The ugly media circus and congressional investigation of Solyndra were scripted and planned long before the solar company filed for bankruptcy.
I know, because in March, at the Eco:Nomics Conference, I watched Kim Strassel of the Wall Street Journal editorial page spend two days trying to get executives from companies like Dow Chemical, DuPont, and Ford to admit that federal support for innovation and competitiveness was unworkable, arguing that the American public would never tolerate the failure of some of these projects.
They didn't give Strassel what she wanted, but the opportunity to tell that story did present itself on the final day of the conference when Kleiner Perkins partner Ray Lane shot back, "That depends on what you write, Kim. The public will be just fine if you tell the truth."
But of course telling the truth was not the game plan. When Solyndra filed for bankruptcy, the pre-scripted media circus rolled out. The strategy was simple. The very first time that a clean-energy innovator stumbled, and fell back on its Department of Energy loan guarantee, opponents of clean energy would pounce -- with absurd congressional investigations, manufactured scandals in the media, and political theater on Capitol Hill -- all to undermine public support for clean-energy technology and the important role of the federal government in supporting that innovation.
It's important to understand what the Solyndra bankruptcy actually represents -- that without failure and without bold risks, we cannot innovate.
The DOE loan guarantee program unblocked hundreds of billions of dollars of private investment in new, clean-energy technologies. That's hundreds of billions of dollars in investments to create jobs and compete with China's clean-tech industry -- dollars that would never have seen the light of day without federal backing.
To match these private dollars, the DOE loan guarantee program was budgeted to lose $2.5 billion total upon the failure of some of these projects and companies -- just as private bankers set aside loan reserves. So far, the DOE program has used less than 20 percent of this budget -- hardly the sign of a reckless program that didn't do adequate diligence.
Loan guarantee "calls" are particularly likely for manufacturing projects like Solyndra. Imagine that there are three promising new companies with technologies that might enable the U.S. to compete with China for dominance in the solar-panel manufacturing market. There are two risks: That the technologies might not work is an obvious one. But even if all three technologies work, one is likely to come out as the cheapest. That winning technology will take off, with enormous benefits to the U.S. economy, but the two companies with the "also ran" technologies might well fail.
Since private investors cannot guess which of the three technologies will win the race, it's hard for any of the companies to find investors willing to take the plunge. Federal loan guarantees make it possible for private investors to back all three companies -- even knowing that in the end, only one company will win out in the market. Manufacturing is precisely the area in which the U.S. is failing to compete with China and Europe -- it's the key to both environmental sustainability and economic recovery.
So failures are part of the plan -- and failures are essential to innovation. If anything, the Obama administration didn't make enough manufacturing loan guarantees in 2009 and 2010.
Clean-energy naysayers and opponents of the loan guarantee program are essentially acting as if the failure of the company that made Stanley Steamers back in 1924 was a sign that Ford and GM were bad investments, and that America should have stuck with horses. But federal innovation programs could work better -- except that conservatives in Congress have deliberately crippled these by not allowing them to behave like businesses. (For example, the Department of Defense, which needs highly specialized military biofuels for aviation to get off imported oil, is not allowed to purchase biofuels from a factory that has benefited from federal loan guarantees -- even though such a factory can only sell specialized biofuels to the Department of Defense -- it has no other customers. This is equivalent to General Motors deciding that it won't buy parts from suppliers that it has helped to meet GM's technical specifications. Insane.)
Then, of course, conservatives turn around and complain that government isn't businesslike! Their real fear is that if they let government be businesslike, people would come to trust government.
But why did they care so much? After all, the federal loan-guarantee program was expiring only a few weeks after Solyndra's banktupcy. Why make this a cause celebre? Because, as the right knew when it made its plans to jump on the first DOE loan-guarantee call, it could use the Solyndra case to do a lot of collateral damage:
As icing on the cake, anti-clean energy members of Congress hoped to kill some of the most exciting loan-guarantee candidates that were still in the pipeline. They succeeded, sadly.
A potential loan guarantee for Solar Strong, a privately funded initiative to put solar panels on 166,000 units of military housing at 124 bases in 33 states, would have unlocked a billion dollars in investment and provided jobs for thousands of veterans while doubling America's solar-rooftop capacity. But in the aftermath of Solyndra, DOE officials, swamped by responding to the congressional witch hunt, couldn't put Solar Strong over the top.
Tragic? Not if your only goals are to defeat Barack Obama and keep the nation addicted to fossil fuels.
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Brendan DeMelle: Keystone XL Pipeline Crony Corruption Infographic
someone should be jailed....
good article but....
The central argument for the loan program seems to be fostering innovation since it is clear that this level of financing is not going to do anything on GHG reduction.
