Solyndra: All Is Not Lost

Among those who follow the American renewable-energy industry, the recent bankruptcy of the California-based solar-energy firm Solyndra was confusing and dismaying. Isn’t “green energy technology” of the type this firm embodies – namely solar – the new boom industry, where fortunes are there just waiting to be made? The company had even received just over $500 million in a federal government-guaranteed loan last year – which the federal government, indeed, will now have to step in and guarantee.

But things are not so simple, and few know that better than Dana Blankenhorn, a long-standing blogger and analyst of IT, of open source software, and of renewable energy. It seems that others outside the US are also curious about what happened to Solyndra, to the point that the Washington correspondent for the left-wing French newspaper Libération, one Lorraine Millot, got in contact with Mr. Blankenhorn while writing an article on the subject, which is here.

It’s an interesting one, and as a favor to Mr. Blankenhorn (whose on-line work I’ve been reading for at least a decade) and as a service both to his readers and mine, I offer a full personal translation (i.e. no Google Translate – I don’t touch that stuff) after the jump.

Solyndra, the President’s Tricky Trap

The American solar collector start-up was just declared bankrupt, two years after having received $500 million from the government.

By Lorraine Millot, Washington correspondent

“Companies like Solyndra open the way to a brighter and more prosperous future,” Barack Obama declared on the company’s premises in Fremont (California) in May 2010. Fifteen months later, Solyndra is bankrupt. Its 1,100 employees learned Wednesday morning, arriving at work, that they had no further need to show up at the factory; they would receive their last check by mail. The loan of 535 million dollars (377 million euros) that the federal government had granted in March 2009 to this start-up which promised super-performing solar-collectors in tube form, not panel, will without doubt never be repaid.

A model enterprise, “a sign of American ingeniousness and dynamism” according to the Head of State in 2010, the Solyndra problem is turning into a nightmare for Barack Obama, at the very moment when he wants to convince people – including Congress, in his address next Thursday – that he can still create jobs (especially “green” ones) even while reducing the public deficit. “We sensed from the beginning that there was something shady going on there” is the attack Republicans Cliff Stearns and Fred Upton, members of the House Energy & Commerce Committee, have already launched while opening a committee investigation into Solyndra.

“Setback.” To make things even worse, the Obama administration is basically suspected of having “favored” this particular start-up in order to reward a big contributor to the 2008 Obama presidential campaign, the millionaire George Kaiser, who was one of Solyndra’s biggest investors. “What happened here, I think, was that they gave money to people who were either contributors or big supporters,” is Cliff Stearns’ accusation.

“If Obama’s intention was to help the economy and create jobs with this loan-guarantee of half a billion dollars, it’s clear that this is a setback, and I suspect that it was even predictable,” observes Sam Wilkinson, analyst for IMS Research. The product that Solyndra tried to bring onto the market was “very good,” this analyst emphasizes – its tubes enabled the capture of sunlight the whole day long, throughout the Earth’s rotation. “The problem is that Solyndra didn’t manage to reduce production costs,” explains the IMS analyst. “Despite all their advantages, Solyndra’s tubes did not justify a price that was far above those of the competition – one of the reasons for that, by the way, being that Chinese companies receive much more public money than American producers . . . ” According to information released by the company itself, Solyndra’s production costs reached $2/watt. The Chinese competition, which has already gained around 60% of the world market, is today at $1.20 or $1.25 per watt instead.

In 2011 the price for solar-panels sunk more than 40%. Before Solyndra, two other American producers were declared bankrupt this year, Spectrawatt Inc. and Evergreen Solar Inc. “It’s still too early to say whether the guaranteed loans granted by the American government to these solar-panel producers are a failure or not, considering that only three or four companies have benefited from them,” is the nuance offered by Shyam Mehta, an analyst for GTM Research. “But it’s certain that the US won’t be able to beat the Chinese at the low-cost game. Not only because Beijing supports its industry much more than Washington does, but there are also all those costs that are lower in China: salaries, electricity, materials . . . ”

“Obsolete.” The 500 million lost by the American government with its Solyndra venture isn’t any big thing compared with the billions which it continues to spend to support nuclear energy and to grant tax-advantages to oil companies, that’s how the situation is set in context by Dana Blankenhorn, a passionate blogger on the subject of renewable energy. The American government’s error lies in having wanted “to play the role of the market” by putting its bets on Solyndra’s technology, rather than devoting its subsidies to research, he judges. “In solar, the technologies change very quickly. The silicon collectors that dominate the market now will perhaps be completely out-of-date soon. The Chinese dominate the market with technologies that are already largely obsolete. Where we can beat them is with new technologies, it’s there that the State needs to invest.” The argument is no doubt true . . . but it is not necessarily what one will hear during the next electoral campaign when the subject of Solyndra – Obama’s “cherished project” – is brought up.

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