U.S. Solar Spin, China Moves Ahead
Climate Change Insights 2012-11-08
Congressional oversight and press coverage of DoE’s failed $500 million loan guarantee to Solyndra, a now bankrupt U.S. solar manufacturer, is everywhere. These loans were provided pursuant to Section 1705 of the 2005 Energy Policy Act authorizing DoE to provide credit subsidies to emerging technologies including solar, nuclear and carbon capture & storage for coal. There is a significant amount of political finger pointing in Washington to explain why Solyndra went bankrupt and who is to blame for leaving U.S. taxpayers potentially on the hook.
With President Obama’s green jobs push, it is easy to see why Solyndra is such a hot political button. There are also reports of campaign contributions linked to both the decision to approve by solar interests and zealous scrutiny by some critics in Congress linked to fossil fuel interests.
So here are some facts to help maneuver one through the spin:
- The 2005 Energy Policy Act was passed in a bipartisan fashion by Congress and signed into law by President George W. Bush.
- Solyndra submitted its initial application to the Department of Energy in 2006 and due diligence crossed both the Bush and Obama Administrations resulting in a 2009 loan being issued.
- The Department of Energy was not alone in their positive assessment of Solyndra. For instance, in 2010 the Wall Street Journal published a review entitled, “The Next Big Thing: Top 50 Venture Backed Companies.” Solyndra was ranked #5.
- The total sum of the current DoE solar loan portfolio is $15.585 billion. Solyndra's loan guarantee accounts for $535 million or approximately 3.4% of the total portfolio.
Beyond the facts and spin, however, Solyndra failed primarily due to an inability to compete with cheaper solar panels made by Chinese manufacturers. According to Bloomberg New Energy Finance, the China Development Bank has provided at least $30 billion in government-backed credit to Chinese solar companies, thus increasing the scale of manufacturing and radically bringing down the cost of production. The direct result for China is a dominant share of the global marketplace in solar. Congress and the Administration should develop bipartisan strategies to compete and win the global solar marketplace once the Solyndra finger pointing is done.