How might funding for renewable energy projects and research shift as the congressional budget "supercommittee" tries to reduce the deficit? During today's OnPoint, Dan Arvizu, director of the National Renewable Energy Laboratory, explains how cuts to the Department of Energy budget could affect the future of renewables in the United States. He explains why he believes the debate in Washington ignores the magnitude of the United States' issue with energy.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Dan Arvizu, Director of the National Renewable Energy Laboratory. Dan, thanks for coming back on the show.
Dan Arvizu: Great to be with you.
Monica Trauzzi: Dan, lots of talk in Washington right now about budgets. DOE could potentially lose loan guarantees for renewable energy projects and also see some pretty big budget cuts. What do you believe the impact would be on the renewables industry if the government did make some cuts to DOE?
Dan Arvizu: Well, I think there would be fairly potentially a big impact. I think the concern that we have is that the industry is gaining some momentum and that momentum could be heavily curtailed either with lack of financial instruments and/or with lack of, I think, support of the government program.
Monica Trauzzi: Does the debate that we're hearing in Washington right now recognize the magnitude of the energy issue that we're looking at right now?
Dan Arvizu: You know, unfortunately, I don't think it does. The thing that I'm most frustrated by when I listen to all the discussion regarding debt ceiling and budgets in general, is that hardly anyone even mentions the word energy. If you think about kind of what you've heard over the last few weeks, hardly anyone says the word energy and, unfortunately, the energy challenges that we've talked about in the past and that we've had for many years now are not getting easier. They're not dissipating. They're getting larger and so there is a little bit of a time urgency to them and the unfortunate piece is that our attention has been diverted and I think we've lost sight of the fact that this is a really important national issue that needs to be dealt with in the context of all these budget discussions.
Monica Trauzzi: How could things change, at your lab specifically, if there were some budget cuts to DOE?
Dan Arvizu: Well, it's hard to know precisely what happens until the budgets all get allocated. Of course, there's the House mark and then the Senate has to mark and then they conference and then ultimately we get a Department of Energy budget and then they have to allocate according to their priorities. But suffice it to say, under the circumstances that we're looking at, trying to model kind of worse case and kind of more likely cases, impacts could be severe. They could be quite large and that frustrates us primarily because I think the lab these days is kind of hitting on all cylinders, having great market impact, great outcomes in terms of science, in terms of partnerships and, unfortunately, the piece that I think would be sacrificed, you know, I think would be an important piece of what we do to help shape the markets.
Monica Trauzzi: Why do you think there's such a disconnect between what's happening on the ground around America and the discussions that we see here in Washington? Is there a disconnect?
Dan Arvizu: There is a disconnect and I think it's not something that's new, unfortunately. You know, we've had -- for a long time we've recognized that most of what's going on in the whole clean tech/clean energy space is more of a ground-up, you know, bottoms up sort of grassroots efforts as opposed to top down. That's not the same as it is in many other countries where you get strong federal policy and then they drive essentially market conditions in some way. It happens just the opposite here. It's kind of driven from the bottom up and so you see pockets of activity and then when you have kind of a federal discussion like we're having with budgets, it gets lost in that conversation.
Monica Trauzzi: The last time you were on the show we spoke about the competitive issue, the competitiveness issue that the U.S. was facing when it comes to renewables. Has it gotten any better? Have we seen an improvement in the U.S. or are we still behind?
Dan Arvizu: Well, I think that's a leading question, which I think you know the answer to and that, unfortunately, is we've gotten farther behind. It's not -- we're not gaining ground, we're losing ground. I spend a good deal of my time trying to understand what's going on in the global marketplace and so I've been to Asia a number of times, I've been to Europe a number of times, the Middle East. In almost every corner of the world there is active public discussion, much more investment. Germany out invests us now, China out invests us in terms of money into this particular sector. And the unfortunate piece is I'm seeing great progress being made elsewhere while we continue to debate and discuss, you know, how much emphasis we're going to put in this area. So we're falling farther behind and more difficult for us, I think, is it's going to get more increasingly difficult to catch up as we go forward.
Monica Trauzzi: But all that said, the lab is still doing some good work. Can you talk a bit about some of the projects that the lab is currently working on?
Dan Arvizu: So, we're excited by what's going on at the lab. You know, again, this is -- the frustrating piece is that we see that as being vulnerable now. But the lab's got some great things that are going on. We've got a great relationship with the Department of Interior, just met with some of their officials today. They're deploying thousands of megawatts, so there's 10,000 megawatts that will be deployed. It was originally scheduled for 2015, because that's what EPAct 05 had suggested. That will get done next year, a tremendous amount of deployment of renewable energy on federal land, so they're streamlining those processes. The Department of Defense, just came from a briefing on the Hill where there's a lot of activity in terms of them embracing green tech in the military. In the lab we've just - we've done, you know, essentially several partnerships. We've got 131 new cooperative research and development agreements, 6 to 1 leverage on the government investment, a small business incubator that we set up, 20 to 1 leverage. I hosted Vice President Biden at the lab about six weeks ago, very excited about the fact that small investments encourage and entice large segments of the venture and expansion capital world. So in terms of impact, in terms of progress, the science is going great. We have three R&D 100 awards this year which we're very excited about, all of them in photovoltaic process manufacturing, help reduce the cost of manufacturing these particular types of applications. So exciting work going on and yet, you know, the concern that we have is that there are large clouds on the horizon.
Monica Trauzzi: One of those clouds, some red flags have been raised recently regarding DOE's standards for providing loan guarantees for renewable energy projects. How difficult is it to predict how a technology will do once it hits the marketplace?
Dan Arvizu: Well, you know, this is something that's a continual debate among folks in the financial community. Typically in the financial world, when you make investments, you make investments into a portfolio and so there are both things that do well and things that don't do so well. And the unfortunate part of the Department of Energy's program and the one that we kind of worked on for loan guarantees is that every one of them gets scrutinized as though it's a, you know, must go sort of environment. It is hard to judge and to know for sure if a technology is going to be enabled in the marketplace. There's a variety of factors that have to be essentially satisfied. So, one of the things that I would encourage is let's do this on a portfolio basis and the other piece of that is that there's going to be some that don't make it and I think that is the nature of the business. But it's hard to know for sure unless, you know, you have some sort of divine insights that we don't have.
Monica Trauzzi: All right, we'll end it right there. Thank you for coming on the show. Nice to see you.
Dan Arvizu: OK, very good. Thank you Monica.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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