Solyndra Bankruptcy Unlikely to Hamper Gov’t Investment In Green Jobs
EmailTwo weeks ago an American solar company declared bankruptcy. It was one of three U.S. solar companies to go under in a month, but this one was special. Solyndra, the solar panel manufacturer, risked losing as much as $528 million in taxpayer money the day it shuttered its Freemont, Calif., factory and is now calling into question the integrity of the government’s loan guarantee program for renewable energies.
But while the evidence continues to prove that gambling millions in taxpayer money on a company that made just $3 for a product that took $7 to produce was rather unwise, it doesn’t look like the one bad apple has ruined the whole orchard of green energy investments.
“I think renewable energy remains one of the best long-term investments one can make as long as you’re careful to pick your companies,” said Garvin Jabusch, chief investment officer at Green Alpha Advisers, which focuses on environmentally sustainable investments. “If some companies go bankrupt, this is just normal capitalism.”
The Solyndra bankruptcy has inspired an investigation from the House Energy Committee, whose chairman Fred Upton (R-Mich.) said it was a “classic case of fraud and abuse and waste.”
But the Energy Department argues the bankruptcy is not emblematic of the entire loan program. The solar company loan represents about 1.3 percent of the entire loan guarantee program, which was a $2.4 billion initiative created under the 2009 Recovery Act to support the new green technology investments, which can be risky. Under the program, the government does not actually pay out any money, but guarantees that if the company fails, Treasury will repay the private loan.
“What this program is intended to do is leverage private sector capital towards innovative clean energy technology that can help American manufacturing remain competitive, but might not otherwise receive project financing on the open market,” said Damien LaVera, a spokesman for the Energy Department. “Congress recognized that investing in innovative tech carries intrinsic amount of risk.”
The Solyndra bankruptcy is not symptomatic of the entire solar industry either, Jabusch said. According to the Solar Energy Industries Association, the solar market nearly doubled from 2009 to 2010 and is anticipated to add about 24,000 jobs, a 26 percent increase, over the next year.
“They were doing something different and new that nobody else was doing,” he said. “It’s like somebody came out with a new three-wheeled kind of car and hoped for it to grow rapidly. You’re going against the mainstream for that industry.”
And production of solar panels did grow rapidly, but in China, not America. According to the Energy Department, the Chinese government poured $33 billion into its solar industry in 2010, allowing Chinese companies to produce solar panels at a fraction of the cost that American companies like Solyndra were paying.
When the price for solar products fell significantly due, in part, to the flood of cheaper Chinese products, Solyndra could not cut costs fast enough to keep up, Jabusch said.
“The Department of Energy got caught out by that change,” he said. “They weren’t staying on top of the market enough to realize that Solyndra was not going to be able to remain competitive. That sort of event in investment management happens all the time.”
But the difference was that the Solyndra investment was made with taxpayer money, money that some conservatives think should never have been spent in the first place.
“What Solyndra really speaks to is the large issue of how government intervention can sort of hide the normal profit-and-loss signals that direct private investors,” said Lachlan Markay, an investigative reporter with the Heritage Foundation, a conservative think tank.
He said the public nature of the company’s bankruptcy will act as a “force against future investments, but won’t be the nail in the coffin for green technology.”
Richard W. Caperton, a senior policy analyst at the liberal Center for American Progress, said there was little chance that the Solyndra bankruptcy will put a damper on government subsidies for renewable energy. Ending the programs would be “almost impossible,” he said, because “there are so many success stories.”
And while the scandal may not be a big driver on the policy side, it could definitely be a big player in the politics of President Obama’s re-election.
“Unfortunately the Solyndra default is blood in the water,” said George Sterzinger, executive director of the Renewable Energy Policy Project. “And I think the loan guarantee will be elevated into the cross-hairs of political battles.”
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Green companies are and have always been a fraud. Obama should be in prison for the theft of American tax dollars for all five of the companies that have gone bankrupt with our tax dollar money. These green companies have finally been exposed for what they are a front for campaign money for Obama and the politicians.
