Yes, More Solyndras for Clean Energy

The solar company failed, but the decision to invest in it was the right one

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Illustration by James Yang for TIME

The Solyndra “scandal” is trotted out every few months as part of the big-vs.-small-government debate in this country, but it is not and never was a scandal. The federal clean-energy loan program that the infamous solar-panel maker was a part of was designed to finance risky ventures, and Solyndra was a reasonable risk: an innovative manufacturer with huge private backing and an opportunity to transform the industry. But the industry transformed itself first. Silicon prices plunged, Solyndra’s advantages vanished, and the firm went bust. It happens. The Bush and Obama Administrations both selected Solyndra from 143 applicants for the program’s first loan, and investigators found no evidence that political interference made that happen. Yes, a White House official wrote “Ugh” in an e-mail when she heard about the $535 million default. What was she supposed to write?

But no matter how often independent fact checkers debunk charges of crony capitalism, Washington Republicans won’t be deterred from pushing a No More Solyndras Act, vowing to kill the loan program. Mitt Romney is basically running a No More Solyndras campaign, attacking Obama’s entire green push as a payoff to donors. Government aid isn’t supposed to guarantee success; subsidized farms and entrepreneurs with Small Business Administration loans fail all the time. According to one White House official, some students who receive Pell Grants end up drunks on the street. Still, Solyndra has become shorthand for Big Government sleaze.

There’s a legitimate debate to have about Solyndra and green industrial policy, but it’s not the debate over imaginary corruption we’ve been having. For example, economists know public investments can crowd out private investment. Romney once tried to make this case, claiming handouts in Obama’s stimulus to firms like Solyndra were “killing” solar energy. But he was wrong. Solar power has increased over 600% since 2009, partly because of the low prices that doomed Solyndra. The installer Solar City is now preparing to go public. As I explain in my new book, The New New Deal: The Hidden Story of Change in the Obama Era, the $90 billion for clean energy in the stimulus actually crowded in private investment, luring an additional $100 billion in matching funds from the sidelines.

Much stronger arguments can be made against government support for manufacturing. Even Obama’s economists warned it would be wasteful to finance inefficient factories in the U.S. And it’s tough to compete with countries like China, which pumped $30 billion into its solar manufacturers in 2010. In fact, the U.S. loan program mostly supported relatively safe projects generating renewable power, which is why independent reviewers have concluded that its reserves will easily cover Solyndra-style losses. The stimulus created a brand-new battery industry for electric vehicles and scores of factories making green stuff.

And yet Republicans haven’t argued against subsidies for manufacturing. In fact, they’ve argued that the stimulus shipped manufacturing jobs overseas, which is ludicrous. It has increased the domestic content of U.S. wind turbines from 20% to 60%. Politics aside, that’s a good thing. It would be a shame to trade our dependence on foreign oil for dependence on foreign turbines, solar panels and lithium-ion batteries, all products that were invented in the U.S. Many scientists and engineers believe that as high-tech manufacturing drifts overseas, our culture of innovation will follow it. And it’s expensive to ship a wind turbine overseas. If we want clean energy, we’ll need a domestic supply chain.

This is the real debate: Do we really want clean energy? Government subsidizes lots of things, from agriculture to postal delivery, and it has jump-started many industries, from aerospace to info tech. Republicans accuse Obama of “picking winners and losers,” but what he has picked is the game itself, reducing fossil fuels, which will reduce our emissions and our vulnerability to price shocks. The stimulus poured unprecedented cash into wind, solar and geothermal power, electric vehicles, biofuels and other clean-transportation plays. It subsidized hundreds of technological and entrepreneurial strategies so the market could pick the winners and losers.

Solyndra was one of the losers, but the winners might change the world. No More Solyndras is just another way of defending the fossil-fuel status quo. Ugh.

216 comments
JohnDavidDeatherage
JohnDavidDeatherage

Subsidies distort markets and puts the government in the position of picking winners and losers.  A better solution is to tax the negative externalities of dirty fuels, a carbon tax, increasing gasoline taxes...

iammoe
iammoe

The solar company failed because solar power doesn't work! How many zoning regulations allow for a 40ft wind generator in your neighborhood? If you live anywhere close to the 38th you need more than just PV panels. Look up how many solar hrs are at your location then run the numbers. Paybacks of 30 to 40 years are crazy.  If you live in Florida you might be able to get by with a passive system but about the 38th you need brute force.

TroyOwen
TroyOwen

@iammoe Ever hear of a solar PLANT?

They do work and are being built in 5 states.

