[Senate Hearing 110-179]
[From the U.S. Government Printing Office]

                                                        S. Hrg. 110-179



                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION




                    ALBUQUERQUE, NM, AUGUST 7, 2007

                       Printed for the use of the
               Committee on Energy and Natural Resources


38-840                      WASHINGTON : 2007
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512�091800  
Fax: (202) 512�092104 Mail: Stop IDCC, Washington, DC 20402�090001


                  JEFF BINGAMAN, New Mexico, Chairman

DANIEL K. AKAKA, Hawaii              PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota        LARRY E. CRAIG, Idaho
RON WYDEN, Oregon                    LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota            RICHARD BURR, North Carolina
MARY L. LANDRIEU, Louisiana          JIM DeMINT, South Carolina
MARIA CANTWELL, Washington           BOB CORKER, Tennessee
KEN SALAZAR, Colorado                JOHN BARRASSO, Wyoming
ROBERT MENENDEZ, New Jersey          JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas         GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky
JON TESTER, Montana                  MEL MARTINEZ, Florida

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
              Frank Macchiarola, Republican Staff Director
             Judith K. Pensabene, Republican Chief Counsel

                            C O N T E N T S




Bingaman, Hon. Jeff, U.S. Senator From New Mexico................     1
Chavez, Martin, Mayor, Albuquerque, NM...........................     3
Domenici, Hon. Pete V., U.S. Senator From New Mexico.............     2
Hou, Hong, Ph.D., President and Chief Operating Officer, Emcore 
  Corporation, Albuquerque, NM...................................    25
Schmit, Rusty, Co-Founder and Chief Executive Officer, Advent 
  Solar, Albuquerque, NM.........................................    13
Simmons, Jerry A., Jr., Program Manager, Solid State Lighting, 
  Sandia National Laboratories, Albuquerque, NM..................    16
Smith, Douglas, President, Nanopore Incorporated, Albuquerque, NM    10



                        TUESDAY, AUGUST 7, 2007

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                   Albuquerque, NM.
    The committee met, pursuant to notice, at 9 a.m., at the 
Albuquerque Convention Center, Hon. Jeff Bingaman, chairman, 


    The Chairman. Why don't we go ahead and get started. Thank 
you all for being here. We've got a sort of gathering of the 
leaders of the community to talk about a very important issue.
    This is a hearing of the Energy and Natural Resources 
Committee of the Senate--a field hearing that we are having 
today at the suggestion of Mayor Chavez, which I appreciate 
very much his suggesting a couple months ago that we convene 
this to talk about some of the initiatives that are going on 
here in Albuquerque and in the State, both in the public arena, 
but also with private companies to promote more use of 
renewable energy, to promote more efficient use of energy, to 
create jobs and benefit economically from this transformation 
of our economy that I think we're all very aware of.
    Let me begin by acknowledging Kathryn Clay who is here from 
Senator Domenici's office, she came from Washington to be part 
of this. I know she's here. All right. Joe Trujillo is 
representing the senator here in New Mexico and he does very 
well as we all know.
    New Mexico and Albuquerque in particular are blessed with a 
wealth of technology, of course, that much of which resides in 
our national laboratories, Sandia, Los Alamos, Air Force 
Research Laboratory in particular, but others as well. In 
addition we have the University of New Mexico, we have New 
Mexico State, we have New Mexico Tech, all of which are high 
quality research institutions.
    Over the years these laboratories and universities through 
their highly educated work force and state-of-the-art research 
facilities have made New Mexico a seedbed for new technology 
startups and high technology economic growth in a broad array 
of areas, from sophisticated computer codes to advanced 
materials and also emerging energy technology companies.
    We have some of those with us today and some that are not 
here. Companies such as EMCORE and Advent, Tesla Motors, 
NanoPore, there are various successful companies that call this 
their home and which have put New Mexico on the map with regard 
to clean energy and renewable energy.
    The Council on Competitiveness, in their 2004 report 
``Innovate America,'' called this mix of companies and research 
institutions, laboratories, an innovation ecosystem or an 
innovation cluster.
    Today's hearing is to explore the barriers that emerging 
energy technology companies encounter. Also how the Federal, 
State, and local government can help these companies to 
overcome these barriers. Obviously we need to look at all 
levels of government to get this job done.
    Again let me just congratulate Mayor Chavez for the 
leadership he has shown in putting Albuquerque on the map as 
far as a leader in clean energy and moving the economy here to 
a clean energy future which I believe the entire country is 
aware of.
    So he is going to be our witness on the first panel. I 
welcome Mayor Chavez. Why don't you go right ahead.
    [The prepared statement of Senator Domenici follows:]

    Prepared Statement of Hon. Pete V. Domenici, U.S. Senator From 
                               New Mexico

    I'd like to begin by thanking Senator Bingaman for calling today's 
field hearing, and I'd also like to commend Mayor Chavez for organizing 
the conference coinciding with our hearing. Both the conference and the 
hearing are designed to call attention to an important issue for our 
nation as a whole, and for New Mexico in particular. That is the issue 
of the development and commercial application of new energy 
    Developing advanced energy technologies will be critical to our 
nation's future success in meeting challenges relating to our energy 
security, our environment, and our national competitiveness.
    Our witnesses today will provide us with their thoughts on how 
federal, state, and local governments can work more constructively with 
innovative companies like their own. We have a common goal, to bring 
new, advanced energy technologies out of the laboratory and into the 
marketplace. We need to do everything we can to make sure that 
government and the private sector are working together in a productive 
way to make that happen.
    New Mexico is the perfect place to hold a hearing on this topic. We 
have a tremendous depth of talent and entrepreneurship that we can tap 
into, to build new companies and create new jobs based on advanced 
energy technologies.
    Our witnesses today represent companies that are terrific examples 
of this kind of success. EMCORE, a leading maker of high-efficiency 
solar cells, started through licensed technology developed at Sandia 
National Laboratories. EMCORE, located in the Sandia Science and 
Technology Park, has created more than 500 high-paying jobs and 
invested more than $100 million in developing and manufacturing 
advanced solar cell technology over the last nine years.
    Advent Solar is another great example of what we are trying to 
achieve. Advent started as a ``spin-off'' from Sandia National 
Laboratory four years ago. Today, it has over $120 million in equity 
and employs over 200 people.
    NanoPore, a University of New Mexico spin-off, uses nanoengineering 
to make advanced materials capable of reducing insulation thickness by 
a factor of about twenty. This translates into large weight reductions 
on commercial refrigerated trucks, and that means big savings on fuel 
costs. Nanopore has generated over 80 patents and supplies a wide range 
of commercial high efficiency insulation products, again creating new 
job growth in energy technology.
    I am also glad that we have with us today Dr. Jerry Simmons, the 
Co-Director of the Center for Integrated Nanotechnologies (CINT) at 
Sandia National Laboratories. Dr. Simmons was instrumental in a recent 
dialogue, organized by my office, with Chinese officials representing 
solid-state lighting research issues. Our hope is that we can establish 
a positive collaboration with the Chinese in solid-state lighting 
research, in order to advance both nation's goals of deploying clean, 
efficient energy. The potential market in China is enormous, as are the 
energy efficiency gains and global environmental benefits, that would 
be realized through use of this technology.
    I am pleased that the Department of Energy is moving forward to act 
on the technology transfer provisions of the Energy Policy Act of 2005. 
I am also pleased that Congress passed the Competitiveness bill last 
week, a bill that Senator Bingaman and I worked very hard on for a 
couple of years. If implemented properly, it will help us remain 
competitive in the sciences as we face the new challenges of a global 
    Senator Bingaman and I have worked together for a long time on the 
issue of technology transfer from the National Laboratories. The 
Department is now working on a technology transfer roadmap to determine 
next steps in improving technology transfer efforts at the 
laboratories, and I think this hearing will yield some useful 
information to guide that effort.
    Thank you to all the witnesses for your participation today.


    Mr. Chavez. Mr. Chairman, Senator, thank you so much for 
being here this morning and allowing me to be here with you. 
All of New Mexico, by last count all 33 counties, have made 
contributions to the State. Thursday and Friday of last week, 
we hosted in this facility mayors, city managers, county 
officials from all across the State to share best practices as 
we are experiencing them and learning them in the city of 
    It was clear at the conclusion that there's tremendous 
interest on the part of all communities in New Mexico in doing 
the right thing, whether it be to address climate change or 
whether it be in the interest of energy independence or frankly 
for the creation of wealth in our communities. It was very 
clear at that time that there was a tremendous need for 
resources and expertise.
    I want to on behalf of all of Albuquerque thank you and 
commend you for the legislation that has now passed the House 
and is in conference that would provide block grants to local 
governments around the State of New Mexico and indeed around 
the country.
    As you're aware, Senator, the Federal administration has 
been slow on these issues and it has fallen to America's cities 
to take the lead. Over 600 cities have now signed onto the 
clean air protocol. We're all very proud of that and we 
recognize that some things really are best local, whether it be 
building codes, things of that nature. But some things 
absolutely cry out for Federal partnership.
    So I want to commend you for your leadership. I want to 
acknowledge as well the leadership of Senator Domenici on 
behalf of New Mexico and the country. I want to commend as well 
the President for now acknowledging the climate changes and 
man-made phenomena, if I'm understanding that that is what he 
is acknowledging. We have a long ways to go.
    Albuquerque might seem to some an unlikely epicenter for 
the place to have a global sustainability movement. But, in 
fact, it's because of the inaction at the Federal level that 
the cities have had the ability to really do the right thing.
    We've had some head starts here in great part thanks to 
Federal legislation. Albuquerque is rated as having the first, 
second, or third cleanest air of any city in America depending 
on whose gauge you use. If you utilize mine, it's No. 1 
    That is a function of Federal legislation of the Clean Air 
Act which has compelled us to engage in certain conduct, 
whether it be auto emissions checks, things of that nature. We 
see that at the end we are a healthier community, indeed the 
best community in America most recently ranked but also a more 
productive community. It's simply a better place to do business 
if the people are healthy, if the air is clean. So we have a 
number of things that have allowed us to have a step up.
    The interface between the building environment in climate 
change is now very well-known. Depending on the community, 
between 45 percent and 55 percent of all carbon emissions are 
generated by buildings, their construction, their operation. 
We're very proud that a New Mexico architect is the architect 
of the 2030 plan.
    Speaking to this group yesterday was the CEO of Green Build 
around the country. They have now incorporated lead into 2030--
or 2030 into lead, Bill Fradrezi, and he's doing a great job on 
this. Again it focuses attention on New Mexico and our 
communities and the leadership role that we have by virtue of a 
lot of hard work by a lot of people.
    The location of the national laboratories in New Mexico is 
not an accident. It was because people worked to make it 
happen. So today we boast the second highest number of Ph.D.'s 
per capita than any city in America. That means, when you 
combine that with our natural wind, our natural sunshine, and 
our built-in gray matter, we are very well situated to be 
leaders on many, if not, all of the issues that have to be 
addressed if we are to save the planet.
    Albuquerque, of course--and please forgive me if I brag a 
little bit on my hometown, but it's my job--received a world 
leadership award in London in November for our water 
conservation program, beating out all the major cities in the 
    Under the rubric of sustainability which is really what all 
of this at its most basic element is about has learned how to 
take limited resources, extend them, build upon them, and in 
the process create wealth.
    I had the distinct privilege of attending a world 
conference on these issues in January in Paris just as the new 
figures were being released on the gravity of climate change 
and how very real it is and how immediate it is. It was clear 
that they were still skeptical as they are of many of the 
things that we do, looking to the United States of America for 
the leadership in technology.
    It is also clear to most who spend any serious time with 
these issues that this is the beginning of a new era, the 
beginning of an entire new economy that, if we take advantage 
of, will transform our country. If we don't, we'll condemn our 
country for generations.
    So I want to assure you that you have our full support as 
we work to pass legislation at the Federal level, partner with 
local governments, and probably more importantly with the 
private sector to remove those barriers. It makes no sense to 
me that the regulatory environment ought to be such that it 
stifles innovation in these areas.
    I have witnessed this in the last few days, because here 
are many of the technologies with us today that are dedicated 
to a new spirit of entrepreneurship as they save the planet. It 
makes no sense that they should be stifled by impediments, 
particularly regulatory impediments in that endeavor.
    I was in China just 2 weeks ago. The topic of climate 
change was very real. They were informed, the officials that I 
met with. Interestingly some of the impediments that we have 
they do not have, some justified, some unjustified, whether 
it's a means of transmission of energy which can be an obstacle 
in this country to innovation, whether it be--no matter what 
the source of the energy is to CAFE standards which we seem to 
struggle so greatly with in this country.
    At some point I believe the market, if it is respected, and 
it always has to be respected, will simply demand that change. 
I know, Senator, that Congress feels that demand from the 
consumers. Certainly the sales in Detroit indicate that they're 
feeling a little bit of that demand.
    Again I want to pledge to you the support of America's 
cities in your efforts. I want to thank you for your 
leadership. There is no question in my mind that done properly 
we can save our planet. We can assure this country of energy 
independence and in the process become once again the world 
leaders in technological innovation.
    I know, Mr. Chairman, that you share my goal that the 
center for technological innovation be located right here in 
New Mexico. Thank you very much.
    [The prepared statement of Mr. Chavez follows:]

     Prepared Statement of Martin J. Chavez, Mayor, Albuquerque, NM

    Thank you for providing Albuquerque with the opportunity to host 
this hearing on fast tracking of energy and climate change technology. 
I want to commend Chairman Bingaman in this regard, and Ranking Member 
Domenici as well for their continuing leadership in this critical area.
    My name is Martin J. Chavez. It is a privilege to talk with you 
about the role of the State, Federal and Local partnership in 
addressing the urgent challenge of energy innovation and climate 
change, and the many opportunities generated by a coordinate, pro-
active approach in answering the challenge.


