**OPENING STATEMENT**

**BEFORE THE ENERGY COMMITTEE FIELD HEARING ON REDUCING BARRIERS TO
GROWTH OF EMERGING ENERGY TECHNOLOGIES - RELATIONSHIPS BETWEEN FEDERAL,
STATE AND LOCAL GOVERNMENTS**

Hong Q. Hou, Ph.D

EMCORE Corporation

10420 Research Rd, SE,

Albuquerque, New Mexico 87123

Thank you, Mr. Chairman and the members of the Committee for inviting me
to testify today on a subject that is of great importance to the nation,
namely finding pathways for Federal, State and Local governments to
enable US companies to accelerate the development and deployment of
emerging energy technologies.

My name is Hong Hou, and I am the President and Chief Operating Officer
of EMCORE Corporation. EMCORE, with its headquarters located in Sandia
Science and Technology Park in Albuquerque, New Mexico, offers a broad
portfolio of compound semiconductor-based products for broadband and
fiber optic telecommunications networks and high-efficiency,
multi-junction solar cells and systems for space and terrestrial solar
power applications. Nine years ago, EMCORE licensed advanced solar cell
technologies from Sandia National Laboratories and National Renewable
Energy Laboratory, and successfully commercialized them for a variety of
commercial and defense applications. Today EMCORE is the world leader in
high-efficiency multi-junction solar cells. We utilize the same solar
cell technology, combined with focusing optics, to produce Concentrator
Photovoltaic (CPV) systems. We have successfully demonstrated
approximately 40% conversion efficiency under a 500× concentration. This
technology offers a significant advancement in conversion efficiency
over traditional photovoltaic technologies and is uniquely produced in
the United States. We believe it will be the most competitive Solar
Photovoltaic technology in the future.

Over the last decade, EMCORE has invested over \$100 million to develop
and manufacture this emerging technology here in New Mexico. We have
created approximately 500 new jobs in Albuquerque. More than half of the
employees in our Albuquerque campus work in our Photovoltaics and Solar
Power Divisions.

My comments today are targeted at a segment of the renewable energy
industry that is the fastest growing energy technology in the world,
Grid Connected Solar Photovoltaic Technology. We have observed this
growth and believe it is a direct result of the policy-driven support
mechanisms that other countries, principally European, have established.

The U.S. electricity system is built around fossil fuels and this may be
true for many years to come unless a more significant shift in gas
prices occurs. According to a recent AEO (Annual Energy Outlook) Report,
out of 4,100 Billion KWhr power generated in 2006, renewable energy,
excluding hydro power, accounts for only 2.7%, and solar power accounts
for less than one four-thousandths. So there is plenty of room for
improvement. EMCORE's Solar Photovolataics developments are responding
to the market factors of increasing energy costs and worldwide interest
in this energy sector. As I mentioned, Grid Connected Solar Photovoltaic
Technology is the fastest growing energy technology in the world.

As a producer of advanced and emerging renewable energy technology, we
have a unique perspective on the obstacles that need to be overcome to
achieve success. We have some recommendations for how government can
help, and what EMCORE can give back.

Although, in a perfectly level playing field of energy, we ought to
consider the costs of economical, social, and environmental impacts, we
recognize that we need to be economically competitive in renewable
energy. Accordingly, EMCORE continues to devote substantial resources to
develop the technologies to enable a new generation of solar power
systems based on high efficiency concentrating photovoltaics. We believe
that this approach will result in the most cost effective energy derived
from solar power. However, no single company is structured to bear all
of the risks and costs associated with deploying new energy
technologies. Especially for the emerging CPV technology we are
commercializing, there is, in our view, a "First Mover Penalty." Due to
the emerging nature and lack of heritage, we are often asked by our
customers to guarantee the performance and an even energy-selling
revenue stream over 20 to 25 years. This becomes almost prohibitively
difficult to deploy in the US. What we have seen in Europe is
government-sponsored, strong incentive mechanisms. Guaranteed
electricity purchases as high as 60 cents per kilowatt-hour for Solar
Photovoltaics over 20 to 25 years have provided price surety and risk
return for investors competitive with their other investment options.
The U.S needs similar risk targeted policy tools to attract investment
in emerging technologies. Other key financial considerations are:

-   Price surety that allows risk returns competitive with other
    investment options.

-   Consideration for Capital Grants to mitigate higher cost for first
    movers

-   Duration, which allows investors to recoup their investments.

-   Financial measurement and controls that reduce price support over
    time as emerging technologies mature and late movers come to market.

An additional First Mover Penalty is achieving project financing for the
first large-scale project. Market acceptance requires heritage; and
heritage requires the First Mover to provide an acceptable risk profile
for project financing. Government backing to lenders and warranty backup
or insurance support are major risk mitigation benefits for the first
project.

Beyond the first project, the industry needs Federal as well as State
Renewable Portfolio Standards (RPS) that are achievable and enforceable
to permit a sustainable business environment. Large-scale grid connected
PV deployments require efforts to overcome regulatory bias in rates
which impact technology choices. Public Utility oversight resists cost
recovery of capital on renewable energy.

Government agencies can uniquely capture the public value renewable
energy; and cooperation between federal, state and local governments can
be key to viability of emerging energy technologies.

With these,

-   Our technology risk can be reduced by market factors such as
    **higher energy prices**, which stimulate private investment in
    renewable energies.

-   Our market risk can be reduced by **incentive mechanisms**, which
    provide defined and stable returns for investors, and

-   Our execution risk can be reduced when project lenders whose
    confidence in emerging technologies can be aided by **credit
    enhancements** such as loan guarantees or warranty backups.

Here in Albuquerque we have excellent solar resources: Sandia National
Labs as a world premier energy research institution, as well as EMCORE
and Advent Solar as high-tech photovoltaics technology companies. With
our tradition to explore renewable energy, we can mine gold out of the
wonderful blue sky with its high direct normal irradiance. Project
support from the local government can take the form of access to land
for deployment. Project support from the state government can take the
form of connection to a facility that can use the power generated from
the project. Project support from the Federal government can take the
form of a financial support mechanism to the project financer. And for
the long term, cooperation between the State and Federal Governments can
take the form of Renewable Portfolio Standards that are enforceable.

How can industry contribute? Industry can give back and is anxious to do
so, in the form of job creation. In Europe, this is already happening.
Spain reports that net job creation from 2005 to 2010 is 9,186 with over
360MW of Solar PV to be installed. The European Photovoltaic Industries
Association reports that due to strong feed-in tariff support in Germany
for the deployment of 750MW of Solar PV, 18,000 jobs supporting their
solar power industry were created in 2006 alone. This job creation can
happen in the US as well with support for Solar Photovoltaics.

With cooperation between government agencies, emerging technologies can
reach this success. Right here in Albuquerque, innovative technologies
are emerging; and sustainable employment can be created here at home.

In summary, policies that encourage local industry development rather
than international job creation should be a significant priority.
Policies that create surety for investors will enable renewable energy
deployment. Finally, simplicity of policy implementation will accelerate
the deployment of solar energy, create jobs, and contribute meaningful
renewable energy over the long-term. These simple polices are:

-   Price and duration surety

-   Financial support to encourage project financing for emerging
    technologies

-   Enforceable RPS

Only our government can recognize that Renewable Energy is necessary --
not a discretionary good. I would like to thank the committee for
providing me the opportunity to testify and deeply appreciate your
interest in supporting the emerging energy technology development and
commercial deployment.

I am prepared to answer any questions you may have.