foot of paved land 
in the United States, you could produce five times as much as 
you could from all of the cultivated lands of the United 
States, because, after all, it has something to do with our 
being able to eat. So, you have to balance food with fuel.
    Mr. Honda. Thank you.
    Let me get back to that question of innovation, teach 
innovation, unless, Mr. Larsen, you have another comment to the 
last question.
    Mr. Larsen. Just a quick comment on the pitfalls of the 
boom bust, and avoiding making past mistakes. I think we need 
to keep the options open, but we also need to focus on the cost 
of generating electricity on a cents per kilowatt hour, in 
comparison to where we are today, and also in the future and to 
keep that in mind in evaluating all renewable technologies as 
we move forward, with the goal in mind to develop technology 
that is cost effective, economic and competitive with other 
technologies.
    Mr. Pearce. With respect to your question on education, I 
think Miasole's experience is pretty typical here of Silicon 
Valley. We have 58 people, a significant portion of those are 
engineers and scientists, and I would guess 40 to 50 percent of 
them were born in some other country and trained here in the 
U.S.
    I think the whole education issue really goes back to 
middle school. We have to get more boys and girls interested in 
science and math, because if we lose them there we lose them in 
high school, and they don't go on to engineering programs.
    Mr. Honda. What I was driving at was taking the phenomena 
of being innovative and creative that's embodied in a person 
who is creative and innovative, and being able to extract 
that--what is it about that person that makes that person 
innovative and creative--and be able to extract that and teach 
those skills to children, from preschool to post-graduate. The 
idea of being able to teach that skill, so that it doesn't 
matter whether they go into science, or math, that they have 
different insights and different ways of looking at things that 
are equal to music, or to performing arts, or to social 
studies, that it's a different way of thinking and looking. 
And, I was just curious whether you thought that those are 
teachable, that's possible, number one, and, number two, 
teachable.
    Mr. Pearce. Well, I think that is possible, and I think, in 
fact, the U.S. does a pretty good job in that area. I mean, 
particularly, our institutions on higher learning, we generate 
a lot of people that are, you know, creative, and you don't get 
that to the same extent in other countries.
    Mr. Honda. But, is it a conscious process of teaching 
innovation and creativity?
    Mr. Swenson. In our case in the Galapagos Islands, we gave 
students meters to measure the performance of the refrigerators 
in their homes, and students showed their electricity bill next 
to the graph that showed the performance of their refrigerator. 
They were quickly galvanized and motivated because one kid's 
family had twice the electricity bill as the other, and that 
was like 10 percent of their income, you know, living a 
different lifestyle than we have. It was a lot of money for 
them.
    So, there was a motivation, and I think that service 
learning, which is productive, so I go back to that term 
productivity-centered service learning, that galvanizes young 
people into being aware that they can make an impact in their 
community.
    The Ministry of Energy came from the Mainland and 
interviewed our students, because they had a conservation 
program that wasn't working, and they wanted to see how our 
kids did it. And, it all had to do with the fact that we gave 
them something productive, something meaningful in their 
community, to work with.
    Mr. Honda. Yes, Dr. Penzias.
    Dr. Penzias. I have two ways for innovation. One of them 
would work here in the United States very well, I think, which 
is diversity. I wasn't born in the United States, a lot of 
other people weren't, but I think the fact that having a mix of 
ages, I mean, one of the nice things about Silicon Valley is, 
it's not youth oriented, age agnostic. I mean, many of the CEOs 
I work with could date my granddaughter and nobody would know 
it, but they don't care because it's age agnostic. So, if we 
can go age agnostic, race agnostic, ethnicity agnostic, that's 
one good thing.
    The thing about school, I would say, which is quite the 
opposite, I'm sorry to be a grouchy old guy in this, I think we 
have to get the school out of the way of undermining 
creativity. Kids, we have, I'm blessed with 12 grandchildren, 
they drive you nuts with their questions until they get to 
school and learn to stop asking questions.
    We are, and there's a very simple thing, and I think we 
really ought to encourage teachers. We are, I think, the only 
country in the world that spends more money on bureaucrats in 
the education budget than the people actually going to the 
classroom.
    And then, we decide, okay, let's put in, and let's fix that 
by putting in a testing program which gets yet another level of 
conformity. So, you know, if we could somehow get all these 
folks out of the way of teachers, I think by itself that would 
be--it would make a difference, and the better teachers, and, 
in fact, one of the things we've learned is, of course, and 
I've seen studies on this, the classes, any school, whether 
it's inner city, large, rural, urban, better teachers make for 
better kids. I don't think we have to impose anything on them, 
I think we can get rid of this upper structure.