    To some, a city like Albuquerque might seem like an unlikely 
epicenter for the global sustainability movement. But a failure on the 
part of the present Administration in Washington to take seriously the 
threats to our environment posed by global climate change has prompted 
states, and indeed over 600 localities across the country, to step up 
and rise to the challenge.
    And a confluence of circumstances has given communities such as 
Albuquerque an early opportunity to transform how we live and, by 
example, be a leader that communities worldwide can look to and learn 
    In terms of clean air, metropolitan areas like Albuquerque got a 
jump start years before most communities because of our periodic 
inversion layer. The same recirculation that makes us the hot air 
ballooning capital of the world, also made it imperative that we 
greatly reduce emissions.
    Today, thanks to emissions testing, particulate mitigation 
strategies, fuel reformulation, CNG and Hybrid-Electric buses and many 
other innovations, Albuquerque air is healthy and cleaner than it had 
been in decades.
    But it is worth noting that while the impetus may have come from 
the grassroots, the authority had to involve federal imperatives such 
as come from the EPA under an Air Quality Management District. We could 
not have had the success we have worked so hard for without the federal 
government as an active and authoritative partner.


    In terms of the interface between our built and natural 
environments, Albuquerque today garners a variety of national awards 
and recognition, from arborists to cyclists and from open space 
enthusiasts to fitness gurus.
    Today's leaders in these areas can point back to the middle of the 
last century, when Mayor Clyde Tingley built parks, set aside open 
space and initiated a particularly ambitious tree planting program. We 
now build on that legacy with initiatives such as the 3000 acre Bosque 
Restoration Project, renowned trails and open space acquisitions as 
well as world class sports and cultural amenities. We also recently 
kicked off a ``Million Tree Challenge'' by handing out 5000 free 
saplings to the community.
    But again, open space and park land acquisition would have been 
greatly limited if not for our federal partners. We would not, for 
example, have the degree of protection we enjoy for the Petroglyph 
National Monument, or for the Sandias or even the Bosque.

                          WATER SUSTAINABILITY

    And in terms of water sustainability, it was an alarming discovery 
back in the early 1990s that our aquifer was not nearly so limitless as 
had been thought, which prompted one of the nation's most ambitious and 
successful water conservation programs as well as the biggest public 
works project in the city's history--the San Juan Chama surface water 
    Here too, we took the legacy of forethought from those federal, 
state and local leaders two generations ago who purchased rights to 
40,000 acre feet per year of Colorado River water, and we built 
dramatically upon it. Today Albuquerque boasts not only a sustainable 
water future on a par with any other major city in America, we actually 
garnered a World Leadership Award on the subject.
    And again, as much as we might have the will, without the federal 
partnership we all too often lack the ways and means to accomplish our 
critical environmental goals.
    Water makes a great allegory for energy in New Mexico. We have 
reduced our use by a third, even while we were growing our number of 
accounts by just about as much. When every level of government comes 
together as we did over water sustainability, such results should not 
be unexpected and I believe we can do even better with a similar effort 
toward energy sustainability. Indeed, it is every bit as imperative 
that we succeed because our very future depends on it.


    It should also not come as a surprise to the world that we are a 
hotbed of innovation, since New Mexico hosts two of the nation's 
premier energy laboratories as well as major research and development 
institutions. Even groups that are normally focused elsewhere, such as 
the National Hydrogen Association, came away impressed with Albuquerque 
after they chose us as the site for their first Renewables to Hydrogen 
conference last Fall.
    What has become increasingly true about Albuquerque and New Mexico 
is that the innovations that get their start here are more often 
sticking around to fruition. We are finally coming into our own as a 
metroplex capable of hosting the most sophisticated of production 
operations while attracting, cultivating and retraining the world's 
most creative minds.
    Advent Solar now produces a superior solar cell at the South end of 
town with a technology that was hatched right here at the federally 
funded Sandia National Laboratories. And companies such as Eclipse 
Aviation and Tesla Motors, who could have taken their innovative 
manufacturing anywhere, have chosen us as well.

                            MISSING ELEMENTS

    But to stay on this path toward sustainability that is economic as 
well as environmental, we must continue to work the game plan that has 
brought us here and map out our next moves wisely.
    Some key elements to the nascent federal, state and local 
partnership are still missing.
    For one, we lack the resources the federal government can bring to 
bear. While we now dedicate 3% of our bond revenues to energy 
conservation and distributed power projects, this amounts only to about 
$3 million per cycle. A great down payment, to be sure, but not the 
kind of resource infusion that is going to sufficiently shrink our 
carbon footprint or transform our sustainability prospects by itself.
    Fortunately, it is our understanding that the critical Energy Block 
Grants to localities that the Senate sent over to the House have 
remained whole in that body. So we are optimistic that this element of 
the partnership may soon be falling into place.
    Another area, where we are greatly alarmed, is the lack of CAFE 
standard increases. This is especially embarrassing, when we compare 
ourselves to the rest of the world. Even China is putting us to shame 
in this regard, and it is an area where we are at the mercy of the 
federal government to set the standard.
    While buildings may account for a plurality of greenhouse gas 
emissions elsewhere in the country, here in New Mexico the number one 
contributor is transportation. This is partly the result of relatively 
mild weather shrinking our buildings' emissions somewhat, and also 
partly due to the fact that we register more miles per year of per 
capita vehicle travel than most.
    This is one area where the localities and states must look almost 
totally to Washington for leadership.


    The goal has always been an Albuquerque where our children or 
grandchildren don't have to leave town to realize their dreams. Thanks 
to smart planning about sustainability and decisive action, and working 
thru NGO partners such as the International Council on Local 
Environmental Initiatives, we are making great gains toward that goal.
    And we have learned that action toward sustainability can actually 
be good for both our economic wealth and our quality of life, and that 
the two goals support each other when we ``push the green envelope.'' 
It is also, quite simply, the right thing to do and the greatest moral 
imperative of our time. Because our grandchildren will either look back 
to us in this time and celebrate that we had the foresight and will to 
change course, or they will curse us for what we will have left them.
    For those remaining folks who disbelieve the scientific consensus 
about man's influence on global climate change, I would also just like 
to add briefly that our present reliance on foreign oil--adding 
billions of dollars per month to our foreign trade deficit--is 
something we ought to rethink.
    But it is also clear to us that there are some things we cannot do 
alone, and others where we need a ``force multiplier'' of a partner in 
the federal government.
    So I would respectfully urge the Committee to stand fast on 
proposals for block grants to municipalities and to make another run at 
a serious improvement to our now antiquated CAFE standards.
    And I would also invite a review of our sustainability blueprint, 
which will be posted on the sustainability link from www.cabq.gov once 
it is finalized.
    With that, thank you again Mr. Chairman on behalf of Albuquerque 
and all of New Mexico, both for what you do in the realm of public 
service and for giving us this opportunity here today.

    The Chairman. Thank you very much. Again thanks for all 
your leadership. Let me just ask a couple of questions that 
occurred to me.
    One of the problems we've had historically with trying to 
promote renewable energy and do a better job with energy 
efficiency is that in the past, that's been driven by changes 
in the price of oil and the price of gasoline.
    You've seen as the price of oil goes up, everybody gets 
worried about energy efficiency. When the price of oil drops, 
everybody moves on to other subjects. So we're not able to 
sustain a focus on the issue.
    My impression is that the concern about climate change is 
sort of a new element in this debate and in discussion and that 
that is going to change that going forward; and that just as 
you made this a priority, your administration, whoever succeeds 
you, and whoever succeeds me in my job is going to have to make 
it a priority as well just by virtue of the changed perception 
of the importance of the issue.
    I don't know if that's something that you've focused on or 
if you have any thoughts about how much this is an issue that 
is front and center because it's of concern to you or is front 
and center because it is sort of getting hard wired into our 
national policy concerns.
    Mr. Chavez. Mr. Chairman, it is my opinion that we're 
standing on a railroad track and there's a train coming 
straight at us and we have two options. One is to get on the 
train or be run over by it.
    The events, the reality of climate change will compel 
action. The only real question is whether we will act in time 
to save the species. As one of our speakers, Terry Tammen, last 
week who is the principal architect of all of California's 
green program said this is not about saving the planet. The 
planet will be fine. The question is whether or not our species 
will be living on the planet at the time.
    So I think all of us simply have to respond. What is 
impressive about this movement, if you will, is the involvement 
of the private sector. The private sector sees the economics. 
Much of this conversation started not with environmentalists 
but with economists. It brings all parties to the table.
    I have seen many skilled legislators in my career. Without 
sounding too sweet about it, you are one of the most skilled 
I've ever witnessed. I've watched the difficulty of taking a 
major piece of energy legislation that is imperative and see it 
work through the Senate and the House and how difficult it is 
to have meaningful change.
    That cannot be the status quo for the future. Either that 
or the public will rise up and we're all out of work.
    The Chairman. Let me just ask on one other issue. One of 
the things that we've always strived for here is to take 
advantage of the technology developed in our laboratories, move 
it into the private sector, create jobs, and do a lot of good 
in the process in addition to the job creation, the economic 
    We've got some companies that are on this second panel that 
are going to talk about how they've done that and been able to 
take technology that was created either in our laboratories, or 
with help from the public sector, in some way or another, and 
gone ahead and succeeded in the private sector with that.
    It would seem to me that we've struggled to make this work 
in New Mexico over a long time. But I would think that we would 
probably have as good an insight here in New Mexico as to what 
the factors are that make that occur as anyplace in the 
    I don't know if this is something that you've spent a lot 
of time on. I know, if you have any thoughts about it you want 
to express, I would be anxious to hear them.
    Mr. Chavez. Thank you, Senator. It's just very clear that 
we have all of the basic assets. I had a marvelous conversation 
not long ago with one of the principals of the city of 
Covington, one of the premier or newest developers in the 
country. Of course, we're building up all of Mesa del Sol which 
will be to my mind building a city the right way for the future 
in a sustainable fashion.
    He looked at basic elements, free college tuition. There's 
not many places in the country where you can go to college for 
free if you just have a decent grade point average. The number 
of Ph.D.s, all the technological excellence that's going 
around, the beautiful environment.
    His question to me was, Mayor, with all those assets which 
are superior to just about any community in the country, why 
aren't you doing better as a community? Of course, they see the 
business opportunity and that's why they're here. So we 
definitely have the assets.
    Why we continue to subsidize an industry when gasoline is 
$3 at the pump for that continued behavior when we have the 
crying need for alternatives and renewables is beyond me. It is 
simply beyond me.
    I believe with your leadership and the leadership of the 
delegation and frankly with the upcoming elections, because I 
think all sides are now much better informed on these issues, 
that we're at the beginning of something great and not the end 
of something great.
    The Chairman. OK. Thank you again for being here and all 
your leadership on these issues.
    We have a second panel of very distinguished private sector 
leaders who are going to come and tell us about their 
particular companies and circumstances and the problems that 
they have encountered and ways they've overcome them. So again 
thank you very much, Mayor.
    Mr. Chavez. Thank you, Mr. Chairman.
    The Chairman. Why don't we ask the second panel to come up 
here and I'll introduce everybody and we'll go ahead with their 
    While I'm thinking of it, so I don't forget, let me also 
particularly thank John Epstein for his good work in getting 
this hearing put together. He works with me on the energy 
committee there in Washington as well and does a great job on 
this and a lot of other things. So I very much appreciate that 
effort and want to acknowledge that.
    Let me just start to my left, your right, and go right 
across. I'll introduce everyone and then just ask for you to 
each say whatever is on your mind.
    Dr. Doug Smith is president of NanoPore here in 
Albuquerque. We had Doug testify before our finance committee 
in Washington, a couple months ago, on some of the tax issues 
related to the business that he's in and very much appreciate 
that and appreciate him being here again today.
    Rusty Schmit who is the founder and president and chief 
executive officer of Advent Solar which is a very successful 
company that we're very proud of, it's located here in 
Albuquerque. He's got a great story to tell and great insights 
into this issue and so we appreciate him.
    Dr. Jerry Simmons who is the program manager for solid 
state lighting out at Sandia National Labs. Jerry is putting 
New Mexico and Sandia on the map in this solid state lighting 
area and it's an area that we think is going to be a growth 
area for a long, long time.
    Dr. Hung Hou who is president and the chief operating 
officer for EMCORE Corporation that now is headquartered here 
in Albuquerque. We're very glad that they are. We're very glad 
that Dr. Hou is here to talk about that and what they're doing.
    So, Doug, why don't you start and give us your views and 
we'll just go across in the order that I've indicated and then 
I'll have a few questions.

