ENERGY RESEARCH AND DEVELOPMENT AND SMALL BUSINESS WEDNESDAY, MAY 14, 1975 U.S. SENATE, SELECT COMMITTEE ON SMALL BUSINESS, The committee met, pursuant to recess, at 10:10 a.m. in room 457, Russell Senate Office Building, Senator William D. Hathaway presiding. Present: Senator Hathaway. Also present: Raymond D. Watts, general counsel; John M. Cross, professional staff member; Gary J. Klein, assistant minority counsel; Mary Conway, staff assistant; Frank M. Shooster, academic intern; Dr. Ronal W. Larson, Director of Solar Technology Assessment, Office of Technology Assessment; Jeffrey Angus, legislative researcher to Senator Nelson; Betty Boynton, legislative assistant to Senator Hathaway; and Bethany Weidener, legislative aide to Senator Abourezk. STATEMENT OF HON. WILLIAM D. HATHAWAY, A U.S. SENATOR FROM THE STATE OF MAINE Senator HATHAWAY. The committee will come to order. This is the second hearing we are having on this energy research and development problem, with particular focus on solar energy, and it gives me a great deal of pleasure to continue these hearings that Senator McIntyre and Chairman Nelson began yesterday. Yesterday we heard of the problems that small business faces with respect to solar heating and cooling from manufacturers, installers, and researchers. Now we will hear how the Administration proposes to help develop the national solar energy industry. Our witnesses today come from the newly created Energy Research and Development Administration, the Federal Energy Administration, and the Department of Housing and Urban Development. ERDA is the lead agency with respect to solar energy research, development, and demonstration. It has assumed these duties from the National Science Foundation. Together with the Department of Housing and Urban Development, ERDA will spend about $300 million in the next 4 years to help solar heating and cooling. HUD will concentrate on solar home heating and ERDA will conduct research and followup. Through its procedures, ERDA will be able to bring small business into the development of solar energy, or it will be able to effectively shut it out. ERDA, for instance, could write its proposals in such a way that only large corporations could bid. We know this is not the case; one company in Virginia has already received a large grant from the ERDA procurement office. However, we want to make sure that ERDA continues with this record and does not fall back upon the ability of the Federal bureaucracy to feed research into large corporations or universities, exclusively. Dr. John Teem will be the witness for the Energy Research and Development Administration. We look forward to his testimony. We will also hear this morning from the Department of Housing and Urban Development which has authority for residential demonstrations of solar energy. Dr. Michael H. Moskow will represent the Department. He is Assistant Secretary of Policy Development and Research. We will also have Donald Craven, an Assistant Administrator from the Federal Energy Administration, who will describe the FEA input into solar energy development. At the hearings held yesterday, we heard from three small businessmen and how they believe solar energy should be developed. Our first witness, Dr. Jerry Plunkett, of Denver, Colo., testified that a bias against small business exists in the Federal research establishment. He made several strong recommendations for development of solar energy by small business, including retraining the biases of the Federal bureaucrats who work for the gentlemen we will hear from today. Dr. Plunkett, as president of Materials Consultants, Inc., has worked for several years to try to develop solar energy but has run smack against the Federal Government. Our second witness yesterday, James Piper, the president of Piper Hydro, Anaheim, Calif., not only discussed the institutional constraints in developing solar energy with Federal help, but went to the extent of making positive recommendations on the national plan for solar heating and cooling that the Energy Research and Development Administration will tell us about today. I think the most telling point in Mr. Piper's testimony was the figures he suggested that ERDA use for solar energy. ERDA plans to spend about $300 million to construct about 4,000 units to be heated and cooled by solar energy. Mr. Piper suggests that this number could be jumped to almost 130,000 units, including multi-family dwellings that are not considered in the ERDA interim report-with no increase in Federal funding. Piper, as a small businessman, also suggested that the Energy Research and Development Administration should consider loans rather than direct grants for the development of solar energy. He suggested that the Federal Government should not be funding companies to compete with established solar energy companies. Nor, he said, should the Government be funding companies that can roll research and development costs into rate bases as the utilities do today. Our third witness yesterday, Barney Menditch, suggested that education is the most important point in the development of solar energy. Menditch runs an air-conditioning and heating contracting firm, and suggested that code development and manuals to show con tractors how to install solar energy would encourage builders to use systems that could be rapidly available. In my home State, Maine, there has been considerable interest in solar energy. The Maine Times, a weekly newspaper with a circulation of over 10,000, has suggested