Perhaps this is what makes more recent government spending trends in energy more troubling. According to the Organization for Economic Cooperation and Development, member countries have reduced their spending on energy R&D from 11% in 1981 to 3% in 2010, making it the least funded sector of all government spending. If we expect to make advancements in energy development and energy security, investments will need to be made.
Three steps forward, one step back
When Solyndra went belly-up in 2011, the Obama administration had funded the company with $475 million in government-backed loans. They weren’t the only ones: More than a dozen alternative energy companies have filed for bankruptcy protection despite receiving stimulus funding.
Yet for the failures that have occurred along the way, there have been some major successes. Of the 14 major advancements in solar efficiency, 13 of them have been helped by government-backed funding. One of those projects, the advancement of thin-film solar efficiency, began with a public-private partnership in 1991 known as Solar Cells, which many of you know today as First Solar, Inc. (NASDAQ:FSLR). The U.S. government was also granted several loans to manufacturing giant General Electric Company (NYSE:GE) to help it improve efficiency enough that its turbines could compete on the open market.
It may have been a long time coming, but the technology for renewable fuels is very close to the point that they can can compete on the open market against traditional energy sources. First Solar, Inc. (NASDAQ:FSLR) just recently announced a deal with El Paso Electric Company (NYSE:EE) that it will sell electricity to El Paso Electric Company (NYSE:EE) from its Macho Springs solar facility for 5.79 cents per kilowatt hour, less than half what El Paso pays for electricity from coal. Also, the Federal Energy Regulation Commission has stated that 83% of all additional energy generation in the U.S. for Q1 2013 came from either wind or solar facilities. Perhaps the route to developing better solutions wasn’t the smoothest, but it’s hard to deny the overall outcome.
What a Fool believes
Very rarely do breakthroughs in technology happen on the first try, and it can take years to transform an idea into a profitable venture. Just like Thomas Edison’s quest to make an effective incandescent light bulb, there will be several failures along the way, but those failures bring us closer to a better solution.
Not every government loan or investment will be right. The overarching goal is for the successes to outnumber the failures. One of America’s greatest strengths has always been its ability to foster innovation. After more than 200 years of experimenting, it would be a shame to get gun-shy because of failure now.
The article Was Solyndra’s Failure a Fluke or the Status Quo? originally appeared on Fool.com.
Fool contributor Tyler Crowe has no position in any stocks mentioned. You can follow him at Fool.com under the handle TMFDirtyBird, on Google +, or on Twitter, @TylerCroweFool.The Motley Fool owns shares of General Electric (NYSE:GE).
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