AOL Energy Week In Review

on October 07, 2011 at 3:30 PM

The roles of government and business in driving energy investment are areas of continual debate, but this week brought the turmoil to a new high.

The Department of Energy and the Obama Administration went on the offensive to defend their renewable energy and clean tech programs, many of them funded or arranged under previous administrations but implemented and promoted by current leaders.

Clean energy investment drives jobs, the President said this week, as well as innovation essential to keeping the US economy at the forefront in its continually-evolving competition with Chinese manufacturing might and growing financial heft. Investment in clean energy and renewable fuels has been broadly seen as an unqualified “good thing” for much of the past few years, with manufacturers, communities and even traditional energy companies reaping investment through loan guarantee and tax credit programs for alternative energy at a time when the struggling broader economy and tight lending standards limited the availability of funds.

Then came the collapse of Solyndra.

The solar company was a high-flier in the space, using cutting-edge technology and building its manufacturing base in the US. Obama visited their facilities, and his pictures spending time with the company’s top executives and workers have circulated around the internet ceaselessly.

The firm typified many of the things the general public believe about clean energy, including the ability of technology to bring back American manufacturing. Its failure, largely due to rapidly-compressing solar panel prices based on cheap Chinese panel availability prompted by well-implemented government manufacturing incentives, seemed to show up the US government and its energy causes as broader than the collapse of a single firm.

Throughout, the news has been handled with the most painful possible timing for the renewable industry, with Solyndra executives choosing silence in Congressional hearings, and the trouble of other alternative fuel projects at the same time underlying the perceived failure of the entire industry.

The announcement of the Loan Program Office chief’s resignation this week only served to prolong the pain. The story was showing signs of dying, caught up in the rapid business news cycle around employment numbers and, in energy, the stupendous scale of new natural gas reserves in Ohio and elsewhere.

The energy business is not short on innovation. There is a widespread belief that innovation requires new and shiny devices, but the ability of the industry’s engineers to maintain a first world level of service availability on increasingly third-world infrastructure reflects inventiveness and commitment on an inspiring scale.

It can be difficult to make the argument for renewable fuels on raw cost comparisons alone. The “shale gale” of new natural gas developments has sent the entire industry back to the drawing board when it comes to their pricing forecasts. The US government is not alone in having been caught planning for a future of constrained fossil fuel availability and high electricity prices that seems to have been indefinitely delayed.

The individual cases of Solyndra and other companies backed by the Loan Program Office have yet to play out, and if history is a guide, they will do so in the most public and widely embarrassing fashion possible. But the investment in new energy capacity by the federal government has at the very least sparked a debate about what kind of energy the country should use, and how it should be paid for.

That debate is comforting after decades of widespread ignorance about the very basics of energy in the US beyond the price of a gallon of gas. The industry is moving to welcome the debate, which can only become louder as the election cycle spools up to its most feverish pitch in the months to come.

Photo Caption: President Obama tours a Solyndra facility in May 2010 (corrected from an earlier mistype identifying the year as 2006).