                        ALBUQUERQUE, NM

    Mr. Smith. Thank you, Mr. Chairman, for the invitation to 
speak here today. It's probably a bit dangerous to say I can 
say whatever I have on my mind.
    The Chairman. Go right ahead.
    Mr. Smith. So as background NanoPore has been in business 
for 14 years here and we now have three different spin-offs and 
they're all related to not energy production but rather energy 
    We have a brand-new startup called NanoVend which has 
developed a new kind of vending machine which cuts the amount 
of energy for vending machines by 80 to 90 percent. We have 
NanoCool which makes medical packaging which greatly reduces 
the size and, therefore, the amount of fuel required for air 
freight for shipping pharmaceuticals.
    Our biggest spin-off right now is NanoPore insulation which 
makes advanced thermal insulation, roughly R-40 per inch. So 
about seven times better than foam, seven to eight times better 
than polyurethane foam.
    As I testified up in Washington, that's being used now in a 
number of applications, from refrigerated transport, where we 
can save 1,000 gallons of diesel per year, to cold storage in 
everything from McDonald's to large cold storage facilities 
even getting into housing now.
    What I wanted to talk about was really--again we enforce 
the idea that saving energy is probably the cheapest way to 
make energy rather than alternative energy. Actually saving it 
is probably the most efficient way.
    But what I really want to talk about is the experience of 
NanoPore. When I saw about governments working together, I 
started thinking back to my history. I won't go too far back in 
my history. I started at--NanoPore is a spin-off of both UNM 
    I ran a center at UNM in engineering and advanced 
materials. This was a spin-off of that. Sandia was actively 
involved in that. So we always claim to be a spin-off of both. 
When our company started 4 years ago, I think of--14 years ago, 
I think now what would have helped us and would continue to 
help us.
    There are really four issues where government is working 
together that can talk about tax credits and investment and 
funding for a change and to talk about what are the practical 
things, local things that could help us. The first was really 
technology demonstration projects.
    When you come forward with a new technology, whether it's 
advanced insulation or a new kind of air-conditioning, it's 
important to get large-scale demonstration projects that have 
credible analysis of the data. Not me analyzing the data and 
putting it out, but scientists in the national labs and the 
university independently monitoring the performance of that.
    I think that's an important thing. It's tough for small 
companies to do when they startup with a new technology. But it 
really helps give them credibility to have both local 
governments and State and Federal Governments involved in these 
kinds of demonstration projects. I think it's a great role for 
the national labs too.
    Another one is really education. Especially when it comes 
to energy efficiency and energy production, is doing a better 
job of educating the consumers, even our kids, about the 
relationship between energy and climate change.
    Everybody hears about climate change. But they don't not 
buy an SUV because of climate change. They may not buy an SUV 
because of oil prices. So really a better job of education, 
just like the city of Albuquerque has done on water 
conservation. So I think there needs to be a combined education 
effort all the way from the schools up to the Federal level on 
    The third is economic development. When NanoPore started 14 
years ago, the economic--local economic development activity 
was essentially nonexistent. Three years ago, when we started 
NanoCool, one of our spin-offs, we got connected with 
Albuquerque Economic Development. I have never had such a 
fantastic experience.
    Gary Tonjes and Bob Walton went out of their way to help 
us. The people who are starting up these days really have it 
made. But really getting the economic development to focus on 
these target areas that we want locally to foster.
    Finally the fourth thing I think and the most important 
thing is for governments at all levels to be a good example. I 
was walking around D.C. recently and walked by the White House. 
Next to the Executive Office Building there were 20-year-old 
air-conditioners sticking out of every office window.
    It's the most, you know, inefficient way you can think of 
it. I criticized the Senate when I was there and the vending 
machines weren't Energy Star rated vending machines. So I think 
being a good example--you know how it is with your kids. If you 
don't do something, then your kids aren't going to do it. I 
think the same thing is going to be true about modifying our 
energy pattern. With that I'll conclude my testimony.
    [The prepared statement of Mr. Smith follows:]

Prepared Statement of Douglas Smith, President, NanoPore Incorporated, 
                            Albuquerque, NM

    Mr. Chairman and Members of the Committee, thank you for inviting 
me to testify before you today on the subject of reducing barriers to 
the Growth of Emerging Energy Technologies-Relationships between 
Federal, State, and Local Governments. Before I begin, I should state 
that by my way of thinking, emerging energy technologies include both 
new and improved sources of energy production as well as ways to 
improve energy efficiency such that we accomplish the same with less 
energy. This doesn't have to mean that we drive slower or lower the 
thermostat, just that as a nation, we insert new technologies to reduce 
our energy consumption. Just from NanoPore and our three New Mexico 
based spin-offs, we have multiple examples of how this can be 
accomplished. These include NanoPore Insulation which is the country's 
largest producer of thermal superinsulation, NanoCool which produces 
controlled temperature medical packaging which dramatically shrinks 
package size and hence, reduces air freight fuel consumption, and 
NanoBev which is producing a new generation of beverage vending which 
reduces the electricity consumption of vending machines by 80-90%.
    We strongly believe that the lowest cost form of new energy 
generation capacity comes from increasing the efficiency of existing 
products. In particular, retrofitting insulation to applications 
originally designed in the era of low cost energy and ignoring the 
environmental impact of energy use. Although not as sexy as new ways to 
produce energy, retrofitting older, energy intensive applications has 
the potential for demonstrating similar energy savings in a much 
shorter time period and at greater economic and environmental savings 
to society.
    So how can governments at all levels work together to boost the 
growth of energy technology companies? First, I would start by 
expanding this group to include our Universities (private and public) 
as well as our National Laboratories. Before starting NanoPore, I was a 
professor at the University of New Mexico with strong research ties to 
Sandia and Los Alamo National Laboratories. That said, I see four areas 
where government can help to reduce barriers to emerging energy 

          1. Technology Demonstration and Validation.--One large 
        barrier to new energy companies is creditability and an 
        unbiased value analysis for their technology whether it is 
        biofuels or advanced electronic controls. Governments are in a 
        unique position to sponsor a range of peer-reviewed, technology 
        demonstration projects for emerging technologies. These serve 
        multiple purposes. As with all new technology, it is often 
        difficult to separate the wheat from the chaff when the market 
        is filled with an array of competing claims. When economic and 
        technical performance is validated by independent sources such 
        as Universities or National Laboratories in well-controlled 
        demonstration projects, the performance data has more 
        creditability in the marketplace and more value in driving 
        energy policy. This builds support from both the customer base 
        and investment community. Because it has been generated by 
        governments, the data can be freely circulated. This approach 
        also helps to connect University and National Laboratory 
        researchers with emerging technology companies. Another benefit 
        is that it helps to build markets for new energy technologies.
          2. Education.--As the debate over climate change played out 
        in the media, the consumer has now recognized the importance of 
        climate change but they still do not want to change their 
        behavior. The move to smaller cars from large SUV's is driven 
        more by high oil prices (i.e., market forces) than a concern 
        for the environment. So how does government help? Education is 
        the key to guiding consumer actions to reduce their energy 
        footprint without sacrificing their way of life or receiving an 
        adequate return on their investment. As an example, I suppose 
        that some would say that market forces should govern the use of 
        better thermal insulation and, if the return on investment is 
        adequate, the market will drive the implementation of new 
        technology. My favorite response to this statement is to direct 
        our attention to the hot water heaters we have in our homes. 
        How many of us have gone to Home Depot or Lowe's to buy a 
        insulation blanket for your hot water heater? If our heater is 
        electric, the investment pays for itself in months, not years. 
        Governments, with the support of Universities, National 
        Laboratories, and federal agencies such as DOE and EPA, need to 
        greatly expand education efforts for everyone from young 
        children in school to the elderly consumer. Energy education 
        and awareness is critical to helping to move new energy 
        technology into the marketplace.
          3. Economic Development.--As with any new business, a strong 
        local and state economic development team is essential to 
        reduce barriers. When NanoPore started fourteen years, a local 
        economic development team was essentially nonexistent. Three 
        years ago, when contemplating the location of our NanoCool 
        spin-off, the Albuquerque Economic Development team led by Gary 
        Tonjes and Bob Walton were fantastic. They introduced us to a 
        wide range of assistance which made our decision to stay in 
        Albuquerque easy and has allowed us to increase investment and 
        expand. In my experience, it is not enough to just have strong 
        incentives but what is necessary is to have a team that helps 
        guides the technology company through the process of obtaining 
        that assistance. Of course, if economic development efforts are 
        only judged by the number of jobs created that year, it drives 
        development efforts towards companies such as call centers 
        which will create a large number of jobs in a short time and 
        away from helping technology companies which will grow jobs 
        year over year. NanoPore and its' joint ventures have grown by 
        40+% per year for each of the last three years and project at 
        least that rate for the future. Our economic development 
        efforts should be expanded to provide more resources to help 
        focus on areas of longer-term impact and strategic interest for 
        the city.
          4. Serve as an Example.--Governments must practice best 
        energy use practices and make the community aware of this. The 
        problem is always the trade-off in initial capital cost and 
        operating costs. Governments should consider energy costs in 
        all of their purchasing decisions whether it is new 
        construction, retrofitting buildings, purchasing equipment, or 
        even sourcing vending machines. Beverage vending machines are a 
        perfect example of how there is often disconnect between the 
        person who pays for the insulation and the person who pays the 
        energy bill. Most vending machines are owned by large beverage/
        ice cream companies and loaned to the location where the 
        machine is placed. The store/office/university must pay the 
        energy cost. There are approximately 2 million vending machines 
        in this country and the retrofit application of a \1/4\ " thick 
        superinsulation would save over 500 MW of energy. This energy 
        savings does not account for the knock-on effect that when 
        energy is being expended inside a building, there is an 
        additional energy load on the HVAC system. Government needs to 
        publicize what it has done to save energy and provide a report 
        card to the consumer. Just as Albuquerque has accomplished with 
        water conservation, we need to use examples and progress 
        reports to show that the Federal, state and city government can 
        save energy (and money) and therefore, the consumer can also.

    I would like to thank you for the invitation to speak today and I 
hope that the information provided will be useful.

    The Chairman. OK. Thank you very much. That's very useful. 
Rusty, why don't you go right ahead.


    Mr. Schmit. Thank you, Mr. Chairman, for the opportunity to 
testify here today. I will keep my opening remarks brief 
hopefully, but be happy to answer any questions.
    For background Advent Solar is a privately funded early 
stage company. We began operations in July 2003 so we're now 4 
years in operation. We have raised 120 million in equity 
capital and several million dollars more in debt.
    So in one sense, as you said in your introduction very 
graciously, we are successful. But really we've been successful 
to clarify only in raising money and spending it to get to the 
next stage. To be a real sustainable business, we have to 
compete in a global marketplace.
    So the target of my remarks today is the barriers in the 
global industry in which we are living today and what can 
governments do to model after those other countries' 
governments in order to promote this kind of industry.
    By background as you can see on this first chart on the 
easel there, the photovoltaic industry in which we are 
operating is booming. In 2006 the global cell production topped 
2.5 gigawatts. As you can see, over the past 10 years, that's 
an increase of over six X. This is a global industry. The 
competition that we face is formidable.
    All of the leading photovoltaic producing countries have 
advanced their industries with national energy policies that 
provide supply and demand in incentives for photovoltaics and 
other renewable energies and with policies linked to the 
national energy policy that provide economic development 
incentives for companies in those fields.
    This is not the case yet in the United States despite your 
leadership in trying to push some of these things through, 
which I very much appreciate. So I would like to talk about 
three barriers to companies like ours given this global 
    Like the host countries of our industry leading 
competitors, the U.S. needs a long-term energy policy that 
provides incentives for the production and consumption of 
emerging energy technologies in the U.S. market. This has been 
highly successful in other countries.
    Japan, for example, was the first to provide market 
incentives for solar electric power as an integral part of 
their energy policy back in the 1990's. This policy led to 
tremendous growth in the amount of solar electricity generated 
and it also led that country to be a leader in manufacturing of 
solar photovoltaic products. That industrial leadership 
continues today, they are the largest manufacturing country of 
solar PV products in the world.
    Though the market demand in Japan has been surpassed now by 
that in Germany. Germany followed the example of Japan, 
implemented an incentive program to drive market demand for 
solar power. Here again it was part of a broader national 
energy policy for long-term diversification away from 
traditional coal and nuclear in that country. This market 
demand in turn led to the buildup of the manufacturing base in 
    The second factor is to have open and equal domestic market 
access. Very simply emerging energy technologies will not 
emerge if they are easily squashed or obstructed by the bested 
status quo opponents who fear the loss of their franchise 
    Emerging energy technologies in the U.S. need open access 
to the largest energy market in the world. Our home market is 
our special advantage. But we need to level the playing field 
and not handicap newly emerging technologies like solar 
    The third factor, Federal, State, and local economic 
development incentives aligned with national energy policy. 
Companies such as Advent compete in the global market in which 
virtually all other countries align their economic development 
with national policy.
    In the solar energy business, we are at a huge disadvantage 
with our competitors in countries such as Germany because of 
their grants and other aid provided to companies that locate 
    Germany, for example, has created an estimated 100,000 jobs 
in the renewable energy field over the past several years. Last 
year they reported over 35,000 jobs in solar photovoltaics 
alone. This has driven not only by the market incentives that I 
mentioned as part of their national energy policy, but also 
through outright grants from the European Union, the German 
national government, and the German State governments.
    This combination of grants which are linked to job creation 
often amounts to 50 percent or more of a total project 
investment. It's very difficult for companies like Advent to 
compete in this global industry.
    To put that in perspective, I mentioned earlier that Advent 
has raised over 120 million in equity capital. We could have 
done the same in another country for half of that amount, which 
is obviously very attractive to investors and makes it much 
easier to get businesses going and growing quickly.
    To summarize, Federal, State, and local economic 
development efforts should be coordinated through grants or 
other near-term incentives that lower the barrier to investment 
for companies involved in strategic new energy technologies.
    Again thank you for providing me with this privilege to 
testify and I'm happy to answer any questions.
    [The prepared statement of Mr. Schmit follows:]