development of solar energy, and a company in East Holden, Maine, manufactures wind-powered systems. Clearly, solar energy is something we should be developing. I hope our witnesses this morning will be able to inform us how the Federal Government will help to do it. Our first witness is Dr. John Teem, Assistant Administrator for Solar, Geothermal and Advanced Energy Systems, Energy Research and Development Administration, here in the Nation's Capital. Dr. Teem, we are glad to have you with us, and the gentleman with you. Would you identify him for the record? STATEMENT OF JOHN M. TEEM, PH. D., ASSISTANT ADMINISTRATOR FOR SOLAR, GEOTHERMAL AND ADVANCED ENERGY SYSTEMS, ENERGY RESEARCH AND DEVELOPMENT ADMINISTRATION, ACCOMPANIED BY DONALD BEATTIE, DEPUTY ASSISTANT ADMINISTRATOR FOR SOLAR, GEOTHERMAL AND ADVANCED ENERGY SYSTEMS, ENERGY RESEARCH AND DEVELOPMENT ADMINISTRATION Dr. TEEM. Beside me is Mr. Donald Beattie, Deputy Assistant Administrator for Solar, Geothermal and Advanced Energy Systems, who is here to help me should you have questions pertaining to some of the activities that have to do more with the National Science Foundation. Mr. Beattie came from the National Science Foundation into ERDA, so he is very familiar with the Foundation's solar energy program. Senator HATHAWAY. Fine. Glad to have you here. Your entire statement, Dr. Teem, will be made a part of the record, and you may proceed to summarize it if you wish. Dr. TEEM. Thank you very much, Mr. Chairman and members of the committee. I want to thank the committee for the invitation to discuss the solar energy program of the Energy Research and Development Administration here today. As Senator Nelson requested in his letter of invitation, I will discuss the role that small business concerns have played and the role that we foresee will be played in the application of solar technologies to meet our Nation's energy needs. On April 8 of this year, ERDA released for public review and comment its interim report-which I hope most of the members of the committee have seen-entitled "National Plan for Solar Heating and Cooling," covering both residential and commercial applications. The comments we have received on this report are being considered in the preparation of our report to Congress on June 30, 1975.1 Interim report, "National Plan for Solar Heating and Cooling (Residential and Commercial Applications)," ERDA-23, Energy Research and Development Administration, Mr. Chairman, we continue to receive comments on this report, and will welcome them for as long as we possibly can. We hope that we will get comments from the hearings you are holding, as well as the House overview hearings that are being held concurrently with this. Such comments will be useful to us, as well as those we receive by mail. The June 30 report will constitute the comprehensive program definition required by section 15 of Public Law 93-473, the "Solar Energy Research, Development, and Demonstration Act of 1974." The near-term applications of solar energy offer specific opportunities for small business concerns, especially in the heating and cooling demonstration program. Therefore, I will describe the program and illustrate how we envision participation by such firms. Senator Nelson's letter of invitation to this hearing requested that we consider certain questions touching on the use of solar energy. In response, I will discuss briefly solar energy applications, the program history, annual funding levels, and projections for energy contributions by these solar technologies. This will provide a framework within which the committee's questions may be addressed. I will then conclude with specific comments on opportunities offered by the heating and cooling demonstration program. FORMS OF SOLAR ENERGY As a useful framework, I would like to discuss first the forms of solar energy which we are investigating. The sun is a large and continuing source of domestically available energy. The solar energy that falls on the continental United States in 1 year is about 600 times our annual rate of energy consumption. This energy is distributed widely over the United States, and its use would not add further to the Earth's overall heat inventory. Solar systems can provide thermal energy or power at the point of use without the need for extensive distribution networks. If desired, solar central power stations could be tied to existing power grids to assist in meeting peak or, in some cases, base electric power demands. But every energy concept has drawbacks, and solar energy is no exception. Sunlight is a dilute source of energy. By this, Mr. Chairman, I mean that the concentration of sunlight is very broadly spread out. Only about a kilowatt of solar energy falls on about a square yard of the Earth and this energy, if it is absorbed directly, produces a relatively low temperature heat. Therefore large collection areas are required when large amounts of energy are needed. Solar radiation is variable due to the Earth's rotation and change in orbital position. It is also subject to interruptions due to clouds, rain, snow, haze, or dust. Thus, the energy collected must either be used as it is collected, or in conjunction with energy storage and backup energy systems. Solar energy is closest to being economically available to the public in its application to heating and cooling of homes and commercial buildings. However, there are many manifestations of solar energy. These include direct utilization: Heating and cooling of buildings; process |