The Fifth Risk by Michael Lewis:
The $70 billion program that John MacWilliams had been hired to evaluate was a case in point. It had been authorized by Congress in 2005 to lend money, at very low interest rates, to businesses, so that they might develop game-changing energy technologies. The idea that the private sector underinvests in energy innovation is part of the origin story of the DOE. “The basic problem is that there is no constituency for an energy program,” James Schlesinger, the first secretary of energy, said as he left the job. “There are many constituencies opposed.” Existing energy business—oil companies, utilities—are obviously hostile to government-sponsored competition. At the same time, they are essentially commodity businesses, without a lot of fat in them. The stock market does not reward even big oil companies for research and development that will take decades to pay off. And the sort of research that might lead to huge changes in energy production often doesn’t pay off for decades. Plus it requires a lot of expensive science: discovering a new kind of battery or a new way of capturing solar energy is not like creating a new app. Fracking—to take one example—was not the brainchild of private-sector research but the fruit of research paid for twenty years ago by the DOE. Yet fracking has collapsed the price of oil and gas and led to American energy independence. Solar and wind technologies are another example. The Obama administration set a goal in 2009 of getting the cost of utility-scale solar energy down by 2020 from 27 cents a kilowatt-hour to 6 cents. It’s now at 7 cents, and competitive with natural gas because of loans made by the DOE. “The private sector only steps in once DOE shows it can work,” said Franklin Orr, a Stanford professor of engineering who took a two-year leave of absence to oversee the DOE’s science programs.