Energy Secretary Steven Chu sees energy following cell phones and “going viral” worldwide if the costs of advanced batteries teamed with efficient solar panels can be reduced enough.

But the difficulties of reaching those and other energy innovations have been so underestimated by the public and politicians, says Microsoft founder Bill Gates, that US energy research is underfunded by half.

The two spoke Tuesday to the Energy Innovation Summit, hosted by the Department of Energy’s Advanced Research Projects Agency – Energy, in Washington, DC.

Read here for earlier coverage from the ARPA-E summit on Breaking Energy.

Chu said there’s a “worldwide race” to get cheap, practical battery storage and solar panels, which combined could bring reliable electricity to growing rural areas without the need to build transmission grids. The combination offers a chance to “leapfrog” development and bring people power for life-altering changes like pumping water and refrigerating medicines.

“It’s a huge market opportunity,” Chu said, and he expressed optimism costs can be brought down for both. Solar panel costs have already come down from $20 to $1 per watt in recent years, he said.

But both Chu and Gates cautioned energy develops on a far longer cycle than IT did, with investments made for 50 years forward.

“I worry that people underestimate the time to innovate,” Gates said, adding, “It’s crazy how little we’re funding this energy stuff.”

Moreover, the two agreed technology advances mean different things in the US, where new technologies must displace or replace old ones, and in China, where companies are scrambling to build new capacity.

Shifting Priorities For US Companies

Another big change for innovative companies, said Chu, is that the US was the world’s biggest market for a long time, but “no longer.” Virtually everyone has to consider markets abroad.
Chu said “most of the greatest ideas still come from the US,” but the challenge is to “capitalize” on them by having new products made in this country, which now often isn’t the case.

Multiple speakers at the summit said the US simply isn’t organized to do what other nations’ central governments do: identify companies they want to attract and go after them, with flexibility to work out deals including tax breaks quickly.

Asked whether the political controversy over the Solyndra loan guarantee failure was an impediment to getting federal research funding, Gates came to DOE’s defense, saying the department had been asked to act unusually quickly in the stimulus program and overall, did “very well.”

Developing technologies means taking risks and having failures, he noted, and said he expects to hear “anti-Solyndra stories” of guarantees that produced results.

Chu said the controversy had had “a dampening effect” but insisted, “we can lead in technologies the world will want.” He added, “Let’s not blow it.”