Lou Covey, in a recent Element 14 article, suggested that the Department of Energy may have gone ahead with loan guarantees because the portable panels were easier to deploy for Defense Department applications. But other analysts say the DOE's largesse happens across the board, with few questions asked about how a technology might be integrated with systems in the field today.
Take the case of Beacon Power, whose flywheels looked perfectly suited for grid storage when prototypes were demonstrated. Problems in a handful of the 200 flywheels used in a Stephentown, Mass. project led many investors to worry about escalating maintenance costs. Walter Nasde of Ardour Capital told the Washington Post that Beacon had a good technology, but "is this something you can build a business around?" Because the Stephentown project remains in operation, the DOE will be able to recoup some of its investment in Beacon Power, but it's left Congress and the media highly skeptical of DOE efforts to aid alternative energy.
The problems encountered by First Solar in developing thin-film cadmium telluride solar panels are a little tougher to sort out. Two of the market leaders, China-based SunTech and US-based SunPower, rely on crystalline silicon panels. SunTech invested in thin films four years ago but found the declining price of crystalline silicon was hard to beat. SunPower teamed up with semiconductor leader Cypress Semiconductor at an early stage in order to apply chip-style economies of scale to its panel production.
First Solar claims its cadmium-telluride thin film panels offer the lowest carbon footprint for production in the PV panel market, but the company was grumbling when General Electric claimed cadmium-telluride breakthroughs. If First Solar can't show an unbeatable patent protection regime for its panels, an integrated giant like GE could take over in thin-film sectors of the market. First Solar's woes at the end of October suggest the problems in being a thin-film pioneer could prove fatal.
Does this mean US players have to cede the solar and wind markets to companies in China with lower production costs. No, but it does mean that innovative startups and large system integrators need to work together to indicate how a total energy infrastructure could be designed, and how the components of that infrastructure could be manufactured cheaply. It would be nice to think that such an industry would be stronger overall if it minimized acceptance of grants and loan guarantees from DOE. But first, the focus on designing point solutions has to end.