In 1992, Newton Becker went before Congress to tell the story of his company’s demise. Many companies have gone bankrupt and many more will, but Becker’s company, Luz International, happened to be the largest solar company in the world.

“I am here much like a crime victim trying to change a law,” Becker said.

The crime here, though, wasn’t just against the investors in Luz (who never made a dime) but against the future. Silly legislative wrangling killed off the most promising utility-scale energy technology of the 20th century.

Writing this book, I’ve encountered a lot of missed chances and blown opportunities in green technology. People made choices — economic, social, political — and they are reflected in our energy mix. But there is no sadder story in green technology than Luz International, the solar thermal electric pioneer that had installed more than 300 megawatts of solar thermal electric power before Bill Clinton was President.

As their technology flirted with becoming cheaper than natural gas — the long sought-after goal of renewable energy — the playing field shifted beneath them and sent them spiraling into insolvency. They were the one and only company capable of doing what they had, and no one new picked up the slack. American solar thermal development hibernated even as the plants they built continued to perform flawlessly.

What is most striking about Becker’s testimony, which is reproduced below, is the tremendous carelessness of American energy policy. The company had reduced the cost of solar thermal electricity from 24 cents per kilowatt hour down to 8 cents, nearly even with natural gas — and did it under a regulatory scheme that artificially and unjustifiably prevented them from building at larger, more efficient scales. At the time they went under, they already had plans to drop the price of solar thermal electricity another two cents, by far the cheapest solar energy in the world, and even with fossil fuels not named coal.

All it would have taken to keep the company going was tax treatment along the lines of what oil companies were getting for doing enhanced oil recovery. Any number of other moves at the state or Federal level could have saved the company. But they didn’t; Luz went down. The California and American governments failed the future here — and it’s infuriating.

Mr. Chairman, my name is Newton Becker, chairman of the board and a founding investor of Luz International, Ltd., the world’s largest solar company, that produced solar electric generating system plants that currently supply over 90 percent of the world’s solar electricity. Luz is now in chapter 7 liquidation proceedings; management is gone.

As an investor I am here much like a crime victim trying to change a law. This is a summary of my testimony that I previously submitted.

Since Luz was founded in 1980 it successfully constructed nine commercial solar thermal electric plants in the Mojave Desert, supplying Southern California Edison with 354 megawatts of installed capacity. This is enough energy to supply the residential needs of more than one-half million people.

The first two plants, a 14 megawatt and a 30 megawatt, produced electricity at a cost of 24 cents per kilowatt hour. The next five 30, megawatt plants built in 1086 through 1988. produced electricity at 12 cents a kilowatt hour. The two 80 megawatt plants built in 1989 and 1990 currently produce electricity at 8 cents a kilowatt hour.

Unfortunately these reduced costs did not result in increased profits to Luz because Government support also was being reduced to less than half. Luz’s small profits were always considerably less than the tax credit, making the tax credit crucial to Luz’s existence and the continued development of this technology.

A new generation of Luz plants were to have been constructed in 1994-95 which were projected to produce electricity at a cost of approximately 6 cents per kilowatt hour. We had over $20 million of R&D in that effort before we went under. In comparison new nu¬clear plants today 8.re projected to produce electricity at 6 to 9 cents a kilowatt hour, assuming no construction delays or cast overruns; natural gas plants and coal plants, depending upon pollution control restrictions, at 4 to 7 cents per kilowatt hour.

We were right in the range. These fossil fuel and nuclear electricity coats do not reflect the cost to society of residual pollution, global warming effects, and nuclear contamination and waste disposal.

Now, there is no hope that Luz can be resurrected. There is no hope that the solar thermal electric industry can be resurrected without a national energy policy that will, number one, create a level playing field with polluting fossil fuel technologies and,number two, nurture the growth and efficiency of the new technology.

Investors of Luz lost their entire investment of $45 million, No dividends were ever paid, all gross profits were reinvested in research and development, which brought about the dramatic cost reduction of solar electricity from 24 cents to 8 cents per kilowatt hour.

Others will be careful not to take the same risk on an unstable Government policy or on-again, off-again support for emerging renewable technologies. Now, level playing field legislation is needed. If a permanent solar tax credit had been in place as permanent oil and gas drilling benefits are now in place. Luz would not have had to rush construction of its ninth solar plant and would not have lost $30 million, two-thirds of its capital base in 1990, to beat the 9-month extension of the solar energy tax credit, which expired September 30, 1990.

If the solar tax benefit had been permanent in 1991, Luz would have been able to survive by completing its 10th by not running out of money before construction financing was completed. If in 1991 the solar tax credit had been increased to 20 percent, as proposed by Senator Daschle’s S. 2100, and indexed downward similar to the law for section 29, credit for enhanced oil recovery, a temporary decline of natural gas prices could have been weathered.

If the solar tax credit were available for utilities, which is now prohibited by law, a direct sale of an 11th solar powerplant to a utility probably would have occurred, which would further have sustained Luz. All of the above provisions are incorporated in S. 2100, the Renewable Energy and Energy Conservation Act of 1991. Many of these same provisions are incorporated in other House bills, such as H.R. 1652.

In conclusion, without a level playing field, there will not be a domestic solar industry producing inexpensive, reliable, pollution- free electricity from a noninterruptable source. Without greater attention by Government, we are doomed to breathing foul air and increasingly relying on unstable countries in the Middle East as a major source of our country’s energy. There is no solar thermal electric industry today. There will be almost no tax revenue lose for at least 5 years for the 20 percent indexed solar energy tax credit, but passing this level playing field legislation now could nurture the beginning of the solar age, which has the potential of supplying much of our country’s electric energy for the 21st Century.

Image: SEGS at Kramer’s Junction. By Alan Radecki.