A Challenge and an Opportunity for the Next 4 Years Turning the DOE into Something That Matters White & Case Energy Forum By Larry Kellerman November 8, 2012

1. QUANTUM UTILITY GENERATION
A Challenge and an Opportunity for the Next 4 Years
Turning the DOE into Something That Matters
Presentation – White & Case Energy Forum
By Larry Kellerman
November 8, 2012

2. Energy is Central to Our Nation’s Success
ENERGY
…and it is time our political leaders
embraced this proposition
NATIONAL
THE ECONOMY
SECURITY
THE ENVIRONMENT
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3. We Need a Real National Energy Policy and a DOE to Design/Implement It
 Reconcile the fact that there hasn’t been a real NEP since the Carter Administration, and one can
argue that there has not been a hugely impactful Energy Policy since the Roosevelt Administration
 Elements in a National Energy Policy must all align with a central proposition: what is best for the
country in the decades to come
 Federal oversight, design and planning must have a role in 21st Century Energy Policy
 “All of the above” is not a policy. It is fundamentally an admission of lack of focus on the problem
 Central questions to address:
 Definition of objectives:
– lowest system-wide cost to consumers and industry
– minimized environmental footprint
– greatest contribution to the economy of the United States and to our security
 We have four fuel types in abundance. Which do we wish to encourage/discourage?
– Natural gas
– Renewable energy (wind and solar)
– Coal
– Uranium
 What is the government’s role in encouraging the efficient use of the energy we have?
 Most importantly, define what the energy infrastructure of this country “should be” in 20 years
and initiate policies and programs to get us there
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4. We Need to Re-Examine and Role and Mission of the DOE
 While the DOE’s mission is multi-modal, the agency has been ineffectual in shaping our nation’s
energy future
 The current version of the DOE sees its mission at least in part as funding some projects and
technological initiatives that otherwise would not have funded
 At the same time, they also have funded other projects and initiatives that would have received
conventional financing, albeit at a higher cost, even without government support
 How about something along the following lines as a mission for the DOE:
 Defining and implementing national policies and priorities that facilitate gaining the U.S. a long-
term strategic advantage by securing clean, cheap and reliable energy resources
 The DOE can be an effective and functional part of a national energy strategy facilitating clean,
low cost energy that is made here, used here and gives this country a real leg up on our
international competition for energy-dependent jobs
 DOE’s leadership today is characterized by an
intelligent technocrats who views DOE’s mission
as stimulating the advancement of paradigm-
shaping technologies
 Solyndra, A123 and other failed DOE “investments”
are not the problem – they are a symptom of
DOE’s self-definition
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5. DOE’s Own View of Its Mission Today: What Is Missing?
 Catalyzing the timely, material and efficient transformation
of the nation’s energy system and securing U.S.
leadership in clean energy technologies
 Maintaining a vibrant U.S. effort in science and
engineering as a cornerstone of our economic prosperity
with clear leadership in strategic areas
 Establishing an operational and adaptable framework that
combines the best wisdom of all Department stakeholders
to maximize mission success
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6. An Alternative View: We Have the Technology, We Don’t Have the Policy
 Solar energy is grid-competitive in large swaths of the country, and with every passing month is
getting more competitive
 Long-term wind contracts have been signed at less than the delivered fuel cost of over half the
coal plants in this country
 Smart grid technologies are readily available and implementable today that enable effective
management of loads and the reduction of both peak and energy demand of ~ 15%
 Technologies exist to convert every type of fuel we have access to in the country, whether natural
gas, sunlight, wind, coal or uranium, into clean power
 We don’t need the Department of Energy to pick technology winners and losers
 We need the Department of Energy to define a sustainable path for this country to achieve low
cost, low environmental impact and highly reliable energy for many decades to come
 We need the public sector to do what the private sector either cannot do or cannot do well
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7. What Real Energy Policies, Implemented Effectively, Have Created
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8. Important Things A Reinvigorated DOE Could Do Today
 Designing a plan for intelligently weaning the renewables sector off of subsidies over a realistic
timeframe
 Designing a set of policies to materially reduce our reliance on oil/imported oil
 Integrating tax policy with energy policy to encourage the right societal actions
 Initiating a thoughtful dialog on how utilities are regulated and how the rate base model can evolve
 Putting teeth behind consumptive use efficiency standards similar to the teeth behind CAFE
 Defining the role and designing a path for nuclear energy in the nation’s future
 Recommending to Congress which resources are too important to our future to export
 Taking a much larger role in the debate around market power/market concentration issues
 Defining with greater clarity who is responsible for electric power system reliability, especially in
“competitive markets”
 Championing the role of cogeneration and efficient energy production and use, and crafting
recommendations related to the viability of a PURPA for the 21st Century
 Educating the public on the choices facing the nation on the energy front and how that translates
into personal behaviors, costs and outcomes
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9. Energy Policy Should Not Be A Partisan Issue
 Energy policy has been ignored for too long by both sides of the aisle
 Designing and implementing a durable energy policy is an initiative that all sides should be able to
agree upon
 If we as a nation do not take a proactive, assertive role in defining our energy future, we are
walking away from a once in a generation opportunity:
 To capture the benefits of now-available technologies
 To leverage our abundant domestically produced fuels
 To replace significant vintaged infrastructure with something better
 The next Administration can change our nation’s future for the better
 It may need a push from all of us to help it along
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