 Prepared Statement of Rusty Schmit, Co-Founder and CEO, Advent Solar, 
                            Albuquerque, NM

    Mr. Chairman and distinguished members of the Committee, my name is 
Rusty Schmit. I am co-founder and CEO of Advent Solar, a solar cell and 
module manufacturing company located in Albuquerque, New Mexico. I 
would like to thank you for providing me the opportunity to testify 
before you today.
    Advent Solar is a privately funded, early-stage company. We began 
operations in July, 2003 based on a proprietary ``Emitter Wrap 
Through'' solar cell technology licensed from Sandia National 
Laboratories in Albuquerque, New Mexico. We have raised $120M in equity 
capital and $25M in debt. Today Advent occupies a new 25MW 
manufacturing facility at Mesa del Sol with close to 200 well-paid 
    Even though Advent Solar is a U.S.-based company utilizing U.S.-
based technology, most of its sales are in Europe, and virtually all of 
its $30 million in manufacturing equipment was purchased from industry-
leading European equipment vendors. Most of our key raw materials also 
come from European suppliers.
    The photovoltaic (PV) industry is booming. In 2006, global solar 
cell production topped 2.5GW, a five year increase of 632% from 400MW 
in 2001. This is a global industry and the global competition in 
formidable. In 2006, the top PV producing countries or regions were: 
Japan with a 36% market share; Europe (primarily Germany) with 28%, and 
China and Taiwan with 22%. The U.S. share of global production totaled 
7% (174MW), and a large portion of this was from European and Japanese 
companies with U.S. operations.
    Most industry analysts believe that China will be the world's 
largest nation PV producer in a very few years. Currently, China 
exports 95% of its production.
    All of the leading PV producing countries have advanced their 
industries with national energy policies providing supply and demand 
incentives for PV and other renewable energies and with policies that 
are intended to promote economic and energy security and environmental 
goals. This is not the case in the United States.
    Just sixty days ago, the 2007 Senate Energy Bill was stripped of 
its demand incentives providing federal tax credits for prospective 
residential PV users in the United States. This was an enormous setback 
for the advancement of the PV industry in the U.S. and for Advent 
Solar. The PV world was watching with the expectation that the U.S. was 
on the verge of asserting its market strength and potential, and 
instead the status quo prevailed.
    In its World Energy Outlook 2006, the International Energy Agency 
(IEA) projects that world electricity demand will double by 2030. That 
is, whatever the issues are today, multiply them by two over the next 
23 years. Just last month, the National Petroleum Council in its report 
entitled ``Facing the Hard Truths about Energy'' stated that the world 
would need 60% more energy by 2030, and that there are accumulating 
risks to continuing expansion of oil and natural gas production from 
conventional sources. The report called for increased energy efficiency 
and for the expansion and diversification of energy resources.
    The global and domestic drivers for renewable energy and other 
emerging energy technologies have never been more vivid, and I do not 
need to recite them for you. We live with the consequences of our 
energy policy or lack thereof day in and day out. The quality of life 
and standard of living for future generations of Americans and global 
citizens will be impacted by your wisdom and sensibilities as U.S. 
legislators and policy makers.
    With this backdrop, and from the perspective of Advent Solar, I 
would like to cite three barriers to Emerging Energy Technologies. The 
issues and contrasting interests may be complex at a micro level, but 
they are obvious from a perspective on national policy.
    Removing barriers will require bold leadership and enlightened 
public policy with the longterm public interests in mind.
    My three observations are simple and straightforward:


    Energy is ubiquitous, it is a global commodity; and it is a global 
industry. As a U.S.-based industry, solar cell and module manufacturing 
faces enormous global competition and huge barriers to having any 
footprint at all. If we are to be successful, it will not be solely as 
an exporter.
    Like the host countries of our industry-leading competitors, The 
U.S. needs a long-term energy policy that provides incentives for the 
production and consumption of emerging energy technologies in the U.S. 
market. This has been highly successful in other countries.
    Japan was the first to provide market incentives for solar electric 
power as an integral part of their energy policy to diversify the 
sources of electric power generation. This policy led to growth in the 
amount of solar electricity generated, and also led that country to be 
the leader in manufacturing of solar photovoltaic products. That 
industrial leadership continues today, even though the market demand in 
Japan has been far surpassed by that in Germany.
    Following the example of Japan, Germany implemented an incentive 
program to drive market demand for solar power. Here again, it was part 
of a broader national energy policy for long-term diversification away 
from a dependence on coal and nuclear. This market demand led to the 
build-up of the manufacturing base in Germany.
    The private and social benefits make a broader-based national 
energy policy a sure winner for the twenty-first century.

                         OPEN DOMESTIC MARKETS

    Change happens. In fact, it is a hallmark of an advancing and 
prosperous society.
    Emerging energy technologies will not emerge if they are easily 
squashed and obstructed by vested, status quo opponents who fear the 
loss of franchise and annuity income status. Emerging energy 
technologies in the U.S. need open access to the largest energy market 
in the world. Our home base is our special advantage.
    We will not grow our domestic manufacturing industry by selling 
only into foreign markets. China will beat us at that game.
    The U.S. needs political leadership and progressive public policy 
at Federal, State, and Local levels to bridge diverse energy interests 
and accommodate change.
    It is past time to claim our energy independence and get to work.

                       THE NATIONAL ENERGY POLICY

    Though often called industrial policy and therefore frowned upon in 
the U.S., the reality is that companies such as Advent Solar compete in 
a global market. In that global market virtually all other countries 
align economic development with national policy. In the solar energy 
business, for example, we are at a huge disadvantage with our 
competitors in countries such as Germany because of the grants and 
other aid provided to companies that locate there.
    Germany has created an estimated 100,000 jobs in the renewable 
energy field over the past several years, with over 35,000 jobs 
reported in solar energy alone last year. This has been driven not only 
by the market incentives mentioned above, but also through grants from 
the European Union, the German national government, and often from the 
German states. This combination of grants, which are linked to job 
creation, often amounts to 50% or more of the total project investment. 
It is very difficult for a U.S. company to compete in this global 
industry with these types of incentives.
    The federal, state, and local economic development efforts should 
be coordinated through grants or other near-term cash incentives to 
lower the barrier to investment for companies involved in strategic new 
energy technologies.
    Once again, thank you for providing me with the privilege to 
address this committee. I thank you for your interest and leadership, 
and I would be pleased to answer your questions.

    The Chairman. Thank you very much. As I said I'll have some 
questions after we finish hearing from the other two witnesses. 
Jerry, why don't you go ahead.


    Mr. Simmons. OK. Senator Bingaman, thank you for this 
opportunity to testify today on reducing barriers to the growth 
of emerging energy technologies through relationships between 
Federal, State, and local governments.
    In the time allotted, I think I'm going to point out some 
existing partnering mechanisms that have worked well from 
Sandia's perspective. Then I'll suggest a couple of new ideas.
    At the Federal level, the National Competitiveness 
Technology Transfer Act of 1989 was a watershed event for 
Sandia. It enabled us to enter into cooperative research and 
development agreements, or CRADAs, with individual companies 
and to give them licenses to Sandia technology.
    This has been a real success. In the past 3 years, Sandia 
has signed 245 different CRADA agreements with both large and 
small businesses. The Act also enabled us to establish 
entrepreneurial leave program. This program allows Sandia 
scientists to take a 2-year leave of absence to form startup 
companies and then to return to Sandia employment, if needed.
    The safety net increases the number of Sandia scientists 
willing to try to take this risk to form a startup company. 
Both EMCORE and Advent Solar had key founding personnel that 
were Sandia's on entrepreneurial leave. I don't know if Doug 
also counts that. No. OK.
    Another Federal partnering mechanism is the establishment 
of user facilities. By far the largest of Sandia's many user 
facilities is the Center for Integrated Nanotechnologies or 
CINT jointly run by Sandia and Los Alamos National Labs.
    CINT is one of five nanoscale science research centers 
established by the DOE and represents an investment of $100 
million in buildings and state-of-the-art equipment.
    Through a web-based proposal process, universities and 
businesses can come and use CINT equipment and have CINT 
scientists work collaboratively on their projects with the 
costs paid for by CINT. It's turning out to be a great success. 
Over 200 user projects have been undertaken to date.
    As you know in October the National Center for Solid State 
Lighting was established in affiliation with CINT. Solid state 
lighting is the use of semiconductor LEDs for ultra efficient 
general illumination and has the potential for enormous energy 
savings nationwide and worldwide, reductions in total 
electricity use of up to 10 percent.
    This Center For National Solid State Lighting seeks to 
leverage CINT equipment and expertise to harness nanoscience 
for revolutionary advances in this new lighting technology.
    At this point I think I might echo something that Doug 
said. There's a saying that a bird in the hand is worth two in 
the bush. I'd like to coin a new one, which is a kilowatt-hour 
at the point of consumption is worth two kilowatt-hours at the 
point of production. So I think conservation plays an important 
    Let's see. At the State level, the Energy Innovation Fund 
is a recent exciting development. This is a new partnering 
mechanism. It's in its first year. The fund provided $2 million 
for grants in private public partnerships to accelerate 
innovation for clean energy technologies in New Mexico. The 
first five projects of the fund were announced last month.
    The local level I think from Sandia's perspective is 
Sandia's science and technology park is a tremendous success. 
This 250-acre public/private partnership was initiated in 1998. 
Companies that located in the park gained easy access to 
Sandia's world class facilities and scientists, while the city 
and State get new high paying high technology jobs.
    The park currently has 24 tenants, 1,500 employees, and 
$260 million in investment. So at this point I'd like to 
suggest a couple of ideas for bold new moves that we might 
take, new partnering relationships.
    First Sandia often finds it difficult to find funds to 
enter into CRADA activities that otherwise might make sense. 
The business partner is often unable to pay for Sandia's share 
of the CRADA activity, while Sandia's internal funds are often 
restricted from being used for this purpose.
    For example, the funds provided by DOE for the National 
Center For Solid State Lighting are restricted in this way. A 
solution to this problem might be this establish funds 
specifically designated for tech transfer and cooperative R&D 
in the area of emerging technology, emerging energy technology. 
I believe this could substantially increase CRADA activities.
    The second idea that I would like to suggest involves 
Federal, State, and local government working together. As I 
mentioned earlier, there are five nanoscale science research 
centers including CINT located at national labs around the 
    At many of these labs, State, local, and Federal 
Governments are partnering with businesses to establish truly 
major new initiatives in emerging energy technologies. They are 
leveraging the DOE nanoscience center investments.
    One example is the Helios Project. The Helios Project is 
led by Lawrence Berkeley National Lab and leverages their 
nanoscience center, the Molecular Foundry.
    Helios has already received a commitment from British 
Petroleum for $500 million over 10 years. They have also 
recently been promised 125 million from the DOE's Genomes to 
Life program and $70 million from the State of California. A 
similar broad public/private partnership has been formed at Oak 
Ridge National Labs in Tennessee to establish their bioenergy 
science center.
    So I think we might want to consider whether a similarly 
bold new major energy initiative might not be established in 
New Mexico. It could be formed through a Federal, State, and 
local partnership, have substantial business involvement, and 
be affiliated with the Center for Innovative Nanotechnologies 
at both Sandia and Los Alamos.
    A focus on solid state lighting and solar photovoltaics 
would take advantage of the lab's unique expertise in 
semiconductors and the State's significant semiconductor 
business activity.
    I agree with Mayor Chavez, that Albuquerque and New Mexico 
have all the ingredients for an initiative in this area.
    So, Senator Bingaman, thank you for the opportunity to 
testify today and for your strong support of solid state 
lighting and other emerging energy technologies.
    Mayor Chavez, thank you for your leadership in the 
convening of this event.
    [The prepared statement of Mr. Simmons follows:]

Prepared Statement of Jerry A. Simmons, Jr., Program Manager and Acting 
   Co-Director, Solid State Lighting, Sandia National Laboratories, 
                            Albuquerque, NM

    Mr. Chairman, thank you for the opportunity to testify on reducing 
barriers to the growth of emerging energy technologies through closer 
and enhanced relationships between federal, state, and local 
governments, and the role that national laboratories can play. I am 
Jerry A. Simmons, Jr., Program Manager for Solid State Lighting 
research and development (R&D) at Sandia National Laboratories (Sandia) 
and Acting Sandia Co-Director of the U.S. Department of Energy (DOE) 
Center for Integrated Nanotechnologies or CINT. Sandia is managed and 
operated for the DOE by Sandia Corporation, a subsidiary of the 
Lockheed Martin Corporation.
    Sandia is a multiprogram laboratory of DOE, one of the three 
National Nuclear Security Administration (NNSA) laboratories with 
research and development responsibility for nuclear weapons. Sandia's 
job is the design, development, qualification, and certification of 
nearly all of the non-nuclear subsystems of nuclear weapons. We perform 
substantial work in programs closely related to nuclear weapons, 
including intelligence, nonproliferation, and treaty verification 
technologies. As a multiprogram national laboratory, Sandia also 
performs a substantial and ever-growing amount of R&D for DOE's energy 
and science offices, as well as work in national security and homeland 
security for other agencies when our special capabilities can make 
significant contributions. This past year, for the first time, the 
total amount of direct non-nuclear weapons work performed by Sandia 
grew to be greater than half our total budget. Energy efficiency and 
renewable energy and supporting technologies such as energy storage 
will be a rapidly growing area of Sandia's work for the foreseeable 
    I will begin my testimony by describing some Sandia-related 
examples of what has worked well in nurturing relationships between 
local, state, and federal government to promote technology transfer. I 
will then describe what I see as shortcomings or existing needs, as 
well as efforts that could be made to overcome these obstacles and 
deepen relationships between government entities at all levels.
    Sandia facilitates the use of federal R&D results, facilities, and 
resources through technology transfer agreements with private industry, 
universities, and state and local governments. Partnerships are 
conducted to ensure that national security is protected, U.S. economic 
interests are promoted, competition (by the national labs) with private 
industry is prevented, and fairness of opportunity is provided to all.


