A rough period for supporters of U.S "cleantech" industries and policy supports just got rougher with the announced impending bankruptcy of Solyndra Inc., a California maker of solar modules that received a $535 million loan guarantee from the U.S. Department of Energy.
Inevitably, tough new questions are going to be asked about the wisdom of clean energy subsidies and loan guarantees.
Inevitably, a new round of second-guessing will soon question whether the U.S. can or should compete in globalized manufacturing industries, whether in cleantech or other areas.
Which is as it should be -- within reason. Policymakers absolutely must study what went wrong at Solyndra in business terms, but it is also imperative that they not overlook the strengths and opportunities of the emerging "clean" economy, lest America fall further behind in this crucial sector of the global economy.
To the first point: There is no doubt Solyndra's collapse appears to counsel humility about the challenges of scaling up new technologies in tumultuous, unforgiving global markets. After all, while some like Matt Hourihan of the Information Technology and Innovation Foundation have noted the role of aggressive Chinese industrial policy in driving solar module prices down, others have argued that Solyndra simply bet on the wrong low-silicon / higher-priced technology and got busted when silicon prices declined in recent years with the world recession. Future policy needs to get better at assessing technology pathways and market trends.
Likewise, to the extent there were irregularities in the Loan Guarantee Program process that awarded Solyndra its consideration (multiple problems have been uncovered by the Government Accountability Office), aggressive steps should be taken to ensure the integrity of this and other government investment programs. Investing in fast-moving technology, whether by government or the private sector, is tough work that requires impeccable rigor and no special pleading.
Nonetheless, it would be a serious mistake to over-interpret regarding the Solyndra crack-up, whether to generalize about the solar industry and cleantech or to broadly indict particular technology and development policies.
Begin with solar and cleantech: To be sure, several companies with more expensive products like Solyndra have faltered this summer, citing price declines and Chinese competition. Yet for all that the U.S. solar and broader "cleantech" industries remain crowded, vibrant, and growing as producers and innovators proceed rapidly down relevant technology, price, and scaling curves.
Solyndra's more expensive technology failed in the market because conventional photovoltaic companies -- including many in the U.S. -- have so dramatically driven down the price of conventional panels through technology and process gains, as notes solar executive and blogger Arno Harris. In that connection, the Brookings-Battelle Clean Economy database my team prepared in developing our recent "Sizing the Clean Economy" report identified 121 different solar photovoltaic manufacturing companies operating in the United States last year. Through the decade employment at solar PV and more general "cleantech" establishments has been growing 10 and 8 percent a year -- more than twice as fast as that in other industry establishments.
Also relevant is a new study by GTM Research for the U.S. solar industry that found that the U.S. is a net solar exporter, with a positive trade balance of $1.8 billion. While many of the modules are imported, nearly 80 percent of the final costs for solar photovoltaic systems goes to U.S. companies. The U.S. even has a positive trade balance with China in this subsector; because of exports of polysilicon and capital equipment.
As to the matter of policy, the blow-up of one particular loan guarantee to one particular company with one particular technology should not be spun into any broad new chilling of U.S. efforts to compete more aggressively in cleantech and other advanced manufacturing industries.
The growth of manufacturing- and capital-intensive industries often requires government engagement. And yet, competition and innovation inevitably involve creation and destruction. That means it's a fact of life that, as awkward as it is, government efforts will need to accept a modicum of failure in order to create much greater and lasting value.
Beyond that, the fact remains, notwithstanding an imperfect loan guarantee program, that U.S. clean energy policy as a whole is -- as we argue in our recent report -- incomplete, fragmented, and uncertain.
Winning policy environments around the world foster strong and steady domestic demand for clean energy; provide patient, smart, and risk-tolerant financing; and invest in innovation. However, this nation has been falling short on all of those fronts even before the Solyndra mess. It would be a tragedy if the failure of Solyndra occasions further weakening of U.S. cleantech policy.
In the end, the failure of Solyndra should refocus the nation's efforts on getting general energy policies right; developing rigorous, market-informed finance strategies; and working even harder to rebuild the economy on a firm and environmentally responsible basis. Let's make that what we learn from the Solyndra collapse.
Mark Muro (Twitter: @MarkMuro1) is a senior fellow and the policy director of the Metropolitan Policy Program at Brookings, where Jonathan Rothwell is a senior research analyst. They are co-authors of the Brookings Institution report, "Sizing the Clean Economy: A National and Regional Green Job Assessment."
Big Green is a fail.
Kai
Tulsa billionaire George Kaiser‘s Argonaut Private Equity firm was the largest shareholder of Solyndra, which received $535 million in federal loans. The Center for Public Integrity [CPI] said on its web site that Kaiser’s firm remains a “significant financial backer of Solyndra,” Solyndra spokesman David Miller confirmed.
George Kaiser, who is also chairman of the board for BOK Financial Corporation, hosted a fundraiser for Obama in 2007 in Tulsa. CPI also reported Kaiser raised at least $50,000 for the president’s 2008 election effort.
the question is 1) should the government be in the business of picking winners or losers and 2) did Solyndra receive the loans as a payoff for Obama's contributors
Sounds like another Madoff deal, especially when the loans was encouraged by Obama to George Kaiser, a multimillionaire from Oklahoma that gave thousands to Obama's campaign. The GOP has a committee now investing this debacle.
2. It is foolish to force an "open-market" and "free-trade" framework on American renewable-energy enterprise that is up against a restricted and subsidized counterpart in China (and elsewhere).
3. Giving renewable energy enterprise the maximum attention and effort by our country will return multifold benefits in terms of employment, energy security, energy costs, trade deficit, intellectual capital, environmental health. These benefits will only increase over time as the technology improves.
See the Aesop Institute website for a summary of a solar induced storm that can collapse the power grid for huge areas of the nation for months.
A nuclear plant without grid power for a month is a meltdown candidate.
Multiple meltdowns would be a national nightmare and can be prevented. Minimizing the impact requires accelerating independence from the grid as fast as possible.
Solyndra's design is different than traditional PV
Installation is a snap and labor costs are dramatically lowered. yes their panels do apparently cost more to produce but their solar solution is innovative and elegant.
China is heavily subsidizing its fledgling PV industry to dominate the world over the next 50 years. Instead of really looking at the problem - the immediate response from the USA is to assess blame.
The USA needs to stop finger pointing and get down to the global economic business at hand. We are on the verge of dealing ourselves out of the game.
Eventually, I think we be privy to the inside story here on Solyndra - keep in mind they were going to sell 600 million dollars worth of product this year at higher prices versus the competition. They might have sold a billion next year. If they cannot make money on it that is one thing - I get
The USA needs to stop finger pointing and get down to the global economic business at hand. We are on the verge of dealing ourselves out of the game. "
Exactly.
the reason PV undercut it is thanks to the German feed in tariff, which created an enormously successful market for residential and small-business scale polysilicone based panels, which drove down the price. the US is still denying the success of the FIT and pretending it is Chinese subsidies that drove down prices, as a way of preventing US from implementing this winning compensation scheme (no taxpayer subsidies).
so, it's frustrating that a technology that could have contributed to the distributed generation future was not viable, but i also suspect someone, somewhere was skimming the money - it's still Big Energy, after all...