The world needs safe, clean, and affordable energy, everyone wants an abundant supply of clean energy and a healthy solar energy industry, but where do we start? The best path to a stable renewable energy industry is to create self sufficient companies that do not need government financial assistance. The best companies depend on business models in a competitive environment, if a product meets the needs of consumers it will naturally be successful. Companies need subsidies when establishing an emerging industry, some will survive and others will not. Subsidies can be dangerous acting as a crutch, keeping companies alive by hiding the true cost. The true cost is found in a companys profit margin, but the profits are misinterpreted because some of the cost is transferred to tax payers. If real costs are known, renewable energy will become more competitive and cheaper.
Solyndra was founded in Silicon Valley in 2004. The next year the company was invited to apply for a government guaranteed loan under the Energy Policy Act, which was designed to support innovative clean energy technologies. The full application from Solyndra came in 2008 and the Department of Energy began a review for the loan. In 2009 Energy Secretary announced a $535 million loan guarantee to Solyndra, which was the first since the program began in 2005. DOE was pushed by officials to give a final decision on the loan approval quickly so the Vice President, Joe Biden could announce it. The loan was approved in 2009 and funded with stimulus money.
By the time this loan was approved Solyndra was in trouble. Solyndra’s panels were more expensive to make, but they should have been cheaper to install until the costs were doubted. The company had planned to build solar panels without polysilicon because the prices had skyrocketed giving the company a chance in the market. But, in 2008 the price of polysilicon began to drop sharply. Chinese firms crouded out American firms in the solar panel market. Also, the management had made wasteful spending decisions on unused equipment. Natural gas prices fell as well, making investment in more expensive alternative energy less enticing. In 2010 an audit by PriceWaterhouseCoopers questioned if Solyndra could survive. In 2010 the DOE found that the company could not make its loan payment, a violation of the federal loan. A few months later in 2011 the loan was restructured and some investors provided Solyndra with $75 million more in financing. Part of the deal was that the investors would be paid back before the government if the company fell. Finally, in late 2011 the company filed for bankruptcy.
Solyndra had first applied for a Department of Energy grant under the George W. Bush administration. Both political parties had viewed the company as potentially worthy of government investment even before receiving the loan in 2010.
Republicans argued that the Obama Administration betrayed American taxpayers, they had been repeatedly warned Solyndra was in a poor financial situation and may fail. They believe that his donors got special access and taxpayer money for the failed operation. There are 23 million Americans struggling for work and millions of public dollars were wasted. On the other side, Democrats argue that the government wanted to create jobs, even though it has been difficult through green technology.
Although some companies may fail, the U.S. solar workforce today is around 120,000. Many consumers are creating a demand for solar energy to reduce their monthly energy bills. This is because solar energy is affordable and sustainable source of clean energy.
http://www.washingtonpost.com/blogs/the-fix/post/solyndra–explained/2012/06/01/gJQAig2g6U_blog.html
http://abcnews.go.com/blogs/politics/2012/07/obama-fundraises-with-players-in-solyndra-scandal/
http://www.forbes.com/sites/ciocentral/2013/02/14/government-subsidies-silent-killer-of-renewable-energy/
March 6th, 2013 at 8:24 pm
This is a great blog post! It is both detailed and well-balanced. You state the positives and negatives of subsidies, which I liked. I agree that subsidies can be a very good thing in developing clean energy, but the distribution of them needs to be reevaluated. Solyndra was definitely a mistake, but that is bound to happen. The greater the risk, the greater the reward can be. That’s why we should keep funding new technology. Great job!