White House Chronicle

News Analysis With a Sense of Humor

Beware of the Loving Embrace of the Government

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By Llewellyn King

I am not a government-basher per se. As a reporter, I have covered it too long to say the bureaucracy is always incompetent and lazy. But I have also seen how the government wastes money, veers from one project to another, and is indifferent to any damage done by its autocratic ways.

The government, for better or worse, is the great risk-taker on new technologies. As such, it has added immeasurably to the wealth of the nation, from the creation of the technologies that led to the fracking boom and the Internet to the creative advances one now sees in airliners.

After the Pentagon, the Department of Energy (DOE) is the worst offender of the love-it-then-leave-it school of support for technology innovation.

The country is littered with the carcasses of abandoned projects, such as the Yucca Mountain nuclear spent-fuel repository, which was canceled by the Obama administration to please its political ally, Sen. Harry Reid (D-Nev.). Price tag: more than $15 billion.

This cancellation has had two other damaging effects: the first is there is still no permanent place to store nuclear spent fuel, which is piling up in America; and the second is the demoralizing of talented engineers and scientists by the government’s vacillation. These effects may be as huge as the price tag.

Gifted people throw themselves into government projects and move their families across the country to the work sites. Then the government says, “Thanks for your work on the project, but we are canceling it. Now, shove off!” These contractor employees do not have government protections; they are subject to government caprice.

In South Carolina, for example, a huge project to build a plant to blend weapons-grade plutonium into nuclear fuel for civilian reactors is 70-percent completed and hanging by a thread. That is because after spending $5 billion, the DOE wants to do something else equally expensive, according to one consultant.

Or take Gen4 Energy, a small, Denver-based company that has been strung along by the DOE and now is preparing pink slips. Its plan is to build a small (25-MWe), advanced nuclear power plant for use at mining sites, military bases and remote places that need electricity, such as Alaskan villages and those in less-developed countries. These reactors would work for 10 years and then would be swapped out and replaced with a new, factory-built module.

Robert Prince, Gen4 Energy’s CEO, who came out of retirement to lead the advanced reactor project, says it is a unique, safe design using tested materials and concepts. The Gen4 advanced reactor design was in the running for development funding from the DOE.

The DOE uses a device called a “funding opportunity announcement”(FOA), to encourage technology developers. In 2013, it issued an FOA and handed out grants of $1 million each to four advanced reactor designers, including General Electric, General Atomics, Westinghouse and Gen4 Energy.

The DOE’s next step was to issue another FOA. This time, the department planned to split $80 million over 10 years for just two designs, provided the grantees came up with their own $10 million. Gen4 and the others prepared detailed proposals and waited.

In January, the DOE picked two rector designs: one from a consortium that includes Bill Gates and the Southern Company, and the other from technology entrepreneur Kam Ghaffarian. Neither were in the first round.

The DOE decision hit Gen4 Energy particularly hard, as it was the smallest contender and probably the one most in need of DOE help as it labored on its design, which had originated in the Los Alamos National Laboratory and was due for feasibility testing at the University of South Carolina, according to Prince. “We really thought we had a shot,” he said.

Not so. Love from the DOE is a sometime thing. Just ask Prince, who now must tell investors and staff that the $10 million or so they have already spent is gone and the business must pack up, technology abandoned, lives shattered, hope sunk.

Gen4 Energy is not alone in its disappointment. Other companies with exciting designs for reactors are also disappointed. Careers, brilliant ideas, and untold dollars are lost in the way the DOE seduces and abandons people and technologies. — For InsideSources


Bill Gates and the Energy Research Dilemma

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There is an idea that has been around for a long time, at least since the fall of 1973: All that stands between the United States and an abundant energy future is a lack of spending on research and development.

It is as though the Knights Templar could find the Holy Grail, if only the pope would commit just a few more resources to the hunt.

Tens of billions of dollars have been spent, many of them fruitlessly; and some advances have been made, not the least in the kind of drilling technology that enables us to drill miles below the sea floor in the Gulf of Mexico. (Oops!)

Much else has been researched and not come to market. Wind and solar have taken giant strides, but still require tax breaks and subsidies. Nuclear energy through nuclear fission has been researched, even as its deployment has slowed. Worldwide hundreds of billions of dollars have been spent on nuclear fusion with nothing to show for it. Other programs have gone by the board, from coal liquefaction to magneto hydrodynamics and ocean-thermal gradients.

The thing about energy research has been that there are many promising lines, but seldom a big success.

On Thursday, a new set of highly qualified persuaders came to Washington to exhort the government to increase energy research and development funding from $5 billion to $16 billion a year, and to set up new organizations to channel and manage basic research on energy.

Some of the nation’s industrial savants, including Bill Gates late of Microsoft, Jeff Immelt of General Electric and Ursula Burns of Xerox, appeared at a press conference here as members of the American Energy Innovation Council. The chairman of the group, Chad Holliday of Bank of America, told the press: “Up until now energy investments have gotten short shrift.”

That is debatable. The problem with energy research has not been that it has been shortchanged, but that it has often been directed at the wrong thing; it has often been diluted or spread out for political purposes. Farmers want ethanol research, coal states want carbon management, and the populous Eastern states want carbon-free energy — so long as it is not nuclear.