Posted by: J.Herrera | September 19, 2011, 7:05 am 7:05 am
QUOTE:
“I think renewable energy remains one of the best long-term investments one can make as long as you’re careful to pick your companies,” said Garvin Jabusch, chief investment officer at Green Alpha Advisers, which focuses on environmentally sustainable investments. “If some companies go bankrupt, this is just normal capitalism.”
Unreal!!! That’s just normal capitalism that the Government subsidises both the supply and demand end of a product! I must ask for a refund on my Business degree; I don’t recall that in any econ classes.
And this is not a one off.
My favorites is the bogus microalgae companies, like Algenol. Back in 2008 they claimed they had an $850 million contract with a Mexican company called Biofields who would be producing 250,000,000 (million!) gallons per year of their magical fuel by 2009 and 1 billion gallons per year by 2012. They also said they had their own funding and did not require funding from any other sources. Coincidentally they were lobbying the US government at the same time (Breaux-Lott Leadership Group). That worked out well because they were given a $25 million grant from the Feds, plus $10 million from Lee County Florida for a pilot plant. Why build a pilot plant when they were ready to produce 100s of millions of gallons a couple years back? This from a 2008 press release:
“Algenol forecasts sales from the Mexico plant by the end of 2009 at price levels comparable to other U.S. ethanol makers. It says the plant will have a capacity of 1 billion gallons per year, much of which will be transported by ship to Mexican oil refineries nearby to be blended into gasoline.”
I believe 2009 has come and gone…wonder how that’s going down there in Puerto Libertad Mexico.
Another interesting tidbit is that up until a couple of years ago, the WORLDWIDE headquarters of this vast operation was the CEO’s house! Unfortunately the Government invented the Internet, but they don’t know how to use its search function! Don’t believe me…Google it!
Another is Solazyme in South San Francisco (who would have thunk it next door to Nancy P’s district). They got military contracts for about $8.5 million for 20,055 gallons of algae fuel. That’s over $420 per gallon. A little pricey maybe , but they can probably get that down to under $300 a gallon and hey, stuff happens when you’re saving the planet.
Posted by: PappaDaddy | September 19, 2011, 7:23 am 7:23 am
If the Chinese government subsidized their solar industry with 30B, there should be a 30B tariff for Chinese manufactured solar panels. Our elected officials seem focused on whatever it takes to maximize profits to their election campaigns (e.g. tax incentives to increase executive paychecks) rather than what’s required to maximize the number of products made in the USA. Executives currently contribute to “no-compromise” non-team players in Washington knowing that a shutdown of government gives them free reign to destroy US jobs via outsourcing and H1B. Let’s get people in Washington who give us jobs in the USA for people of the USA.
Posted by: happytowork | September 19, 2011, 8:37 am 8:37 am
We’ll never be able to compete with the Chinese for anything in America ever again. They build the same solar panels as Solyndra, but at 1/3 the cost. No wonder they went bankrupt.
Posted by: blind spot | September 19, 2011, 8:38 am 8:38 am
We can thank Al Gore and Barack Obama for this fraud that has been launched on the American public. There is nothing wrong with taking care of the enviroment but when you use scare tatics to force legesilation for green mandates than this becomes criminal.
Posted by: billy bob | September 19, 2011, 8:45 am 8:45 am
The sad part of this story is that no one will investigate this sham. This will be squashed like everything else illegal done by this administration. Done in good Chicago tradition.
Posted by: Kathy | September 19, 2011, 8:51 am 8:51 am
One company going bankrupt doesn’t mean investment in green jobs is not a good thing. Thousands of companies go bankrupt every year. That was just probably a bad company. Lots of others that will succeed.
Posted by: Sandy | September 19, 2011, 9:27 am 9:27 am
This news will warm the Polar Bear and Al Gore.
