Sputnik Moment -- NOT

The headlines were abuzz last month following Energy Secretary Steven Chu's talk at the National Press Club where he dubbed the global race for clean energy our new "Sputnik Moment" and warned that the U.S. risked falling behind other countries. In this imaginary race, our competition is no longer the Soviet Union, but China, which now leads in the manufacture of wind turbines and solar panels.

The Sputnik analogy is inappropriately applied for obvious reasons. The U.S. space program of the mid-twentieth century was an outgrowth of our military at a time when the United States and Soviet Russia were researching long-range ballistic missiles. The program was a high-cost, high-risk venture that never achieved economies of scale, nor was it intended to. There's no question the race advanced us technologically and the productization of its research benefited generations of Americans. But, contrary to Chu's message, it was not a jobs program, its objectives were not imposed on private industry, and its work did not interfere with the lives of everyday Americans.

In the case of energy, we already have a competent and competitive energy market run by the private sector. Its role in not to innovate, but to keep this country reliably powered at a reasonable price so that others can.

Chu's problem is with the fuels used to power the U.S. and that's what he wants to change.

He doesn't hide his agenda to boost wind energy in the United States and he will do what's necessary to shift the economics in wind's favor, including sponsoring policies meant to drive up the price of fossil fuels and mandate renewables. By teaming up with Interior secretary Ken Salazar, Chu expects to fast-track building hundreds of thousands of megawatts of wind nationwide including the shallow waters just off our eastern seaboard.

The problem for the rest of us is that Chu is an ideologue who, like the department he rules, refuses to publicly acknowledge the cost of his ideas or engage on whether his vision is even realistic.

While Chu delivered his sermon in Washington, ratepayers in the State of Massachusetts experienced a glimpse of his vision in action when the state's Department of Public Utilities (DPU) approved the power purchase agreement between National Grid and Cape Wind at 18.7[1] cents a kilowatt hour -- a price that's three times the cost of in-region natural gas and at least double the cost of other renewable options.

Last week, TransCanada and the Associated Industries of Massachusetts filed separate appeals of the DPU's approval hoping to see the decision overturned.  

After nine years of debate, the reality of Cape Wind's high cost is what caught people's attention. And this project represents just a fraction the megawatts Secretaries Chu and Salazar expect to see built. Imagine 115 Cape Wind equivalents -- 15,000 turbines -- located offshore within 10 miles of our east coast, consuming 3,000 square miles of open water. The eastern seaboard from Florida to Maine is only 1,342 miles. The environmental and societal impacts are not even modeled, but Massachusetts offers us some idea of the economic impact.

Dr. Chu told his audience in Washington that his department would continue to "develop and nurture the technologies to help industry go in the right direction." Frankly, his definition of the "right direction" is highly suspect. And his apparent blind embrace of high-price wind schemes suggests he lacks even a fundamental understanding of how his vision will impact state and regional economies -- or maybe he doesn't care. With the Cape Wind experience in mind, perhaps the best thing the Department of Energy can do right now is emulate NASA by focusing on research, not implementation, and letting competition and private enterprise drive the energy market. Only then will the public have some hope of seeing the best product delivered at a realistic price.
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[1] The approved 18.7 cent cost does not include 4% paid National Grid as prescribed by state law for agreeing to be a party to the contract or the 3.5% yearly escalator. See our editorial on the cost.