JohnDavidDeatherage
JohnDavidDeatherage

@TroyOwen not without subsidies....  I like alt fuels. We need to tax dirty fuels appropriately. Solar could exist then without government supports.

JohnDavidDeatherage
JohnDavidDeatherage

@TroyOwen @JohnDavidDeatherage 10 dollars a gallon? Exaggerate much?

Solar does work but its not price competitive with coal or NG fired plants. Coal is cheap only if you don't tax the pollution.

The problem is the government gaming the system. The pollution from dirty fuels like coal is not taxed so the coal industry supports the government during elections.  Alt fuels depend on subsidies so they too support the government during elections. Both sides are "played" for money.

Why does the government support both dirty fuels and green fuels? Campaign contributions from both.


TroyOwen
TroyOwen

@JohnDavidDeatherage I agree with you on that. But solar DOES work.

How much would you be paying for gas if it wasn't subsidized? (About 10$ a gallon.)

The solar thermal technology behind Ivanpah—which is being jointly developed by BrightSource Energy, NRG Energy and Google—uses thousands of mirrors to reflect sunlight. That light is collected in one of Ivanpah’s three solar towers, where the intense heat transforms water into steam. That steam is piped to a turbine that generates electricity. It’s the same basic technology behind a coal or natural gas plant—only the sun provides the heat.

Ivanpah also has the advantage of producing electricity on a much smoother curve than solar PV, which means it can keep generating power later into the day. But Ivanpah, which should go fully online before the end of the year, has something else: sheer beauty.


Read more: http://science.time.com/2013/06/13/the-power-and-beauty-of-solar-energy/#ixzz2aeYPw6Uw

iammoe
iammoe

It seems strange that nobody has made any reference to Combined Heat and Power Systems and Net Metering, we here in Kansas have had one of the hottest summers on record and are still running off of banked Kwh’s at retail rates.  Why is it all about technologies that don't work and the ones that do get no attention whatsoever? We are getting our CHP systems up and ready for another winter of heating and Kwh production.

Mike Straub
Mike Straub

One bad egg doesn't make the egg industry bad for everyone, and if we all we're judged on one bad investment, well then I for one would be banned from ever putting money in the markets. Solyndra failed on it's own, and was a bad move by Washington decision makers.  But literally hundreds of other energy companies thrive every day, with or without government help.  Clean energy grows because the world is calling out for as much reliable, affordable power as it can get, and the right technologies that meet market needs will thrive today and for years to come.  One power source gaining momentum today is Ocean Thermal Energy Conversion (OTEC).  It creates an endless flow of power from the temperature difference in shallow and deep water.  It can be a dramatic life improver for millions living in tropical locations around the world, and just the kind of innovation that will thrive for generations.

Lots more on how it works at The On Project.

http://www.theonproject.org/ot...

Water Damage Boca Raton
Water Damage Boca Raton

I truly adore what you had to say. Keep going because you definitely bring a whole new voice to the subject.

gen_nathanbforrest
gen_nathanbforrest

Taxpayer supported the spacde industry why did we not we support Solyndra ?

Starshiprarity
Starshiprarity

I'd like to write a comment supporting the author but the critics down here don't seem too concerned with the facts...

MrReasonable
MrReasonable

The author of this article does not seem too concerned with facts.

manapp99
manapp99

A more effective way of capitalizing start up companies whether they be clean energy or otherwise is venture capital. There is no cronyism when the goal is to make money. Money is lent with an expectation of payback so the requests are carefully screened before an investment is made. Clearly the documents show that the Bush administration looked at Solyndra and saw that it was not a good investment so they backed away. Obama, on the other hand, was elected on money he vowed not to take from the private sector and had to payback donors. Thus Solyndra was resurrected from the scrap heap and the taxpayers got the 1/2 billion dollar bill. This is not unique to Obama or the Democrats but is unique to government investments. This is why Americans pay too much for government procurements at every level. Cronyism with other peoples money is rampant at all levels of government and journalists certainly should not write articles condoning it. Whose side is the Times writers on? Perhaps your deluded in thinking one of those great government deals is coming your way for your support. LOL

GarandFan
GarandFan

NewsFlash! Michael.  Solar is only advancing because of GOVERNMENT SUBSIDIES.  You know, those EVIL SUBSIDIES that liberals despise.

Dress it up any way you want, Solyndra was just another example of crooked Chicago style politics.

