11/04/2011 10:44 am ET | Updated Jan 04, 2012

Why Solyndra and Beacon Power Aren't Fatal for Renewable Energy

Earlier this week, Beacon Power, a company that builds systems to stabilize solar and energy power, declared bankruptcy. The company's Massachusetts plant will continue to operate at full capacity, but its finances will be restructured. This is big news mostly because Beacon Power received $43 million in Department of Energy loans, and because it follows the recent closure and bankruptcy of Solyndra, which got $534 million from DOE.

These developments have tongues wagging -- some see it as a symbol of government excess while others repeat the old myth that renewable energy just can't work. These critics are overlooking one important fact -- if our strategy for building new energy markets is having the federal government bet on winners and losers, then that is exactly what we are going to get: winners and losers.

Winners and losers happen all the time in the marketplace. Remember that adorable sock puppet from The company went bankrupt in 2000 after having received more than $50 million in private investment. Over $185 million from the likes of Coca-Cola and GE went into a company called Digital Convergence to create a personal bar-code scanner that flopped.

But putting government in the business of picking winners is not good policy. Neither is it good policy for government to turn its back on clean energy, particularly as China, Korea, and Europe are adopting policies that help their businesses grab more and more of the $2.3 trillion global market for renewable energy technologies.

Instead, I'd like to see our government investing in new energy infrastructure that welcomes participants into the marketplace, and promoting policies that diminish the need for subsidies and make all investments in renewable energy -- public and private -- a better bet. We've seen government play this role before -- just think about what the federal-funded interstate highway system did to boost American business in the 1950s, or what the government-backed Internet does for virtually every business today.

We need federal intervention again to transform our electricity grid from an outmoded obstacle to innovation, into an open platform that allows all energy resources -- renewable and fossil-fuel-based -- to compete on an equal footing.

For those who want to end government subsidies, for those who want less regulation, and for those who want to see the promise of clean, renewable energy fulfilled, the overarching goal should be to maximize opportunities for the private sector to do what government cannot: win, lose, and learn without risking taxpayer dollars. Meanwhile government should focus on creating the conditions that breed success, rather than trying to actually participate in it.