    Now, as far as taxes, maybe you could put a tax on 
bureaucrats, any educational--stop encouraging, stop 
subsidizing the administrators and put the money into the 
classroom and out of that. Change that balance to where it is 
in other countries.
    Mr. Honda. Right.
    I know Dr. Chu's family is full of innovative, creative 
thinkers. What goes on in there?
    Dr. Chu. Well, I was born into a family, and me and my 
siblings always questioned authority, but in sort of taking 
where Arno Penzias left off, I think the United States in 
higher education does it better than any other country, but I 
would agree with him that when you look at kids preschool, they 
are full of curiosity, and even in science class that's stamped 
out of them. Other countries do it much worse, or much better, 
they are much more effective at stamping out of this natural 
curiosity.
    The greatest thing in the United States school system, 
because I get asked this question when I go to Asia all the 
time, why doesn't China have home grown Nobel Prize winners? 
Or, Japan has some, but, you know, Taiwan, you know, and think 
about it, I think it's because teachers in those countries 
aren't questioned by their students. It's considered 
disrespectful, they are punished for it, but you can question 
your teacher in a very respectful way, and that's the way it 
should be.
    So, the United States is actually quite good at it, what is 
it that we have done better? In science it actually goes back 
to when we were in first, second, third grade, when we were 
asked to give book reports, and it was a different thing. What 
do you think about what you just read--very different than in 
many European countries, and certainly Asian countries. You are 
not asked what you think. So, we have to encourage more of 
that.
    Chairwoman Biggert. Would you like to say a few words in 
closing, Mr. Honda?
    Mr. Honda. I have a list here that I want to comment on, 
let me find my notes.
    Chairwoman Biggert. Let me just say we could spend a whole 
hearing talking about education in the science field, and I 
agree with you, I go out to the schools, and, particularly, 
middle school, and I find particularly the young girls say, 
boys do math and science, girls don't, and that's a real shame, 
and I try to encourage them that this is a field wide open to 
them.
    Mr. Honda. Thank you, Madam Chair.
    Before we close, in this area we put together a group 
called the Blue Ribbon Task Force on Nanotechnology, and there 
are some of the folks that helped us move that whole effort 
forward, Delilah Brambot is here, Carry Yang, Bell Wade, she 
left already, Bern Beecham, he's left, was introduced earlier, 
and our selection committee, I just wanted them to be 
recognized and thanked for their efforts in making the Silicon 
Valley the kind of place that it is.
    And, I guess I would close with this thought, that the 
Federal Government has been a major player in innovation and 
technology, and moving technology forward. I guess my question 
in terms of, and the thought that I want to leave with people 
is that, we still have to impact more people and individuals, 
citizens and consumers if you will, and I guess we might want 
to also look at, what is the role of city government, county 
government, in changing some of our attitudes and creating some 
demand on alternative energy? Because cities and counties, and 
states if you will, also bear the brunt of that burden in many 
different ways.
    So, I would beseech all of us to start thinking about 
another way of moving this agenda forward in terms of promoting 
alternative energy and having us think outside the box in a new 
paradigm.
    And, to the witnesses, thank you, I thank the Chair for her 
willingness to bring the Committee out here, having this great 
discipline.
    Thank you.
    Chairwoman Biggert. Well, thank you, Mr. Honda, and I want 
to thank you for your participation, and he's a great Member of 
the Science Committee and really knows his stuff, and we are 
happy to have you on that committee.
    I would like to thank all of you. I hope that we will have 
a successful transformation of our energy system in time to 
avoid the harmful effects of global climate change, and we will 
be having a hearing on global climate change in the near future 
when we go back in September. So, I would like to thank both of 
our staffs, the Majority staff and the Minority staff, for all 
their hard work in putting this hearing together, it takes a 
lot of work, and you did a great job.
    And, I want to thank our panelists for testifying before 
the Subcommittee today. If there's no objection the record will 
remain open for Members to add any follow-up questions that the 
Subcommittee may ask of the panelists. Without objection, so 
ordered.
    This hearing is now adjourned.
    Mr. Honda. Thank you, Madam Chair, and to the audience, you 
have an evaluation form, please turn them in. If you parked in 
the garage here, we will validate your parking.
    Chairwoman Biggert. All right, thank you.
    [Whereupon, the Subcommittee was adjourned at 2:26 p.m.]

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