(Watch Dog) – The federal government’s dream of a renewable energy empire hinges on a scrubby outpost here, where scientists and executives doggedly explore a new frontier.
If you live outside Colorado, you probably haven’t heard of the National Renewable Energy Laboratory – NREL for short. It’s the place where solar panels, windmills and corn are deemed the energy source of the future and companies who support such endeavors are courted.
It’s also the place where highly paid staff decide how to spend hundreds of millions in taxpayer dollars.
And the public pays those decision-makers well: NREL’s top executive, Dr. Dan Arvizu, makes close to a million dollars per year. His two top lieutenants rake in more than half a million each and nine others make more than $350,000 a year.
But what is really going on there? Energy expert Amy Oliver Cooke drove out to the site, which looks something like Nevada’s Area 51 with its remote location and forbidding concrete buildings. NREL had started a construction project and Cooke wanted to see for herself. She didn’t get far: a man in an SUV seemingly appeared out of nowhere, stopped her car, and told her to leave.
“A beefy looking fellow told me, ‘It’s top secret,’ said Cooke, director of the Energy Policy Center at the Independence Institute think tank. “I said, ‘I’m a taxpayer and I want to see what you’re building’ and he said it was it was ‘top secret so we can bring Americans a better future.’”
With its bloated budget and overseen by a $533 million a year government-funded management company, Cooke isn’t buying it.
“NREL has given us two of the most significant boondoggles, one of them being ethanol and the other being (bankrupt) Abound Solar,” she said. “They were part of the team that pushed Abound Solar along. In fact, they wrote in March 2011 on their website how proud they were of their role in abound solar.
“Am I impressed with NREL? No, not really,” she said.
NREL’s taxpayer-funded management company has seen its budget more than double since 2006. That’s when one of its most ardent supporters, Rep. Ed Perlmutter D-Lakewood, was first elected to Congress. The lab sits in the middle of his district.
But Perlmutter’s ties go beyond merely promoting green legislation and lobbying his colleagues for NREL funds. He has received $12,670 in campaign contributions from executives of NREL and its management company, MRIGlobal, a company that describes itself as “an independent, not-for-profit organization that performs contract research for government and industry.” Perlmuter’s father has served as a trustee for MRI and MRIGlobal during the past decade. Between 2003 and 2005, Perlmutter was also a trustee. These positions were unpaid.
Perlmutter did not respond to phone calls seeking comment for this story.
FOLLOWING THE MONEY
Funded by the U.S. Department of Energy, NREL started in 1977 as the Solar Energy Research Institute, a Jimmy Carter-era response to the 1973 Mideast oil crisis. Its budget, then about $100 million, was slashed during the Reagan era.
By the time Perlmutter was elected, NREL’s budget was $209.6 million. It increased steadily before ballooning to $536.5, a beneficiary of President Obama’s stimulus plan and a $135 million contract spread out over five years to construct a new science center. Its current $352 million budget is down slightly from last year’s $388.6 million.
From its inception, NREL has been managed by MRIGlobal, back then called the Midwest Research Institute.
To handle lab management, MRIGlobal partnered with Ohio-based Battelle Memorial Institute, which describes itself as “the world’s largest nonprofit research and development organization.” The pair formed Alliance for Sustainable Energy, a separate non-profit in 2008, for the sole purpose of managing NREL and installed NREL’s top executives as its directors.
Despite record federal debt, municipal bankruptcies and a nagging global recession, those executives enjoy pay packages that are out of reach of most Americans who pay their salaries. MRIGlobal and Alliance tax documents obtained by Watchdog show most earned well into six-figures:
Dan Arvizu, Alliance president and NREL director
Bobi Garrett, NREL senior vice president of Outreach, Planning and Analysis
William Glover, NREL deputy lab director and CEO (retired)
Catherine Porto, NREL senior vice president
The budget to manage Alliance is mind-boggling — and rising. For 2010, tax documents show, Alliance received $532.9 million from the Department of Energy, a whopping $189 million more than they were paid in 2008.
In 2010, MRIGlobal’s tax return shows DOE funding of $104.8 million, while Battelle’s tax return reported $4.55 billion in government grants. Its activities included management of five national laboratories (including NREL) and operating as subcontractor at a sixth.
However, at least one expert who has studied NREL doesn’t see any problem with the fact that the agency is overseen by a management company.
“I have no problems with the contractors operating the lab. They would do a much more efficient job than the government,” said Nick Loris, an energy policy analyst with the Heritage Foundation. “It should lower the cost of these projects.”
But what Loris doesn’t like is the entire concept of placing the government in a role of making energy affordable. That should be a job for the private sector.
“It’s not the government’s role to make energy cheaper. There is no reason the taxpayer should subsidize this,” he said. “We’ve seen the failures when the government gets involved in these projects. If they are going to be successful in the marketplace, they wouldn’t need help from the government”
In fact, the billions that have been siphoned into renewable energy have yet to produce a fraction of the promised return, Cooke claims.
Solar and wind still remain prohibitively expensive and not viable for general use as are corn and wood chips to fuel cars. Yet NREL labs continue to work to this end. Cooke predicts that numerous taxpayer-subsidized companies will go bankrupt in the coming years just as the overinflated housing market came crashing down.
And it’s not just the money, she said. It’s the environmental threat.
“I’ll tell you what’s pollution,” Cooke said. “It’s solar panels and wind turbines abandoned — things with toxic chemicals in them,” she said. “We don’t know what’s going to happen to these things. What do you do with a farm of abandoned wind turbines that are 500 feet tall?”
Despite its bloated stimulus funding, there are signs of financial trouble at NREL. The company offered to buy out 100 jobs when its budget dropped between 2011 and 2012.
Perlmutter spokeswoman Leslie Oliver expressed concern about the buyouts, calling NREL the nation’s green energy “crown jewel” and a driving economic force, the Denver Post reported.
“What about next year?” Oliver said. “Where does this stop?”
On his website, Perlmutter blamed Republicans for the cuts and claimed NREL generates 5,500 jobs. Its direct workforce is listed at 1,700.
By all accounts, Perlmutter’s relationship with NREL will continue. He spent two years trying to pass legislation to give solar companies a break with bankers before successfully adding the language to the American Clean Energy and Security Act of 2009.
He is co-chairman of the New Democrat Coalition Energy Task Force, part of the Financial Services Committee. Perlmutter has leveraged that role to keep alive a 20-year-old energy tax credit to producers of wind technology.
That credit would have expired at the end of the year. But the Financial Services Committee produced a bill to extend the credit for another year, which carries a cost of $12 billion over the next decade, The Hill reported. It faces stiff opposition from House Republicans.
Meanwhile, as energy expert Cooke predicts, the green business is still shaking out unsustainable ventures. The Danish wind company Vestas, which has several Colorado production sites, announced on Nov. 7 that it will shed 6,700 jobs through the end of next year.
Who’s to blame for the industry’s troubles? Government subsidies? Poorly run companies? Insufficient demand? Foreign competition?
Perlmutter blamed the Tea Party.
“It is clean and it is the future of energy production,” Perlmutter wrote on his website. “Until the Tea Party took over this has always been a simple, noncontroversial tax credit.”