The story of Solyndra, the Silicon Valley solar technology start-up that received half a billion dollars in loan guarantees from the federal government only to go belly-up two weeks ago, has much to offer policy junkies and devotees of the eternal partisan showdown on Capitol Hill.
The drama, in this context, is typically framed with images of a boosterish President Obama visiting the company's whitewashed manufacturing plant in early 2010, touting its value as an emblem of his nascent green economy, and then, more recently, with images of newly unemployed Solyndra workers wandering out of the company's facilities -- or F.B.I. agents filing in.
That the White House may have eagerly nudged federal bean counters to approve the loan guarantees before they'd fully vetted the company's health only heightens the sense of intrigue -- as does Tuesday's announcement by Solyndra executives that they will invoke their Fifth Amendment rights and refuse to answer questions at a forthcoming congressional hearing.
In all of this, Republicans in Congress and on the campaign trail have been handed an effective cudgel with which to bludgeon the Obama administration just as the 2012 election season gets fully underway.
But whatever the value of the Solyndra debacle in political terms -- and there are surely some fair questions to be raised about the company's failure -- it's become too easy for some observers to overstate its meaning in the broader context of America's diversifying energy portfolio.
And so, some things to keep in mind:
Solyndra was small potatoes -- The Solyndra scandal "could highlight some questions -- and some that need to be asked," noted Thomas Maslin, a senior analyst for the North American solar power sector with IHS Emerging Energy Research. But the fortunes of the wider solar industry are influenced by forces far bigger than this one company. "There are greater factors at play in the actual market," Maslin said. "They weren't a major supplier."
Of course, the $535 million loan guarantee was not insignificant -- and it does represent the largest sum afforded a solar manufacturing enterprise under the DOE's loan guarantee scheme. But that program -- originally put in place by the Bush administration in 2005, and expanded as part of the 2009 stimulus act -- has targeted dozens of companies across a wide swath of industries, including wind, geothermal and solar power, nuclear generation, energy efficiency projects, biofuels, and advanced vehicles.
The Solyndra loan represents just over 1 percent of the $39 billion in loans generated by the program so far, and about 3 percent of all loan guarantees aimed at the solar industry in general. The company also received as much as $1 billion in private sector banking, suggesting that it wasn't just the DOE that saw potential in the company's technology.
Solyndra was special -- That technology seemed to make sense a couple of years ago, when the cost of refined silicon -- a key feedstock in the production of most solar panels -- was skyrocketing, commanding prices in excess of $300 a kilogram. Solyndra got around that by creating solar panels that didn't use silicon -- and investors took notice. But when the cost of that key feedstock collapsed to as little as $50 a kilogram last year, it was left holding a somewhat pricey solution to a problem that no longer existed.
China's ability to flood the market with inexpensive solar panels has also stiffened competition across the entire solar sector, and it should be no surprise to anyone that some American manufacturers will fail. Maslin called it a necessary culling of the herd.
"The reality is, it's a highly competitive environment right now, and it's a natural thing for companies like this to fail," he said. "But larger players are also moving into this space." General Electric, for example, has recently announced several hundred million dollar investments in solar. Samsung and Sharp have also taken up significant positions in the market. "These are signs that the industry becoming more mature," Maslin said.
Solar is still growing -- Indeed, Rhone Resch, the president and chief executive of the Solar Energy Industries Association, which represents some 5,000 companies in the United States, puts it bluntly: "The solar industry continues to be the fastest growing industry in the United States," he said. Data compiled by SEIA for the second quarter of 2011 showed a 69 percent increase in solar photovoltaic capacity over the same period last year.
"In the second quarter, compared to last year, the industry grew by nearly 70 percent," Resch reiterated. "Name another industry that's growing at a rate of 70 percent."
It's growing despite an uneven playing field -- Sure, renewable and clean-energy technologies are the express target of the DOE's loan guarantee program, as well as other federal tax breaks. But the bulk of those subsidies are temporary, unlike the billions in tax breaks and incentives enjoyed by the fossil-fuel end of the energy market. And those incentives have historically been generous.
One analysis, compiled by the Environmental Law Institute, estimated that between 2002 and 2008, the fossil fuel industry -- a mature sector that one might reckon should be able to compete in the free market without props -- enjoyed $72.5 billion in subsidies. Renewables drew $29 billion over the same period, though well over half of that went to makers of corn ethanol, which comes with its own list economic and environmental problems.
A more recent analysis by Bloomberg New Energy Finance concluded that globally, governments awarded as much as $46 billion in direct subsidies to the renewable energy and biofuels industries in 2009.
Fossil fuel companies earned $557 billion in subsidies.
In the United States, President Obama recently proposed eliminating $41 billion in subsidies to profitable fossil fuel companies as a way to help finance his jobs plan. That drew swift condemnations from supporters of the oil and gas industry -- and is likely to meet stiff opposition on Capitol Hill.
Meanwhile, the key incentives that do target renewables have tended to be temporary, making it difficult for the industry to gain deep and sustained traction with investors. One prominent program, which provides Treasury grants for renewable projects, is slated to expire at the end of the year.
Renewables like solar are necessary -- The justifications for spurring the growth of renewable electricity and fuel sources are myriad. Whether it's source diversity in a world of increasing energy demands set against finite fossil fuel resources, economic security in a world where political volatility can have a profound impact on energy prices, or environmental stewardship in a world where burning fossil fuels is tied to everything from lung disease to global warming, it would seem reckless to use the fate of one solar company as an excuse to hobble an entire industry.
Some members of the Republican leadership might do well to remember these realities -- even as they ask legitimate questions about how Solyndra failed and why it qualified for taxpayer help in the first place.
As Former Rep. Bart Stupak (D-Mich.), who once chaired the House Oversight and Investigations Subcommittee, told Politico earlier this week, "It almost looks like you're using an investigation to kill an industry."
Follow Tom Zeller Jr. on Twitter: www.twitter.com/tomzellerjr