Posted by: msnbc | September 19, 2011, 9:27 am 9:27 am
One company going bankrupt doesn’t mean investment in green jobs is not a good thing. Thousands of companies go bankrupt every year. That was just probably a bad company. Lots of others that will succeed.
Posted by: Sandy | September 19
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It was a company that used tax payer money which is what makes a difference. If these green job companies were privately funded, nobody would complain.
Posted by: ivan | September 19, 2011, 9:37 am 9:37 am
This is not for the government to be deciding and investing taxpayers money. If it’s a good investment than capitalist will invest their own money. No more taxpayer money being spend by Obama to pay off his fundraisers and donors.
Posted by: Freedom | September 19, 2011, 9:39 am 9:39 am
From IStockAnaylst, Oct. 7, 2008: “–In late 2007, Solyndra was one of 16 clean-tech companies deemed eligible for $4 billion worth of loan guarantees from the U.S. Department of Energy. Tesla Motors, the Silicon Valley electric carmaker, and Oakland’s BrightSource Energy, a builder of solar-thermal plants, also made that list. “
Posted by: ATTITUDE | September 19, 2011, 10:18 am 10:18 am
I agree that green companies are essentially a fraud. If there was true market demand for the product that could be efficiently produced, then companies like this would spring up everywhere.
Posted by: jablabla | September 19, 2011, 10:18 am 10:18 am
Oh please. We have a history in this country of helping start industries and it’s part of what made us so great. The problem with green is financing as nobody wants to loan to it. Hence George W. Bush choosing to do it.
Posted by: ATTITUDE | September 19, 2011, 10:21 am 10:21 am
Until Green technology can compete with fossil fuels, there is no point investing more and more on companies, R&D yes, individual companies, no.
Posted by: snewsom2997 | September 19, 2011, 11:13 am 11:13 am
George W Bush chose not to do it.
Green energy is necessary for the future of the planet but most of it is a long way from being profitable. China can subsidize their industry with the interest payments they get from us because we try to feed and protect the rest of the planet. They don’t. They take care of China. A lesson we should learn from them.
We need tariffs to reduce import of all goods into the US and we need to stop feeding and defending everyone on the planet. We need leaders who care about the country instead of people who use tax dollars to fill the pockets of rich, elitist friends. So far neither party has provided those.
Posted by: oonogil7 | September 19, 2011, 11:20 am 11:20 am
The Solyndra Bankruptcy has shown that government support and good intentions do not make a good “Business Case”! This is why Solyndra was unable to get private funding! It should raise the question “Why if this is such a great idea can’t they find private financing”! This applies to “Green Industry” as well as “Infant Stem Cell Research”. The government’s may have “noble” goals but this is in conflict with being a competent investor!
Posted by: Common _ Sense | September 19, 2011, 11:42 am 11:42 am
The problem is with our trade policy, if the Chinese government are funding their solar plants with no pollution laws which they are then there should be a stiff tariff to bring the panels here. They had a show on (internet) the other day that showed people in China rioting due to a solar panel company completely polluting a river and killing all the fish, but you will not see it on U.S. tv due to who owns them. Either it was stealing or unfair trade policies and either way it should be dealt with. When are the people in this country going to say enough is enough, stop the greed. All the people against alternate energy will be the loudest crybabies when the gas runs out, why didn’t the government do something wha wha?
Posted by: Greg | September 19, 2011, 11:54 am 11:54 am
Common sense, you mean smart competent investors like the ones on Wall Street where we gave them 1.2 trillion dollars of tax payer money so that we would not go into a further depression? Yea it was all caused by people buying houses they could not afford and I have some great prime land for you in Somalia. The Chinese sell knock off Apple products and when Apple complained the Chinese government said they would not shut them down due to the fact it would put workers out of jobs. Too bad it’s not 1950, cause if it were there would be a whole bunch of CEO’s and investment bankers in jail for treason.
Posted by: Greg | September 19, 2011, 12:17 pm 12:17 pm
That’s where you are wrong. China is making major investments in Africa and South America. Don’t you know how to search on a computer?