    The federal government has taken a number of legislative steps to 
aid in the transfer of national laboratories-developed technologies to 
U.S. industries. Technology transfer has been a goal of U.S. government 
policy since the Stevenson-Wydler legislation of 1980. The Bayh-Dole 
legislation, also enacted in 1980, permitted small businesses to obtain 
title to inventions developed with government support. For DOE national 
laboratories, a watershed event occurred with the passing of the 
National Competitiveness Technology Transfer Act of 1989, which 
established technology transfer activities as a mission of Government-
Owned Contractor-Operated (GOCO) labs such as Sandia. This enabled 
Sandia to establish and use two major mechanisms for technology 
transfer, which continue to be used today.

   First, this act enabled the licensing of Sandia-developed 
        technologies to the commercial sector. This includes not only 
        non-exclusive licenses, but exclusive licenses as well. 
        Exclusive licenses are particularly important because the 
        competitive advantage provided can motivate companies to make 
        the investment necessary to bring a given technology into 
        production. The Act also authorized GOCO labs like Sandia to 
        establish Cooperative Research and Development Agreements 
        (CRADAs) with large and small businesses and to make advance 
        agreements on title to inventions resulting from these 
        agreements. Sandia has embraced this mechanism wholeheartedly; 
        in FY04, FY05, and FY06, Sandia signed 245 different CRADAs 
        involving both large and small businesses.
   Second, in another approach to this technology transfer 
        mission, Sandia established the Entrepreneurial Separation to 
        Transfer Technology (ESTT) program, which enables Sandians to 
        take a leave of absence to start up a technology-based 
        business, with the option of returning to employment at Sandia 
        within 2 years. This program is widely considered a success. It 
        enables employees to mitigate their risks in taking the bold 
        move of establishing start-up companies and has resulted in a 
        number of successful start-ups that might otherwise never have 
        happened. In some cases Sandia has become a partner with the 
        company by accepting equity as partial consideration for 
        licensing its technologies.

    Two examples that have particular relevance to today's hearing 
include that of MicroOptical Devices (MODE) and Emcore and that of 
Advent Solar:

   MODE was founded in 1995 by a group of Sandians who took an 
        entrepreneurial separation leave. MODE was purchased in 1997 by 
        Emcore. Additional Sandia technology was licensed by Emcore, 
        which then established a facility in the Sandia Science and 
        Technology Park. Today that facility employs nearly 500 people, 
        is an anchoring institution in Albuquerque's high-technology 
        business nexus, and last fall moved its global headquarters 
        from New Jersey to the Park.
   A second example is provided by Advent Solar. Founded in 
        2002, Advent has an exclusive license to three Sandia patents 
        on emitter wrap-through technology. James Gee, Vice President 
        and Chief Technology Officer as well as a founder of Advent, 
        was one of the original Sandia scientists who led work on this 
        technology. He took advantage of Sandia's entrepreneurial 
        separation program to co-found Advent with President and CEO 
        Rusty Schmit. Today Advent employs more than 165 people and is 
        becoming a cornerstone of Albuquerque's high-tech business 

    Sandia has also established more than 30 unique research facilities 
for use by U.S. industry, universities, academia, other laboratories, 
state and local governments, and the general scientific community. 
These user facilities enable businesses, government, and other 
institutions to access specialized equipment and the expertise 
developed to satisfy DOE's programmatic needs. These facilities range 
from the National Solar Thermal Test Facility, which provides 
experimental engineering data for the design, construction, and 
operation of unique components and systems in proposed solar thermal 
electrical plants planned for large-scale power generation (among other 
testing capabilities), to the Photovoltaic Laboratories, which are 
designed to accelerate the commercial use of photovoltaic energy 
systems and aid in understanding and improving the performance of those 
systems. One of the most important of these user facilities, and 
certainly the largest, is the recently established Center for 
Integrated Nanotechnologies (CINT).
    In FY 2001 the U.S. Government launched the interagency National 
Nanotechnology Initiative (NNI) to accelerate the pace of revolutionary 
discoveries in nanoscale science and engineering and to facilitate the 
incorporation of these scientific advances into beneficial 
technologies. As part of the NNI, DOE's Office of Basic Energy Sciences 
(BES) has established five new Nanoscale Science Research Centers 
(NSRCs) located at DOE laboratories. These five Centers, each housed in 
a new laboratory building with new scientific equipment, are BES 
national user facilities. The capital investment in these Centers is 
roughly $100M each. CINT, with a facility in Albuquerque and another 
one in Los Alamos, is one of the five NSRCs and is jointly operated by 
Sandia and Los Alamos National Laboratory (Los Alamos). CINT has state-
of-the-art facilities staffed by laboratory scientists, post-doctoral 
fellows, and technical support personnel. The four scientific thrust 
areas of CINT are Nanophotonics and Optical Nanomaterials; Nanoscale 
Electronics, Mechanics, and Systems; Soft, Biological and Composite 
Nanomaterials; and Theory and Simulation of Nanoscale Phenomena. Users 
can obtain access to CINT capabilities through a peer-reviewed 
technical proposal for either independent or collaborative research 
submitted through the web in response to semiannual Calls for User 
Proposals. Precompetitive research that will be published in the open 
literature can receive no-fee access to CINT, while proprietary 
research can be conducted on a cost-recovery basis. CINT and the other 
NSRCs provide one model for how federally funded nanoscale science 
research can be pursued jointly with universities and industry. The 
five NSRCs are now up and running and appear to be a success: CINT 
alone has already approved and undertaken over 200 user projects, with 
the in-kind labor of CINT scientists typically valued at 30K for each 
    CINT and the other NSRCs provide another opportunity for 
partnering--the establishment of new initiatives, programs, and centers 
that seek to leverage the substantial investment in the NSRCs made by 
DOE/BES. I would like to give two examples in this regard: the first is 
the National Center for Solid State Lighting (NCSSL) headquartered here 
in Albuquerque and the second is the Helios Project in Berkeley, 
    Solid state lighting refers to the use of light-emitting diodes 
(LEDs) to provide white light for general illumination in our homes, 
offices, and stores. It is believed that in the next decade or two, 
solid state lighting technology will reach energy efficiencies that are 
ten times as high as incandescent bulbs and twice as high as 
fluorescent lamps. If solid state lighting at that efficiency were to 
replace all the incandescent and fluorescent lamps in the nation, the 
result would be an overall reduction in the nation's electricity use of 
10% and a drop in the national electricity bill of up to $50B. Further, 
solid state lights do not contain toxic materials like the mercury 
found in fluorescents. The technology for solid state lighting has been 
rapidly advancing and products have recently become available that 
exceed fluorescents in efficiency. However, it is believed that to 
reach the ultimate efficiency and cost targets of solid state lighting, 
breakthroughs in understanding the nanoscale science of LED materials 
will be necessary.
    The NCSSL, established in October of 2006, is a virtual research 
center involving the five DOE NSRCs. Funded by the DOE's Office of 
Energy Efficiency and Renewable Energy, the NCSSL program seeks to 
build upon the investments made by the DOE/BES by performing targeted 
research in nanotechnology in areas that could increase the efficiency 
and lower the cost of LED-based lighting. Projects are selected from 
the five NSRCs by a competitive proposal process. Sandia has been named 
the Lead Laboratory in the NCSSL. With proposals from both Sandia and 
Los Alamos, CINT captured 5 of the 7 projects awarded ($3.4M of the $5M 
appropriated) in FY06.
    This example shows how the emergence of new energy technologies can 
be aided by leveraging existing investments and expertise, resulting in 
the creation of something that is greater than the sum of its parts. In 
this case one part of DOE was leveraging investments made by another 
part. However, my second example shows that by involving state and 
local government, it is possible to accomplish something that is more 
visionary and much larger.
    The Helios Project is an emerging research program, based at the 
University of California-Berkeley and Lawrence Berkeley National 
Laboratory, that leverages Berkeley's Molecular Foundry, their NSRC 
equivalent to CINT, as well as their other R&D programs. The Helios 
Project targets the research and development of new efficient processes 
to produce transportation fuel from biomass or from solar-energy-driven 
electrochemistry. Because of the broad and interdisciplinary 
capabilities necessary for this bold and ambitious goal, the facility 
is developing an innovative management plan for integrating the efforts 
of leading scientists and engineers from disparate disciplines into a 
single large program. Partnerships will be developed with researchers 
from a broad base: universities, other national laboratories, and 
industry. Funding for the project will be similarly broad-based: $500M 
over 10 years has already been committed by industry (BP, formerly 
British Petroleum), up to $70M may be provided by the State of 
California, and up to $15M may be provided by private donors. The 
federal government (through the DOE Office of Basic Energy Sciences) is 
also playing a key role through the Molecular Foundry and a solar 
energy research institute and will provide substantial funding. The 
expectation is that the Helios Project will maximize the innovation and 
scientific and engineering strengths of its researchers to produce 
solutions to problems encountered on the route to efficient and 
scalable solar fuels, on a time scale of five to 20 years.
    The Helios Project in California is an excellent example of how new 
approaches to managing and funding collaborative work can hasten 
scientific breakthroughs and carry them through to the practical 
applications that are required to resolve the energy issues facing our 
nation and our planet. Of course, every state is different, and each 
state must consider its unique needs, resources, and institutions. 
Other examples of successful state-federal partnering include the DOE 
Center for Nanoscale Materials at Argonne National Laboratory in 
Illinois and the DOE Bio-energy Science Center at Oak Ridge National 
Laboratory, which leverages $80M in state and private-sector sources. 
It might be possible that New Mexico, building on the expertise of CINT 
and other resources in the state, could undertake an emerging energy 
initiative project of similarly bold scope.


    Continuing with examples that have worked, Sandia partners with the 
State of New Mexico in the New Mexico Small Business Assistance (NMSBA) 
program. In 2000 the New Mexico Legislature enacted a law that is both 
innovative and unique among all states. enabling Sandia to use a credit 
against taxes of up to $1.8M (this year it was increased to $2.4M at 
Sandia and a similar program was initiated at Los Alamos) of its NM 
gross receipts taxes each year to provide technical advice and 
assistance to New Mexico small businesses. Requests can be made through 
the web and assistance can take the form of consulting, testing, and 
accessing Sandia's unique facilities. This program has been quite 
successful (the following data is cumulative for 2001-2005): returning 
greater than $17M in economic growth in NM (combined increase in 
business revenues and decrease in operating costs) on an investment of 
$9M; creating more than 450 jobs at an average salary twice the state's 
mean salary prior to this program; generating $13M in new tax revenues; 
and increasing the investments in NM goods by more than $8M. Since its 
creation by the Legislature, NMSBA has assisted over 1500 small New 
Mexico businesses. By design, the cost of assistance rendered cannot 
exceed $10K/company/year in urban communities and $20K/company/year in 
rural communities to assure that Sandia will help companies solve 
difficult technical problems but avoid becoming the R&D arm of the 
    However, to support sustained collaborations with companies 
entering the emerging new energy technologies market, a different model 
is needed that allows R&D investments of larger size. Governor 
Richardson's Energy Innovation Fund, created during the 2007 
legislative session, is precisely the kind of program that will help to 
incubate new green energy technology businesses in New Mexico. The fund 
was established with a $2M appropriation to accelerate innovation for 
faster commercial adaptation of clean energy technologies in the state. 
Projects are required to involve partnerships between private and 
public sectors, with at least one of the principals being a New Mexico 
entity. Selections of the first five projects in this program were 
announced by the Governor last month.


    Another example of a relationship that has worked very well on the 
local level is the Sandia Science & Technology Park (SS&TP), a 250-acre 
technology community located adjacent to Sandia in southeast 
Albuquerque. The SS&TP is a public/private partnership originally 
initiated in 1998 by Sandia National Laboratories, Technology Ventures 
Corporation, and the City of Albuquerque. Today the partnership 
includes Albuquerque Public Schools, BUILD New Mexico, the New Mexico 
State Land Office, the Economic Development Administration, the State 
of New Mexico, Bernalillo County, the Public Service Company of New 
Mexico, and the Mid-Region Council of Governments. The benefit of the 
Park to Sandia is that it facilitates joint R & D, technology 
commercialization, business development, and supplier relations. The 
benefit to our federal, state, and local governments is that the Park 
creates jobs--and not just any jobs, but high-paying, technology-based 
jobs. Companies benefit from their close physical proximity and access 
to Sandia's world-class technologies, state-of-the-art facilities, and 
internationally recognized scientists and engineers. The Park is widely 
recognized for its notable results--24 tenants, 1500 people, and $260 
million of investment. Perhaps an even more important result is that 
the average annual salary for each job in the Park is $62,000, compared 
to $37,000 for each job in Albuquerque.
    EMCORE is a fine example of a successful company at the Park. They 
built their first facility there in 1998, a 50,000 sf building to house 
their Photovoltaics Division, a division built on technology that was 
licensed from Sandia. Over the years they have licensed even more 
Sandia technologies and they have continued to add facilities and 
continued to add jobs. They now have over 175,000 sf of space and 
almost 500 employees at the Park.