JCRocks
JCRocks

No, we don't need more Solyndra-type projects.  We don't need the government picking winners and losers that we, the American taxpayers, have to pay for.  Private industry will, and should, lead in the development of new energy development and most energy companies, including oil companies, are exploring alternate energy programs.  As with fracking and oil-shale, private industry is the only way that new energy programs can work in this country.

TroyOwen
TroyOwen

@JCRocks  But they won't, they want the old, we want the new.

Get it?

Brian  Cunningham
Brian Cunningham

With ideas like this, perhaps TIME should change the heading to "Monkey Business." It's shame to see a once-great magazine in the throes of death with crap like this.

Eric Langdon
Eric Langdon

Hogwash! These investments may make progressives feeeel good about them selfs but are wrong for the tax payers of America.

Yuval Brandstetter
Yuval Brandstetter

It would be a shame to trade our dependence on foreign oil for dependence on foreign turbines,

Read more: http://business.time.com/2012/...

That is utter nonsense. Foreign oil is not made by the superior competitive genius of friendly countries. It is pumped from the ground of nasty regimes who use their ill-gotten lucre to spread terror on earth. Turbines are a product of competitive democracies who strive for excellence. What you are saying is that American mediocre products should be subsidized so that superior  Danish products be not installed. That is un-American, anti-business, protectionist nonsense. Should Danes subsidize a farm-machinery manufacturer so they dont buy john Deer?

weref
weref

Fact: Solyndra executives all were paid huge salaries and after going bust were paid huge bonuses! We the people got hosed!

Alan O
Alan O

Where does Time magazine find these IDIOTS???????????

Bill Tripodi
Bill Tripodi

Stupid article and premise.  Solyndra went down because it was selling solar panels for less than they cost to produce. Ended up the Chinese are building them for way less.

 Did you see that the  all the rhetoric about building roads and bridges and the jobs they produce here in the US are going to Chinese firms and workers HERE IN THE US?

Michel Ouellette
Michel Ouellette

Pretty dumb decision to invest in a company that had  business model  to sell solar panels for significantly less than it cost to manufacture.    I guess i your only experience in  isas a 'community organizer', that wwould look like a smart investment.

GregAbdul
GregAbdul

The critics here are universal in their inability to address Mr. Grunwald's points. You attack me, saying I am bringing up race when, clearly, conservative hate of Obama is not about race. Mr. Grunwald has made a rational argument: Oil and gas are subsidized and regulated by the Feds. The federal government does hand out money to businesses on a regular basis. Sometimes the businesses fail. When we subsidize farmers, are we "picking winners"? When the President says we need to move to green energy because it will lessen our dependence on Saudi Arabia and create American jobs, I don't see any right winger here refuting Mr. Grunwald's facts and assumptions from those facts. I went from Mr. Grunwald's points to say, the arguments against Obama are red herrings. If you really had a principled opposition to government subsidizing business, you would want subsidies to end for big oil and big farms. But funny.....you don't mind the federal government subsidizing businesses that have been subsidized through about five Republican president over the last 50 years. This thing where you only get upset when Obama does it is clear evidence that what conservatives claim is the issue is obviously not the issue. Don't jump at me and call me stupid for saying conservative whites can't stop being racist. My evidence is this article. Refute Mr. Grunwald with a real argument. Quit the nonsense about Obama stealing 500 million federal tax dollars. Hot air accusations are not facts. If your accusations were factual, then your congressmen really suck because no one is coming anywhere near an impeachment process. You have accusations and NO case. Why is it that you only get agitated when Obama is the one who is deciding which businesses get federal subsidizes? Don't tell me you aren't racist. Your actions sure smack of it. Show me rationally why you are so inconsistent when it comes to what policies you don't like versus this constant  complaining about the president who just happens to be black. I am not stupid. I know a fake argument when I see one.

ronchris
ronchris

 Oil and gas are not subsidized.

Perhaps you are referring to the tax depreciation for extraction that applies to all industries such as drilling, mining, quarrying, etc?

Manzoa
Manzoa

We need you to have a psychiatric evaluation.

donzi_boy
donzi_boy

The argument over alternative energy support by government is stupid. The idea was politicized by Barack Obama when he promised 500,000 green jobs as a result of investment in green energy.  Like all politicians he got carried away with the poetry of something he didn't understand. In one state of the union address he mentioned cancer research that would eliminate cancer within 10-15 years.  Also a pipe dream, though amazing progress will happen.