Please explain how $8 billion spent on capital equipment installation (solar module utility generation plants or fab plants) with 25 year lifetimes fosters innovation?
Wouldn't innovation fostering require this money to be spent on developing new technology not deploying uncompetitive technology that already exists?
by the way not exactly a huge surprise that KP is rushing to prop up the solar financing gravy train. they are heavily invested in economically ineffective solar technologies. they have to get their 10x ROI somehow.
Going to the moon created lots of new tech. Yes or no?
Even internally, the DOE did not like this company.
But what did NASA ever produce?
What does the military spending create but destruction, yet, we got the internet out of that.
Innovative ideas are normally rejected by the status quo bureaucrats, like the ones at the DOE which is mostly oriented to nuclear, which got 54B$ in loan backing for old design LWR building.
We got 100MW of installed solar out of this deal for 5-10$ per watt. That's an ok price, but the Chinese have invest more than us, and they undercut our prices.
You are being played by the GOP.
The only problem being it will be just 15 jobs...costing tax payers a mere $80,000,000.00 PER JOB.
EIGHTY MILLION DOLLARS PER JOB
I wonder how many people/families we could have supported for $1.2 billion??????? And for how long..
Your math is delusional.
"SunPower has recently announced a number of projects around the world that utilize its patented solar tracker technology. The company maintains a market-leading position in Spain with more than 61 megawatts installed or under construction; recently completed a 2.2-megawatt solar power plant in Mungyeong, Korea; and the largest solar installation in the U.S., the 15-megawatt Nellis Solar Power Plant in Nevada.[8][9]"
Ya think that's where the money went?
God help us, if your are an example of our educational system.
The Tonopah solar project just received a loan guarantee of 747 million dollars. This project is expected to generate 480 million KWH per year. It uses 17500 mirror assemblies (64 square meters each, over) 16,000 acres. It will have a 640 foot tower. Operating costs will be 10 million a year. Energy stored in molten salt will be able to produce electricity for 10 hours with no sunlight.
It would take 12 of these plants (assuming they operate as expected) to produce the same electricity as one nuclear reactor.
The revenue for 480 Million KWH would not pay the interest on a 747 million dollar loan.
The fundamental problem of solar is that it takes too much in materials, too much land and doesn't produce enough electricity.
Anyone with half a brain could see the Solyndra failure coming.
To produce the same amount of electricity as does our 104 nuclear reactors, it would cost $2.5 trillion and use over 5,000 square miles of land. And this doesn't include energy storage (which cost more than generating electricity conventionally.)
The emperor has no cloths.
That said, silicon-based solar panels are NOT a solution, for dozens of reasons. Obama should appoint a National Energy Independence Commission to recommend an energy independence strategy that maximizes domestic jobs. From my work in this area, the best solutions are:
1) Solar-thermal generation - good for utilities, and being used in California
2) Natural gas and liquified natural gas - good for job creation, centuries of reserves
i agree with the gas ideas. we have plenty and its cleaner than coal
Is converting coal to crude oil an innovation?? No question.
Is converting natural gas to crude oil an innovation??? Yep.
Is mining methane hydrates off shore an innovation???? Indubitably!
Final Question: Which of the innovations above does the political left support? None!
The US needs a carbon tax to replace taxes on production, labor and investment and thereby grow jobs.
Unfortunately a carbon tax is not POLITICALLY feasible in the US because the global warming crowd has bungled the sales jobs for a meaningful carbon tax by relying on shyster salesmen such as algore, Obama’s crony capitalism, the UN and East Anglia Univ. as well as conflating climate change with “social justice” and global income redistribution.
You want to do your side a favor? Deal with these questions honestly then get in touch with the LMADster:
1) If the solution to too much CO2 in the air is to use less fossil fuels, why is NOT the solution to too much federal debt to use less government?
2) If the optimal amount of CO2 in the atmosphere is 350 ppm (current=389 ppm) because that is the optimal concentration of CO2 in our atmosphere that life as we know most likely can continue, why is 18% of GDP (current =25% GDP) NOT the optimal size of the federal government since that is the size that most likely yields maximum economic growth?
Plan Blog: letsmakeadeal-thebook.com
Now I have a question. As you know, every penny that a person or company "makes" comes from society. So, why doesn't society have the right to get some of it back?
Another question: Do you think democracy should be defined as "government of the rich, by the rich and for the rich"? What gives you the right to change Abraham Lincoln's words?
The Westinghouse AP1000 nuclear reactor is innovative.
Fracking is innovative.
LNG is innovation.
Liquid Fluoride Thorium Reactors are innovative.
Deep water drilling is innovative.
It seems the left only likes innovation which has poor potential - like solar and wind.
Partisanship gone mad.