The group of industry captains is not looking at the political, social and economic divides that have negated so many past endeavors. Just when the nuclear industry was ready to enter its long-expected renaissance in the 1990s, it was broadsided by new gas turbines. If the carbon in coal can be safely sequestered, does that solve the environmental problems of ripping it out of the ground?

R&D always produces something of interest and often of value, but not always what it was directed toward. At the press conference, Xerox’s Burns said that innovation needed to be managed, and that the CEOs of the group knew that from experience.

Actually, the experience of Xerox itself may belie that. The original copying machine technology nearly perished for want of sponsorship and was finally saved by not-for-profit Battelle Laboratories. Later, when many of the innovations that made the rise of Microsoft, Apple and Cisco possible were developed at Xerox’s California computer laboratories, the company did not know what to do with them. But Bill Gates did. These two should talk.

The great Bell Labs produced optic fiber and the transistor, but did nothing with them. Management is a lovely business when it controls but in so doing, it stifles.

If you want innovation, first get rid of the managers; second, get on bended knee before the bankers.

A new attitude toward energy is needed, but first it is a good idea to know where we want to go.

With the catastrophe in the Gulf, our energy future is again in flux. The trusted has become dangerous, and the dangerous may again be trusted. –For the Hearst-New York Times Syndicate

 

The Shocking Truth about Future Electric Supply

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TORONTO — “Nobody knows de trouble I see,” goes the Negro spiritual. It could have been playing as background music in Toronto, where the Edison Electric Institute (EEI) held its annual convention this week. Things are not terrible for the U.S. electric utility industry at the moment. But the industry’s future is more uncertain than it has ever been.

The challenge facing the industry is that we are using more electricity than ever before, with our bigger homes that have more appliances and gadgets. To meet future demand, according to Jeffry Sterba, chief executive officer of Albuquerque-based PNM Resources, the industry will need to spend $800 billion. Not only is it unclear whether it can raise this amount of money, in a time of constrained credit, but it is also unclear what expenditures public policy will sanction. Consider:

l The future of coal, which accounts for more than half of U.S. electricity production, is uncertain. It is the largest contributor to greenhouse gases, and the future promise of “clean coal” is yet to be realized on a large scale at an affordable price.

The second hope for coal, carbon capture and sequestration is a hot topic in electric utility circles. But David Ratcliffe, chief executive officer of Southern Company, confesses that it has been oversold, and it will be many years—if ever—before the technical and legal issues of diverting carbon dioxide and storing it by the millions of tons underground. The uncertainty has already caused 60 new coal-fired power plants to be canceled, according to speakers at the EEI convention.

l Nuclear power, a longtime favorite of utility executives, still faces public antipathy, and the cost of building the plants has gone up as the American engineering base has declined. The large steel forgings that are required for the construction of nuclear power plants can no longer be made in the United States. They must be imported from Japan at great expense.

Also the U.S. nuclear industry, thriving in the 1960s, has been sold off. Where once there were four U.S. companies that offered nuclear power plants, now General Electric is the only one, and it is in partnership with Japan’s Hitachi. The once mighty Westinghouse Electric is owned by Japan’s Toshiba. And the other vendor is France’s Areva. Only Ratcliffe’s Southern Company is sure that it is going to build two nuclear units. Other companies, including Baltimore-based Constellation Energy, have expressed interest in about 14 new plants—only about half of these are likely to be built.

The Nuclear Energy Institute reckons the nation needs a whopping 65 new nuclear plants to meet new demand and to allow for the retirement some of the more than 100 operating reactors.

l Wind is a bright spot. Wind power has proved more effective for most utilities than they thought, and they are now scrambling to find ways to store wind power as compressed air. But while the West and the North have good wind conditions, the Southeast suffers stagnant air at the time it most needs electricity: the summer. It is an energy option that is not open to every utility and because of its dispersed nature, it is not as manageable as a large coal-fired or nuclear plant.

l Then there is natural gas, which is the most desirable fossil fuel. In the past 25 years, the use of natural gas to turn utility turbines has grown exponentially, from 0 to 30 percent of generation. The trouble is that there is not that much indigenous natural gas around, and there are demands on it for home heating, cooking and fertilizer manufacturing, which are seen as higher uses than making electricity.

This has led to a boom in the import of liquefied natural gas from Asia and the Middle East. But James Rodgers, chief executive officer of Duke Energy, which is a large gas seller as well as a major electric utility, says that this is a dangerous route. By the time the gas gets here, after it has been liquefied and transported in an oil-burning tanker, Rodgers says it is only 20 percent less polluting than coal. Worse, he says this will harness U.S. electric rates to the global cost of oil and gas. That way he sees ruin.

Like their compatriots in the oil industry, utility executives talk a lot about technology coming to the rescue. But so far, there has been nothing that suggests a revolution akin to the one that transformed telephony is in sight. The only really happy thing here in Toronto is the realization that the plug-in hybrid car is coming, and that it will boost utilities’ revenues by recharging overnight when there is a surplus of electricity.