    I have been discussing some of the partnering and relationship 
mechanisms that have worked well from Sandia's perspective in reducing 
barriers to the growth of emerging new high-tech energy technologies. 
At this point I would like to suggest a few ideas for additional things 
that might be tried to further encourage the emergence of new energy 
technology development in New Mexico and in Albuquerque.
    Let me first address the federal level. As we have discussed, 
CRADAs have been a tremendously successful mechanism for technology 
transfer. However, it is often the case that a business will have 
insufficient funds to pay for a 100% funds-in CRADA; under this 
agreement, the business would pay laboratory scientists, engineers, 
technologists, and other laboratory staff to conduct research on their 
behalf. This is prohibitively expensive, especially for the bold, high-
risk, high-payoff research that will be necessary to develop 
revolutionary new energy technologies to address the daunting energy 
challenges facing us. In these high-risk cases, it would be greatly 
advantageous if Sandia and its industrial partner could apply jointly 
to the government for joint project funding, with an appropriate amount 
of matching funds provided by the business. However, funding currently 
available is often restricted so that it cannot be used in this way. 
For instance, joint projects between labs and businesses cannot be 
undertaken through funding for the National Center for Solid State 
Lighting. To further complicate research partnerships with industry, 
these NCSSL projects are subject to an ``exceptional circumstances'' 
determination with respect to Bayh-Dole, making it difficult to grant 
exclusive licenses to individual businesses. CRADA activity would 
likely be stimulated if DOE were to provide funding mechanisms 
specifically for the development and transfer of emerging energy 
technologies through joint research by labs and industry.
    On the state level, we are extremely fortunate to have a Governor 
who is taking bold steps to position the state for a leadership role in 
the energy technologies of the future. New Mexico's Renewable Energy 
Transmission Authority (RETA) Act, which just took effect last month, 
establishes the nation's first state-level financing authority 
dedicated to developing the towers, transmission lines, and other 
infrastructure that will be needed to carry electricity produced by 
renewable sources to consumers in New Mexico and other states. This 
positions our state to continue to develop its renewable energy source 
businesses to supply demand throughout the west, raising our economic 
    We should also acknowledge the leadership of the State of New 
Mexico in the development of an ecosystem for high-performance 
computing through the implementation of the New Mexico Computing 
Application Center. This will be a partnership among New Mexico 
national labs and academic and industrial entities. A total of $14 
million has been committed by the State of New Mexico this year.
    We also have two DOE national laboratories here in New Mexico, each 
with world-class facilities and staff and unique R&D expertise. In 
addition, we have excellent capabilities in many relevant fields at the 
University of New Mexico, New Mexico State University, and New Mexico 
Tech. Together, these assets provide enormous advantages to the State 
of New Mexico in its pursuit of energy technology leadership. I'd like 
to mention a couple of ideas to consider.
    Of course, if there were to be a Helios-like project established in 
New Mexico, it would be highly desirable to have strong state 
participation. By contributing funding to the project, the State of New 
Mexico could not only add to the size, momentum, and scope of the 
activity, but also could help set strategic directions that are 
tailored to the labs' areas of expertise, complementary to existing New 
Mexico high-tech industry, and in line with the state's strategic goals 
for its future energy technology economy. Strong state participation is 
necessary to make this a true partnership and to ensure there is 
maximum leverage and benefit to all stakeholders. A large local/state/
federal joint energy initiative project for New Mexico will be a large 
undertaking and likely to take some time to initiate. So the time to 
start discussing this is now. We might want to consider some smaller 
jump-start activities to get the ball rolling.
    One possibility would be to utilize the existing user facility 
infrastructure--the arrangements for lab visitors, the proposal call 
and peer review mechanism, etc.--to start a special category of 
industrial and university user projects at CINT. This would involve a 
special pot of money set aside for collaborative projects on emerging 
nanoscience-enabled energy technologies, leveraging DOE's investment in 
the facilities at the CINT.
    A second way in which the state might reduce barriers to emerging 
energy technologies is to establish an institution modeled after the 
New York State Energy Research and Development Authority (NYSERDA). 
NYSERDA is a public benefit corporation created in 1975 by the New York 
State Legislature. One of the things NYSERDA does is support basic 
research projects to help New York's businesses and municipalities with 
their energy-related challenges. Since 1990, they have successfully 
developed and brought into use more than 170 innovative, energy-
efficient, and environmentally friendly products, processes, and 
services. These R&D activities provide funds to municipalities and 
emerging businesses for development in areas such as photovoltaics, 
wind power, electrical grid technologies, improved high-efficiency 
vehicles and transportation systems, water management and treatment, 
building envelopes, and solid state lighting. NYSERDA's research budget 
of roughly $30M per year is provided by a combination of assessments on 
intrastate sales by investor-owned electric and gas utilities, 
voluntary contributions by the New York Power Authority and the Long 
Island Power Authority, and limited corporate funds. These 
contributions to New York's economic growth, energy efficiency, and 
environmental protection come at a cost of only $0.70 per year for each 
New York resident. In addition, the gravity and heft of NYSERDA's 
program has helped attract matching funding; its Energy Efficiency 
Services program is federally funded and working with over 500 
businesses, schools, and municipalities to identify and adopt existing 
technologies to reduce their energy costs.
    It seems to me that if New Mexico plans to be a leader in growing 
emerging energy technologies, to reduce the consumption of non-
renewable resources by New Mexicans, and to safeguard our enchanting 
southwestern environment, we might do well to consider establishing a 
similar institution for New Mexico, adapted to our state's own unique 
needs and conditions. RETA, the Governor's Renewable Energy 
Transmission Authority is already a major step in this direction. RETA 
might be expanded in scope and could be made a partnership between DOE 
and the State's Energy, Minerals, and Natural Resources Department, so 
as to encompass the area of energy storage, where Sandia has specific 
capability as manager of DOE's Energy Storage Program.
    Another possibility is to broaden the State's Rail Runner 
initiative by planning for the next generation of high-speed trains 
using Sandia and Los Alamos expertise in traction, energy storage, and 
electricity transmission. High-speed trains could link Las Cruces to 
Santa Fe and extend westward to Grants and Gallup to further catalyze 
economic growth in the State.
    On the local level, I would also like to suggest a couple of ideas. 
First, I want to commend the Mayor for his leadership in establishing 
the AlbuquerqueGreen Program. This innovative program has a number of 
bold components, such as the commitment to make Albuquerque the most 
bicycle-friendly city in the Southwest, making sure all newly purchased 
vehicles run on alternative fuels, changing city operations to reduce 
greenhouse gas emissions by 67%, and promoting the growth of green-tech 
companies. I would also like to congratulate the Mayor and the City of 
Albuquerque on winning the Climate Protection Award from the United 
States Conference of Mayors for this program. Events like this one that 
raise awareness of the singular importance of energy to the future of 
Albuquerque, New Mexico, and the nation serve to underscore the Mayor's 
leadership in this area. It is a very exciting time.
    Some additional ideas that the City might consider are both 
symbolic and practical. (I suspect that many of them may already have 
been discussed.)

   First, Albuquerque could declare itself as the Energy City 
        of the Future, defining a blueprint for energy-smart 
        neighborhoods and commercial developments such as the 
        ``Jefferson Green Project,'' but going beyond that to 
        incorporate advanced distributed generation, energy 
        conservation, and transportation technologies at the City 
        subdivision-development level. The City might also consider 
        setting targets for incubating emerging energy technology 
        industry within the Rio Grande corridor.
   Second, the City might wish to designate an Energy Czar, 
        reporting directly to the Mayor, who is responsible for 
        developing and implementing this vision of the Energy City of 
        the Future through specific funding mechanisms that blend 
        federal, state and City of Albuquerque resources. The Czar 
        would also serve as the official liaison on energy issues with 
        the State government, the New Mexico Congressional delegation, 
        the state universities, and Sandia and Los Alamos, our two 
        national laboratories. This Energy Czar would serve as a rapid 
        and efficient conduit of communication between these 
        stakeholders and could help to coordinate future bold actions 
        in this arena.
   Third, the City might consider implementing integrated 
        energy efficiency, renewable energy, and distributed generation 
        technology demonstration projects that can be installed at 
        pilot sites like the Sandia Science and Technology Park (SSTP) 
        or Mesa del Sol. These should be high-visibility projects that 
        showcase these technologies in a ``real-world'' environment and 
        attract national attention to the City's leadership position in 
        energy and the environment, leveraging the expertise at the 
        national labs.

    One opportunity currently exists at the SSTP. Sandia, the City of 
Albuquerque, and the State of New Mexico have been discussing ways to 
convert the closed landfill in Phase II of the Park into a source of 
energy. Imagine all of us, including the federal government, working 
together to create a demonstration project that converts this landfill 
gas into a heating source for companies at the Park.
    Solid state lighting installations in interior public spaces are 
another possibility. Because solid state lighting has been used mostly 
as traffic lights or as exterior architectural lighting (e.g., the 
Empire State Building), an interior installation would be relatively 
new and likely to attract national attention, if implemented on a 
sufficient scale. Possible spaces for such a demonstration project are 
City government offices, the Rail Runner train station, or even the 
Albuquerque International Sunport.

                         SUMMARY AND CONCLUSION

    Challenges to supporting the growth of emerging energy technologies 
revolve around establishing good communication between federal, state, 
and local government entities and incubating strong partnerships to 
take bold action. Examples of how large partnerships might work are 
provided by the Helios Project in California and by the New York 
State's Energy Research and Development Authority. While these 
initiatives were established in much larger states with considerably 
greater economic resources, I feel that New Mexico has other 
advantages--namely, two large national laboratories with great 
technical expertise, universities with both requirements and interest 
in energy research and development, an expanding high-technology 
business climate, and an outstanding commitment to emerging energy 
technologies on the part of its two Senators, its Governor, and the 
Mayor of its largest city. Sandia is equally passionate about future 
energy technologies and stands ready to support this initiative in any 
way possible. I would also like to invite the Congressional delegation, 
the Governor, and the Mayor to come and visit the Center for Integrated 
Nanotechnologies' Core Facility here in Albuquerque and to learn about 
the ways we are harnessing nanoscience for future energy technologies.
    Mr. Chairman, thank you for your long-standing vision and 
leadership in introducing legislation to support energy efficiency and 
renewable energy technologies and for convening this hearing today. 
Thank you.

    The Chairman. Thank you very much. Dr. Hou, go right ahead.