Posted by: blind spot | September 19, 2011, 12:22 pm 12:22 pm
The only way to get our country going again is by eitherto quit buying Chinese products or simply nuke them out of business.
Posted by: blind spot | September 19, 2011, 12:24 pm 12:24 pm
The president had nothing to do with the failure of Solyndra. Over the centuries the U.S. has lost trillions on investments in this technology, that idea, this concept or that new industry. Here is what top authorities believe helped Solydra to fold: 1. Cylindrical modules are not as competitive as flat modules – they cost too much more to make & to retail; 2. The market collapsed for modules, causing prices to drop to $1/W or so, which is out of the range of solyndra – every module they made cost them money. The market collapse is because of the over-supply of Chinese module production – about double the actual size of the still growing market demand. Reliable Source!
Posted by: jabberjaw101 | September 19, 2011, 1:45 pm 1:45 pm
If Solyndra was a great idea… the market (investors as a whole) would have beat a path to invest in it. Only the Obama administration would make such a FOOLISH and possibly CRIMINAL investment in Solyndra. Follow the money. Obama contributor was connected. Even Michelle Obama was connected to this one. I am sick and tired of Democrats and Republicans using the American taxpayer as their personal piggy bank. Vote them all out. Every one.
Posted by: Tex Geoas | September 19, 2011, 1:47 pm 1:47 pm
What’s stunning to me is how much more the posters know about this topic and understand about this topic, than the “reporter” who wrote the article. The media is supposed to be helping to educate the public and protect our liberty by enhancing our citizens’ understanding and awareness of events and issues. If the media devoted themselves to understanding and communicating instead of promoting their own political philosophy, they could probably do the far more important job and they might regain the trust and respect of their fast dwindling audience. Frankly, I won’t even read a column that doesn’t allow comments because I know I won’t know what’s actually going on without the readers’ input.
Posted by: Jo Gregg | September 19, 2011, 2:38 pm 2:38 pm
Why is there so much criticism of loan guarantees for renewable energy when the government has a $1.2 trillion portfolio of loans and loan guarantees it provides to farmers, ranchers, exporters of oil and gas equipment, jet planes and a host of other products and services, home buyers, schools and others? Not to mention the billions of dollars ordinary taxpayers pay for failure when oil and gas companies don’t find oil and gas in the form of tax expenditures and other subsidies to the oil and gas industry. Stimulating investment with loan guarantees, according to the Congressional Budget Office, is by far a better use of taxpayer dollars than tax cuts to wealthy individuals or corporations. Let’s keep our eyes on the prize — developing and commercializing innovative technologies for the 21st century. Its the kind of thing the US government has done repeatedly and it pays off as long as we understand there may be some failures along the way — hardly surprising.
Posted by: RenownedGuest | September 19, 2011, 5:39 pm 5:39 pm
Say, wouldn’t the free market let this stupid deal go under just as it did, but without wasting half a billion in tax dollars? Obamanomics really justifies it’s critics better than it’s critics do. I remember pointing out that this kind of thing was going to happen by design and then when I found out about Van Jones, I knew the nation was truly owned by Obama and his disciples would cover for him. I also said that it couldn’t be covered up forever and eventually it would all be exposed. This is part of it. There’s a lot more to be exposed and it’s coming… lots of it.
Posted by: TexBork | September 19, 2011, 6:14 pm 6:14 pm
Four more of his investments into green jobs have gone bankrupt. This madness has to be stopped soon before he ruins the whole country with his rules, regulations, no drilling, go wild EPA, no jobs and more taxation and spending.
Posted by: Freedom | September 20, 2011, 4:17 pm 4:17 pm
There is no such thing as a government “investment” in green jobs. Do not be deceived. Any such talk is nothing more than a wasteful, anti-American, abuse of your money. It is always true. Not because I said so, but because it simply is. Investment means putting your own private money, willing, into an idea that you think will turn a profit. The government doesn’t do that. It cannot, no matter how it phrases the words. Now you know!
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