What went wrong with the U.S. loan guarantee for the now-bankrupt California solar company Solyndra? Today, the company’s two top officers are supposed to appear before a House investigative committee to explain. But their lawyers say they’re going to assert their Fifth Amendment right against self-incrimination, so it might be hard to get the full truth.
This New York Times story delves into the details of why the Bush administration put the brakes on the company’s $535 million guarantee and why the Obama administration stepped on the gas with its stimulus program. The story reports that Solyndra did some serious, and misleading, lobbying that other loan guarantee recipients – like Solopower, the company that is building a flexible solar manufacturing plant in Portland – didn’t do. Lobbyists were assuring government officials that business was good when it apparently wasn’t.
“The government’s backing of Solyndra, which could cost taxpayers more than a half-billion dollars, came as the politically well-connected business began an extensive lobbying campaign that appears to have blinded government officials to the company’s financial condition and the risks of the investment, according to a review of government documents and interviews with administration officials and industry analysts.”
Industry analysts, and government officials in the Bush administration, had concerns about the company’s viability because its business plan depended on its competitors having to pay a high price for silicon. And silicon prices were predicted to fall since 2000. They actually started to dive in 2008. By March 2010, even the company’s accountant had doubts about Solyndra’s viability. At that point, the feds could have pulled their support. But lobbyists were assuring government officials that business was good.
Earlier this year, the company restructured its loan to put the government behind other investors for debt collection. That makes some officials wonder if the company was deliberately misleading the government.
All of this looks bad for Solyndra and bad for the Obama administration, but solar supporters adamantly argue this is not a commentary on the state of the solar power in general (though the fierce competition from China’s heavily subsidized solar industry is a concern for U.S. companies).
A Time Magazine piece entitled “Don’t be fooled by the Solyndra circus, solar is booming” noted:
“The solar industry is on fire, thanks to the same collapse in prices that doomed Solyndra.
In just the last two months, about 7,000 megawatts of new solar projects were added to the U.S. pipeline. That’s the equivalent of seven nuclear reactors, which is seven more than we’ve built in the last three decades. And that doesn’t include residential projects, like the unprecedented “Solar Strong” effort to install photovoltaic panels on 160,000 rooftops on military housing that was just announced last week. The U.S. solar market doubled last year, and it’s expected to double again this year, even though many states are reducing their subsidies. How many other industries are growing that fast in this economy?”
But the Solyndra bankruptcy inevitably raises questions about whether the Obama administration has properly vetted the other companies that got federal loan guarantees. Like First Solar, which recently reported it will miss a loan guarantee deadline. And Solopower …?