Government spending on Ramp;D is critical in the early stages of any new technology, whether that be alternative energy, medical cures, space exploration or weapons.  Only lunatics will deny that, though there are plenty in both the Republican and Democrat branches for the other guys kool-aid.  The true idiocy is to expect something so immature that the private market won't invest in it to produce millions of jobs.  Venture cap investments hit home runs 1 in 7 times, Bain was the "bomb" of VCs because they seemed to win 1 in 3 times with companies that were on their death-beds.

The reason that government VC activity almost always fails is because they rarely demand that the investee have a lot of skin in the game.  That's because they're giving away our money while true VC's are playing with their own and that of their investors.  Government has no business pretending to be in the venture capital game!

Steveglen
Steveglen

First, it isn't just Solyndra:

List Of Failed Green Energy Jobs – By Obama

Solar Trust of America: FAIL

Bright Source: FAIL

Solyndra: FAIL

LSP Energy: FAIL

Energy Conversion Devices: FAIL

Abound Solar: FAIL

SunPower: FAIL

Beacon Power: FAIL

Ecotality: FAIL

A123 Solar: FAIL

UniSolar: FAIL

Azure Dynamics: FAIL

Evergreen Solar: FAIL

Ener1: FAIL .

The list is longer now, including Amonix and others, as well as cars like Fisker and the Volt.

This is where many of our Stimulus $ billions went.

What they all have in common is that most of their CEOS bundled $500,000 campaign donations for obama.

Second, obama is doubling down on green energy investment if he gets a second term.

TroyOwen
TroyOwen

@Steveglen  But 1300 other "green" business the DOE gave loans to are doing fine.

You're a troll.

MrReasonable
MrReasonable

"The Bush and Obama Administrations both selected Solyndra from 143

applicants for the program’s first loan, and investigators found no

evidence that political interference made that happen."

This is a total lie.  The Bush administration considered Solyndra, but rejected it in 2008.  Solyndra applied again under Obama in 2009 and was awarded a $535 million loan guarantee.  Solyndra threatened bankruptcy in late 2010 and the Obama Energy Department agreed to illegally restructure their loan so as to avoid embarrassment before the election.  On December 7th, Solyndra executives met with DOE officials and

Obama donor and Solyndra investor Steve Mitchell, who represented Obama

megadonor and Solyndra investor George Kaiser.

Mitchell and Kaiser came into the meeting willing to commit another

$75 million to Solyndra, but only if DOE agreed to prioritize their new

investment (and the remaining unspent taxpayer money) over the already

spent taxpayer money. In other words, if Solyndra eventually went

bankrupt Mitchell and Kaiser would get their $75 million back first, and

taxpayers would have to come second.  This was illegal and was clearly intended to benefit donors to Obama as well as Obama himself.

How does Time get away with allowing such lies to be printed in what was once a respectable publication?

Richard
Richard

Obama's energy policy is result of  brilliant thinking by smartest guys in room.  

“Somehow we have to figure out how to boost the price of gasoline to the levels of Europe”

--Steven Chu

Secretary of Energy 

d h
d h

Imagine my surprise to find that Time magazine still exists ...

Osama0bama
Osama0bama

Time is lucky to still be considered a penny stock. Kind of like "the paper of record" which is only still alive thanks to a super high-interest loan from a Mexican loan shark. The "great" icons of the Left are crumbling all around them. It will take years of true Conservative leadership to clean up the 80-years-in-the-making disaster that they and the labor unions have left us.

Greg Gray
Greg Gray

Wow this guy is clueless. How did he get a job? China and India are producing so much co2 atm which is THE contributor in global warming. In the past decade both countries have doubled their usage of coal and oil as well as natural gas. Of the three natural gas produces the least CO2. If we don't find a CHEAP way to reduce co2 we can as a country try all we want to use clean energy as the earth continues to warm up to unprecedented levels. But there is no chance India and China will be willing to impede economic growth in the name of clean energy. If its not cheap don't waste any ones time! Immediately our focus should be on reducing CO2 by providing cheap natural gas or develop cheap technologies that can make using coal and Oil plants cheaper. Liberals continue to iignore the economic motives to their detriment in the face of real life costs. Yes it would be a wonderful world if countries weren't motivated by money but the reality is this is the paradigm we work in. Maybe the author could of spared a carbon footprint by saving his Pollyanna comments for him self.

joelsk44039
joelsk44039

Until power storage technology has made a substantial leap in improvement, solar power will never be  major source of electricity.  There's nowhere in the world where the sun shines at night.  Solyndra's failure was easily predicted.  The loan guarantee that Obama's Energy Department made was easily predicted to cost our taxpayers a bundle.  Crony capitalism at its absolute worst.  Please, please don't be duped again. Defeat Obama.