    Mr. Hou. Thank you, Senator and Mr. Chairman, for inviting 
me to testify on this very important subject. It is important 
to our country, important to our community. Apparently it is 
very important throughout the private sector as well.
    As you know EMCORE with its headquarters moved to 
Albuquerque at Sandia Science and Technology Park. We offer a 
broad portfolio of compound semiconductor based product for 
broadband and fiber optic telecommunications networks and high 
efficiency multijunction solar cells and systems for space and 
terrestrial solar power applications.
    Nine years ago EMCORE licensed advanced solar cell 
technologies from Sandia National Laboratories and National 
Renewable Energy Laboratory. We successfully commercialized 
them for a variety of commercial and defense applications.
    Today EMCORE is a world leader in high efficiency 
multijunction solar cells. We utilize the same technology 
combined with focusing optics to produce concentrated 
photovoltaics or CPV systems today. We have successfully 
demonstrated approximately 40 percent conversion efficiency and 
a 500 X concentrated illumination.
    So this technology offers a significant advancement in 
conversion efficiency over traditional photovoltaic technology 
with a typical efficiency of six to 20 percent. It is uniquely 
produced in the United States. So we believe you will be the 
most competitive solar photovoltaic in the future.
    Over the last decade, EMCORE has invested over $100 million 
to develop and manufacture this emerging technology here in New 
Mexico. We have created approximately 500 new jobs in 
Albuquerque. More than half of the employees in our Albuquerque 
campus work in the photovoltaic and solar power divisions.
    So my comments today are targeted to a segment of the 
renewable energy industry. That is the fastest growing energy 
technology in the world; namely, grid connected solar 
photovoltaic technology. We have observed this growth and 
believe it is a direct result of the policy driven support 
mechanism that other countries primarily European countries 
have established.
    So as a producer of advanced and emerging renewal energy 
technology, we have a unique perspective on the obstacles that 
needs to be overcome to achieve success. So we have some 
recommendations in how the government can help. Also we can 
talk about, you know, how the private sectors like EMCORE can 
give back.
    Also in a perfectly level playing field of energy, we ought 
to consider the cost of economic, social, and environmental 
impacts. But we do realize that we need to be economically 
competitive in renewable energy. So accordingly EMCORE 
continues to devote substantial resources to develop 
technologies to enable a new generation of solar powered 
systems based on high efficiency concentrated photovoltaics.
    We believe this approach will result in the most cost-
effective energy derived from solar power. However, no single 
company is structured to bear all the risks and costs 
associated with the deploying new energy technologies.
    Especially for the emerging concentrated photovoltaic or 
CPV technology, we're commercializing. There is in our view a 
``first mover penalty.'' Due to the emerging nature and the 
lack of heritage, we are often asked by our customers to 
guarantee the performance and an even energy saving revenue 
stream over 20 to 25 years. So this clearly is beyond our 
capability. It becomes prohibitively difficult to deploy in the 
United States.
    On the other hand, what we have seen in Europe is 
government sponsored strong incentive mechanisms. Guaranteed 
electricity purchases as high as 60 cents per kilowatt-hours 
for 20 to 25 years for solar photovoltaics has provided price 
surety and risk return for investors. This type of investment 
is competitive with any other investment options.
    So the U.S. in our view needs a similar risk targeted 
policy to attract investment in emerging technology. There are 
other financial considerations we can talk about. For example, 
Jerry talked about and Rusty talked about the consideration of 
capital grants to mitigate higher cost for first movers, a 
duration that allows investors to recoup their investments, and 
financial measurement and control that reduce price support 
over time as emerging technologies mature and late movers come 
to market.
    An additional first mover penalty is achieving project 
financing for the first large-scale project. Market acceptance 
requires heritage. But heritage requires a first mover to 
provide an acceptable risk profile in project financing. The 
government backing to lenders and warranty or insurance support 
are major risk mitigation benefits for the first project.
    Beyond the first project, the industry needs Federal as 
well as State renewable portfolio standards that are achievable 
and enforceable to permit a sustainable business environment.
    So as the mayor talked about, here in Albuquerque we have 
excellent solar resources. We have Sandia National Labs and 
world premier energy research institutions, we have EMCORE and 
Advent Solar and high tech photovoltaic technology companies.
    With our tradition to explore renewable energy, we can 
really mine gold out of the wonderful blue sky with its high 
direct normal irradiance. The project support from the local 
government can take the form of access to the land for 
    Project support from the State government can take the form 
of connection to a facility that can use the power generated 
from the project. Project support from the Federal Government 
can take the form of a financial support mechanism to the 
project financer.
    As for the long term, cooperation between the State and 
Federal Government can take the form of renewable portfolio 
standards that are enforceable.
    How can industry contribute? Industry can give back and is 
anxious to do so in the form of job creation. To talk about 
EMCORE's history, in the last 9 years, we have created over 500 
jobs in Albuquerque. But in Europe this is already happening 
related to photovoltaics. Spain reported a net job creation 
from 2005 to 2010 is over 9,000 for only 350 megawatts of 
    The European Photovoltaic Industries Association reports 
that due to strong feed-in tariff support in Germany for 
deployment of 750 megawatts of solar photovoltaics, over 20,000 
jobs supporting the solar power industry were created in 2006 
    This job creation can happen in the U.S. as well with the 
support for solar photovoltaics. Only our government can 
recognize that renewable energy is necessary, not just a 
discretionary good.
    I would like to thank the committee and the chairman for 
providing me the opportunity to testify and deeply appreciate 
your interest in supporting emerging energy technology 
development in commercial deployment. Thank you very much.
    [The prepared statement of Mr. Hou follows:]
 Prepared Statement of Hong Hou, Ph.D., President and Chief Operating 
              Officer, Emcore Corporation, Albuquerque, NM
    Thank you, Mr. Chairman and the members of the Committee for 
inviting me to testify today on a subject that is of great importance 
to the nation, namely finding pathways for Federal, State and Local 
governments to enable US companies to accelerate the development and 
deployment of emerging energy technologies.
    My name is Hong Hou, and I am the President and Chief Operating 
Officer of EMCORE Corporation. EMCORE, with its headquarters located in 
Sandia Science and Technology Park in Albuquerque, New Mexico, offers a 
broad portfolio of compound semiconductor-based products for broadband 
and fiber optic telecommunications networks and high-efficiency, multi-
junction solar cells and systems for space and terrestrial solar power 
applications. Nine years ago, EMCORE licensed advanced solar cell 
technologies from Sandia National Laboratories and National Renewable 
Energy Laboratory, and successfully commercialized them for a variety 
of commercial and defense applications. Today EMCORE is the world 
leader in high-efficiency multi-junction solar cells. We utilize the 
same solar cell technology, combined with focusing optics, to produce 
Concentrator Photovoltaic (CPV) systems. We have successfully 
demonstrated approximately 40% conversion efficiency under a 500x 
concentration. This technology offers a significant advancement in 
conversion efficiency over traditional photovoltaic technologies and is 
uniquely produced in the United States. We believe it will be the most 
competitive Solar Photovoltaic technology in the future.
    Over the last decade, EMCORE has invested over $100 million to 
develop and manufacture this emerging technology here in New Mexico. We 
have created approximately 500 new jobs in Albuquerque. More than half 
of the employees in our Albuquerque campus work in our Photovoltaics 
and Solar Power Divisions.
    My comments today are targeted at a segment of the renewable energy 
industry that is the fastest growing energy technology in the world, 
Grid Connected Solar Photovoltaic Technology. We have observed this 
growth and believe it is a direct result of the policy-driven support 
mechanisms that other countries, principally European, have 
    The U.S. electricity system is built around fossil fuels and this 
may be true for many years to come unless a more significant shift in 
gas prices occurs. According to a recent AEO (Annual Energy Outlook) 
Report, out of 4,100 Billion KWhr power generated in 2006, renewable 
energy, excluding hydro power, accounts for only 2.7%, and solar power 
accounts for less than one four-thousandths. So there is plenty of room 
for improvement. EMCORE's Solar Photovolataics developments are 
responding to the market factors of increasing energy costs and 
worldwide interest in this energy sector. As I mentioned, Grid 
Connected Solar Photovoltaic Technology is the fastest growing energy 
technology in the world.
    As a producer of advanced and emerging renewable energy technology, 
we have a unique perspective on the obstacles that need to be overcome 
to achieve success. We have some recommendations for how government can 
help, and what EMCORE can give back.
    Although, in a perfectly level playing field of energy, we ought to 
consider the costs of economical, social, and environmental impacts, we 
recognize that we need to be economically competitive in renewable 
energy. Accordingly, EMCORE continues to devote substantial resources 
to develop the technologies to enable a new generation of solar power 
systems based on high efficiency concentrating photovoltaics. We 
believe that this approach will result in the most cost effective 
energy derived from solar power. However, no single company is 
structured to bear all of the risks and costs associated with deploying 
new energy technologies. Especially for the emerging CPV technology we 
are commercializing, there is, in our view, a ``First Mover Penalty.'' 
Due to the emerging nature and lack of heritage, we are often asked by 
our customers to guarantee the performance and an even energy-selling 
revenue stream over 20 to 25 years. This becomes almost prohibitively 
difficult to deploy in the US. What we have seen in Europe is 
government-sponsored, strong incentive mechanisms. Guaranteed 
electricity purchases as high as 60 cents per kilowatt-hour for Solar 
Photovoltaics over 20 to 25 years have provided price surety and risk 
return for investors competitive with their other investment options. 
The U.S needs similar risk targeted policy tools to attract investment 
in emerging technologies. Other key financial considerations are:

   Price surety that allows risk returns competitive with other 
        investment options.
   Consideration for Capital Grants to mitigate higher cost for 
        first movers.
   Duration, which allows investors to recoup their 
   Financial measurement and controls that reduce price support 
        over time as emerging technologies mature and late movers come 
        to market.

    An additional First Mover Penalty is achieving project financing 
for the first large-scale project. Market acceptance requires heritage; 
and heritage requires the First Mover to provide an acceptable risk 
profile for project financing. Government backing to lenders and 
warranty backup or insurance support are major risk mitigation benefits 
for the first project.
    Beyond the first project, the industry needs Federal as well as 
State Renewable Portfolio Standards (RPS) that are achievable and 
enforceable to permit a sustainable business environment. Large-scale 
grid connected PV deployments require efforts to overcome regulatory 
bias in rates which impact technology choices. Public Utility oversight 
resists cost recovery of capital on renewable energy.
    Government agencies can uniquely capture the public value renewable 
energy; and cooperation between federal, state and local governments 
can be key to viability of emerging energy technologies.
    With these,

   Our technology risk can be reduced by market factors such as 
        higher energy prices, which stimulate private investment in 
        renewable energies,
   Our market risk can be reduced by incentive mechanisms, 
        which provide defined and stable returns for investors, and
   Our execution risk can be reduced when project lenders whose 
        confidence in emerging technologies can be aided by credit 
        enhancements such as loan guarantees or warranty backups.

    Here in Albuquerque we have excellent solar resources: Sandia 
National Labs as a world premier energy research institution, as well 
as EMCORE and Advent Solar as high-tech photovoltaics technology 
companies. With our tradition to explore renewable energy, we can mine 
gold out of the wonderful blue sky with its high direct normal 
irradiance. Project support from the local government can take the form 
of access to land for deployment. Project support from the state 
government can take the form of connection to a facility that can use 
the power generated from the project. Project support from the Federal 
government can take the form of a financial support mechanism to the 
project financer. And for the long term, cooperation between the State 
and Federal Governments can take the form of Renewable Portfolio 
Standards that are enforceable.
    How can industry contribute? Industry can give back and is anxious 
to do so, in the form of job creation. In Europe, this is already 
happening. Spain reports that net job creation from 2005 to 2010 is 
9,186 with over 360MW of Solar PV to be installed. The European 
Photovoltaic Industries Association reports that due to strong feed-in 
tariff support in Germany for the deployment of 750MW of Solar PV, 
18,000 jobs supporting their solar power industry were created in 2006 
alone. This job creation can happen in the US as well with support for 
Solar Photovoltaics.
    With cooperation between government agencies, emerging technologies 
can reach this success. Right here in Albuquerque, innovative 
technologies are emerging; and sustainable employment can be created 
here at home.
    In summary, policies that encourage local industry development 
rather than international job creation should be a significant 
priority. Policies that create surety for investors will enable 
renewable energy deployment. Finally, simplicity of policy 
implementation will accelerate the deployment of solar energy, create 
jobs, and contribute meaningful renewable energy over the long-term. 
These simple polices are:

   Price and duration surety.
   Financial support to encourage project financing for 
        emerging technologies.
   Enforceable RPS.

    Only our government can recognize that Renewable Energy is 
necessary--not a discretionary good. I would like to thank the 
committee for providing me the opportunity to testify and deeply 
appreciate your interest in supporting the emerging energy technology 
development and commercial deployment.
    I am prepared to answer any questions you may have.

    The Chairman. Thank you very much. Thank you all very much 
for your testimony. Let me just start by asking Doug Smith 
about your four suggestions.
    One of the first was that we, the government, can help with 
technology demonstration. Can you give us some examples of what 
you see or an example of what you see that the government could 
do to help demonstrate some of the technologies that you've 
developed on a large scale basis?
    You indicated that our vending machines in the Senate are 
out of date. I agree with that. Are there some other things 
like that that the government could take the lead on 
demonstrating the cost savings that can be achieved through use 
of your technology?
    Mr. Smith. Absolutely. I should say some of that is ongoing 
already. We're working with the EPA smart waves program already 
on reefer trucks. But again they don't really have much funding 
to support demonstration programs. They're just trying to 
actually bring together people in the private sector to do it.
    What we were thinking of is much more of a larger scale 
effort combined with a large pull-through customer such as a 
large retailer which has a large reefer fleet to have them 
outfit them and actually collect data independently from, you 
know, universities or someone who will then they will report 
all that data back.
    A lot of what we do is we generate data on how insulation 
helps a reefer truck or a refrigerator in your house. But it's 
much more like the DOE program with domestic refrigerators back 
in the eighties, where they subsidized the cost of 
refrigerators that were much more efficient. Then generated the 
data to show, yes, you really can save that energy over the 
life cycle of a refrigerator.
    The Chairman. I'm wondering, on the point about how the 
government can provide an essential help or a service by doing 
good independent analysis of the data. I guess that could 
happen not just with government funded projects but even--I 
mean if you're doing something for Wal-Mart or you're doing 
something for some commercial entity, your ability to replicate 
that and to sell it to others depends upon having good 
independent data on how much has been achieved by virtue of 
that use of that technology.
    Is there a role for government in that even in analyzing 
the data that's derived from private sector activities?
    Mr. Smith. There is. But it's more difficult to do. We've 
been trying to do that now. The issue is if I'm let's say at 
Wal-Mart, I don't really want that data published so my 
competitors can see that data unless I get something for it.
    So if I'm taking all the risk as the first mover, putting 
the money into the insulation, doing the project, it's really 
that, why would I want to share that data with my competitors.
    The Chairman. You say there are some examples, though, 
where the Federal Government has similar needs for this 
technology which could be properly analyzed and independently 
reported on.
    Mr. Smith. Absolutely. The military is a perfect example. 
It has a large number of cold storage facilities around the 
world, where again it's gotten a lot of public attention 
recently obviously in warm parts of the world.
    The military would be a perfect example of doing some 
demonstration projects where they could then monitor it also.
    The Chairman. All right. I think that's useful, a useful 
    Rusty, let me just pick up on your point about aligning 
national energy policy with economic development policy at the 
State and local level. I think that's a good way to formulate 
or frame that.
    I guess part of what we have--there's a combination of tax 
provisions plus direct regulatory provisions that sort of 
create these incentives that are present in some of our other 
countries, in Europe in particular, and not present here.
    Maybe you can elaborate a little more on this feed-in 
tariff and how that works. I think maybe people aren't entirely 
familiar with that. That's something that I've just gotten 
educated about because of your good help over the last year or 
    If you could describe how that works and what kind of tax 
and how that compares to the tax incentives or lack thereof 
that we have in this country.
    Mr. Schmit. I would be happy to, Mr. Chairman. I'll use 
Germany as an example, in which the German government driven by 
the concerns about climate change and driven by the 
population's concerns about an additional nuclear and coal 
power plants decided that renewable should be a major part of 
their energy source portfolio.
    But in order to do that, they had to overcome the large 
hurdle of the upfront costs of solar photovoltaic systems. So 
they implemented a program in which all the ratepayers in the 
country pay a very, very small additional fee to the utility 
    The utility companies in turn take that additional money to 
pay people who generate electricity from solar panels a higher 
rate than what you would normally pay to the utility company. 
To put that into--quantify that, typical in U.S. dollars, 
typical rates that a homeowner pays for their electricity in 
Germany are about 20 cents per kilowatt hour.
    On the contrary, if you put solar panels on your home, the 
German utilities will pay you on a sliding scale about 60 cents 
per kilowatt hour for that electricity because that is, in 
fact, the value to the country for that power. So they're 
trying to level the playing field for a new emerging technology 
by providing this market pull of a guaranteed rate for that 
electricity over some long period of time.
    Because that feed-in tariff is then guaranteed, the banks 
finance the upfront costs and pay back to the homeowners a 
reasonable amount of years, even in Germany which doesn't have 
the sunshine that we have here in the Southwest. It makes it 
financially attractive and solves the need for clean energy in 
that country.
    The Chairman. Contrast that system you just described with 
the efforts we're making here to try to provide some tax 
incentives to encourage use of alternative fuels, use of 
photovoltaic cells, if you could.
    Mr. Schmit. Certainly the tax credit that was proposed in 
as I understood it Senate bill 590 was three or $3.50 per watt 
tax credit is an upfront credit to the purchaser of a system.
    So if I as a homeowner put in a system and spent $15,000 
for that system, then I would get about one-third to 40 percent 
of that back in the form of this tax credit. However, that's 
not immediate. So it still requires the upfront purchase to 
come out of my pocket.
    Then I benefit from the offset to buying electricity. But 
it's a little bit more cumbersome system. However, we recognize 
certainly the regulatory environment in this country over all 
the multitude of utility companies, public and co-ops, is much 
more difficult to negotiate a feed-in tariff type of program.
    But a combination I believe of a renewable portfolio 
standard in which the Federal Government imposes a certain 
percentage of every utility company's generation come from 
renewables with tax credits and other incentives like that to 
help offset the cost, although not as streamlined as a feed-in 
tariff, it could provide definitely the market stimulation that 
we need in this country.
    The Chairman. So one way to look at the renewable portfolio 
standard, at least as I'm sort of divining from what you're 
saying, is it's an indirect way to get to the same point as you 
have with a feed-in tariff.
    But it does show by providing much more flexibility to the 
individual utility as to how they're going to generate that 
energy from renewable sources. They could do that by changes in 
the rate structure, they could do that by purchasing the power 
from someone else who is producing it from renewable sources. 
They have a lot of ways to meet it. It's less prescriptive than 
a feed-in tariff would be.
    Mr. Schmit. That's correct. It allows the market to sort of 
define the best way to do that. I think a key element to make 
that successful as you well know, Senator, in this country is 
in areas that don't have abundant renewable sources, as you 
said allowing them to buy from others that do.
    Creating that mechanism for interstate transmission of 
renewable energy and allowing that to be part of their 
renewable portfolio I think is a key mechanism to make that 
    The Chairman. OK. Do you see the growth in demand for 
photovoltaic cells in this country growing substantially? I 
mean the chart, the first chart you put up, and I guess all 
these charts show how much more usage there is and purchasing 
there is of photovoltaics in Germany and in Japan than in our 
own country in real terms, not just relative to the size of our 
economies, but in real terms.
    Do you see that changing or do you see them moving ahead 
faster than we are still?
    Mr. Schmit. Yes to both. It is growing in this country. But 
the other countries are growing much, much faster. One of the 
points that I was trying to convey in the testimony is that, 
through the various programs and policies that those countries 
have put in place, not only are they solving their energy 
needs, but they have taking this industry over.
    The U.S. led this industry 20 years ago. Today, as you 
think see on the charts, the U.S. has been growing very slowly. 
Other countries have been growing very, very quickly, 
generating many jobs, taking over the industrial leadership as 
they have in other industries in the past.
    The most recent country to come into play is China just 
over the last two or 3 years. Many new Chinese solar companies 
are in operation, many of them have actually gone public on the 
NASDAQ. So it's U.S. investor base that is helping to finance 
these. That's the sort of thing that we compete with.
    The U.S. market is growing. In a normal sense, you might 
say it's growing healthfully, maybe 30, 40, 50 percent per 
year. But Germany is growing by almost two X per year.
    The Chairman. Now the growth in this industry in China I 
presume is a result of the low cost of manufacture that they 
enjoy in China for everything, whereas the growth in this 
industry in Germany or in Japan is not driven by the low cost 
to manufacture but rather by conscious government policy to 
promote the transition of the economy to more use of this 
technology, is that a fair statement?
    Mr. Schmit. That's correct, that is a fair statement.
    The Chairman. Jerry, let me ask you, on some of your good 
suggestions, could you elaborate a little more. You talked 
about these public/private projects or partnerships that have 
evolved or developed around the country around these five 
nanoscale centers and suggested that we should consider here in 
New Mexico.
    As I understand what you're saying, we should consider a 
combination solid state lighting and photovoltaic effort; is 
that right? Can you elaborate on exactly what you have in mind 
    Mr. Simmons. I think if we could try to establish something 
similar to what's been done at some of the other nanoscience 
centers, that could really be an exciting opportunity for the 
State and for the two national labs and for the Federal 
    A lot of the other centers that have been established are 
looking at alternative fuels or biofuels. We have expertise in 
that area. But one thing that I think New Mexico has that the 
other centers don't have is the expertise in semiconductor 
    So we could fill a very nice gap nationwide in emerging 
technology in the semiconductor area. Solid state lighting, 
Sandia is by far the leading national lab in the country in 
this area. We have partnerships with businesses and with the 
DOE. I think that we could do something very substantial there.
    I think lowering the cost and improving the efficiency of 
photovoltaics is also an area that we could contribute to. I 
don't mean to rule out other emerging technology areas. But I 
think those two stand out as an opportunity.
    The Chairman. What would be needed by way of a structure or 
collaboration that is not currently existing? I mean it seems 
to me you have your center for solid state lighting. We have 
CINT. There are I think you said a couple of hundred projects 
currently going on at CINT with private entities as I 
understand it?
    Mr. Simmons. Most of the projects of CINT are with 
    The Chairman. Oh, they are?
    Mr. Simmons. Yes. So we're trying to grow the projects to 
increase the number of projects with businesses. They also tend 
to be rather small in scale.
    The performance of the facility will be judged by number of 
users. The projects tend to be on the order--have value of 20 
to 30 K per project. I think the investment needed for major 
revolutionary advances in emerging energy technology are larger 
than that.
    One opportunity I think is the new America Competes Act 
that was passed last week through the leadership of yourself 
and Senator Domenici. That Act proposes that there be--or 
mandates that there be up to three discovery institutes located 
at national laboratories that provide up to $10 million a year 
for emerging energy technologies.
    I think--and it also specifies that this be partnership 
arrangements with State and local governments and businesses. 
So I think that could be an outstanding mechanism to get 
something major started if the community here in New Mexico can 
pull together and put together a strong proposal in this area.
    The Chairman. In the private sector in this area of solid 
state lighting, is there a consortium of companies that is 
working together to advance the technology or are they just 
independently doing whatever they can do to advance the 
    Mr. Simmons. I would say that there are aspects--that they 
are cooperating in some ways. There's a body called the Next 
Generation Lighting Initiative--Industrial Alliance, Next 
Generation Lighting Industrial Alliance which is working with 
the DOE to help them shape their solid state lighting program.
    They do compete fiercely with one another. So one of the 
things we've found is when we seek to establish partnerships 
with companies, if the mechanisms are such that the IP has to 
be provided to the competitors, then the companies are 
reluctant to work with us. They feel like their crown jewel 
secrets might be given up to the competitors.
    The Chairman. Dr. Hou, let me just ask you, I think it's 
remarkable the technology that you've developed at EMCORE. As 
you point out, you've got 40 percent efficiency conversion?
    Mr. Hou. Yes, and 500 X concentrates, yes.
    The Chairman. Yes. Explain that second part a little better 
for me. Maybe everybody in the audience understands it. I don't 
understand it that well. I understand 40 percent efficiency 
conversion. Tell me about the 500 X concentration.
    Mr. Hou. Yes. In that broader category, there's three 
technology categories for solar photovoltaics. Silicon, that's 
what Advent Solar is doing. It had a conversion efficiency of 
typically about 20 percent. The second class is thin film 
technology, a multi-silicon cadmium telluride, its conversion 
efficiency about 6 to 9 percent.
    Our technology, we use triple junction advanced solar cell 
originally developed for space applications. But it's too 
expensive to populate a whole area. So what we do is using 
cheaper optics to get the light, solar light velocity focusing 
to a smaller area.
    We put our solar cell only at a focal point. But, you know, 
it essentially would generate the electricity for the whole 
area of illumination. So that way we can reduce the cost and 
make the system more cost competitive.
    So the 500 X is now significantly in that way. The 40 
percent of convergency is, you know, the indirect comparison to 
the 20 percent generated by silicon.
    The Chairman. So as far as cost per kilowatt hour of 
electricity produced, is what you can do with your technology 
in any way competitive with regular photovoltaic technology?
    Mr. Hou. Yes. So, for example, the silicon solar panels 
these days, you know, it costs about $3.50 to $4 per kilowatt--
per watt. Our technology, you know, we go to the market with 
about $3 to 3.25 per watt. So it's more cost competitive.
    Per area basis, you know, we generate more power because at 
a module level we can get about 30 percent conversion 
efficiency compared to 18 percent conversion efficiency of 
silicon. So we generate about twice as much power per unit area 
because of the technology.
    The Chairman. So what is the main market for the technology 
that you have developed, is it going to always be sort of the 
high end space technology kinds of applications or I mean can 
this be used in normal residential/commercial power needs? What 
is the main market?
    Mr. Hou. Senator, this is designed for terrestrial 
applications and because of the concentration, we have to have 
the mechanism to follow the satellite. So we have to have the 
tracking mechanism.
    So it's probably not the best use for commercial--for 
residential application. You don't want to put a sun tracker on 
your rooftop. But, you know, it's perfect for medium size and 
large size utility, you know, solar park commercial 
    The Chairman. What are the largest applications that are 
currently operating? Are there some demonstrations of this that 
are commercial scale?
    Mr. Hou. Yes. This is the very dilemma we are facing. This 
is an emerging technology. So we are the first mover to this 
technology. Currently the photovoltaics is--probably silicon is 
the mainstream. Ninety percent of the market is served by 
silicon solar panels, the other 10 percent is by thin film.
    The concentrator photovoltaic is an emerging technology. 
EMCORE started developing this system about a year and a half 
ago. It takes some time for the market to accept this 
technology. In Europe, say in Spain and Italy and Greece, the 
acceptance is faster. But in the United States we have worked 
with several companies in the last 18 months to commercialize 
this technology.
    But the barrier we have is always they say point me to a 
system that has been operating there for 40 years. We don't. 
This is emerging technology. We don't have the heritage. Then 
they ask us to bear all the burden, you know, to say, well, 
you've got to provide a performance bond, performance and 
service and this and that.
    So we already invested tremendously to develop this 
technology. Now we've got the technology ready. We're facing 
the barrier to go to the market because, you know, the end 
users, they're very conservative. This is a new technology, 
emerging, I don't want to touch it until you cover all the 
warranties for performance for the next 20, 25 years.
    The Chairman. So Doug's suggestion that the government 
could play a useful role in supporting the demonstration, that 
would be applicable to your circumstance?
    Mr. Hou. That would be a wonderful idea. You know, this 
really doesn't need 40 years of demonstration. If we have a 
solar park, say, established in New Mexico near Albuquerque, if 
Sandia can be--the leading premier research institution can be 
a clearinghouse, you know, whoever has this technology, they 
are facing the same or similar dilemma we have, you know, to 
get in the solar park to validate their performance.
    Once the system goes through a full weather cycle, you 
know, a year, then a lot of issues can surface out and the 
problem can be fixed and the heritage will be established.
    The Chairman. OK. Very good. All right. I think all this is 
very useful and very interesting testimony. If any of you have 
additional points that have occurred to you that we ought to 
bring out, I'm glad to hear them. Otherwise we'll call it 
    Let me just advise everybody, I'm told that there's going 
to be a lunch next door after this hearing, it's going to be at 
11:30. So we've got a little time to kill. But I think this has 
been very useful.
    Let me particularly think Jill Halverson for all of her 
help getting this organized also. She's worked hard, she works 
with us here in our Albuquerque office, and has worked with 
Jonathan on getting this hearing organized.
    Thank you all very much and we will conclude the hearing 
with that.
    [Whereupon, at 10:20 a.m., the hearing was adjourned.]