 | Solyndra |
Solyndra has become known as a boondoggle in the US. If you haven't heard, it's the solar power company that got $500 million in Recovery Act loans from the Department of Energy and then went belly up a couple of weeks ago.
Conservatives have been trying to paint this as a big scandal of some kind, despite the fact that: the company had plenty of private investors too, it's the only DOE loan that has failed so far, and there's no real evidence that anyone in the White House did anything worse than push OMB to speed up their decision-making process a bit in 2009.
It's often claimed that the Solyndra loan guarantee was "rushed through" by the Obama Administration for political reasons. In fact, the Solyndra loan guarantee was a multi-year process that the Bush Administration launched in 2007.
You'd never know from the media coverage that:
- The Bush team tried to conditionally approve the Solyndra loan just before President Obama took office.
- The company's backers included private investors who had diverse political interests.
- The loan comprises just 1.3% of DOE's overall loan portfolio. To date, Solyndra is the only loan that's known to be troubled.
The loan guarantee has been attacked as being political in nature because one of the Solyndra investors, Argonaut Venture Capital, is funded by George Kaiser, a man who donated money to the Obama campaign. What critics don't mention is that one of the earliest and largest investors, Madrone Capital Partners, is funded by the family that started Wal-Mart, the Waltons and the Waltons have donated millions of dollars to Republican candidates over the years.
Climate Progress is publishing this timeline, verified by Department of Energy officials, that shows how the loan guarantee came together under both administrations to set the record straight. In fact, rather than rushing the loan for Solyndra through, the Obama Administration restructured the original Bush-era deal to further protect the taxpayers' investment:
May 2005: Just as a global silicon shortage begins driving up prices of solar photovoltaics [PV], Solyndra is founded to provide a cost-competitive alternative to silicon-based panels.
July 2005: The Bush Administration signs the Energy Policy Act of 2005 into law, creating the 1703 loan guarantee program.
February 2006 – October 2006: In February, Solyndra raises its first round of venture financing worth $10.6 million from CMEA Capital, Redpoint Ventures, and U.S. Venture Partners. In October, Argonaut Venture Capital, an investment arm of George Kaiser, invests $17 million into Solyndra. Madrone Capital Partners, an investment arm of the Walton family, invests $7 million. Those investments are part of a $78.2 million fund.
December 2006: Solyndra Applies for a Loan Guarantee under the 1703 program.
Late 2007: Loan guarantee program is funded. Solyndra was one of 16 clean-tech companies deemed ready to move forward in the due diligence process. The Bush Administration DOE moves forward to develop a conditional commitment.
October 2008: Then Solyndra CEO Chris Gronet touted reasons for building in Silicon Valley and noted that the "company's second factory also will be built in Fremont, since a Department of Energy loan guarantee mandates a U.S. location."
November 2008: Silicon prices remain very high on the spot market, making non-silicon based thin film technologies like Solyndra's very attractive to investors. Solyndra also benefits from having very low installation costs. The company raises $144 million from ten different venture investors, including the Walton-family run Madrone Capital Partners. This brings total private investment to more than $450 million to date.
January 2009: In an effort to show it has done something to support renewable energy, the Bush Administration tries to take Solyndra before a DOE credit review committee before President Obama is inaugurated. The committee, consisting of career civil servants with financial expertise, remands the loan back to DOE "without prejudice" because it wasn't ready for conditional commitment.
March 2009: The same credit committee approves the strengthened loan application. The deal passes on to DOE's credit review board. Career staff (not political appointees) within the DOE issue a conditional commitment setting out terms for a guarantee.
June 2009: As more silicon production facilities come online while demand for PV wavers due to the economic slowdown, silicon prices start to drop. Meanwhile, the Chinese begin rapidly scaling domestic manufacturing and set a path toward dramatic, unforeseen cost reductions in PV. Between June of 2009 and August of 2011, PV prices drop more than 50%.
September 2009: Solyndra raises an additional $219 million. Shortly after, the DOE closes a $535 million loan guarantee after six months of due diligence. This is the first loan guarantee issued under the 1703 program. From application to closing, the process took three years – not the 41 days that is sometimes reported. OMB did raise some concerns in August not about the loan itself but how the loan should be "scored." OMB testified Wednesday that they were comfortable with the final scoring.
January – June 2010: As the price of conventional silicon-based PV continues to fall due to low silicon prices and a glut of solar modules, investors and analysts start questioning Solyndra's ability to compete in the marketplace. Despite pulling its IPO (as dozens of companies did in 2010), Solyndra raises an additional $175 million from investors.
November 2010: Solyndra closes an older manufacturing facility and concentrates operations at Fab 2, the plant funded by the $535 million loan guarantee. The Fab 2 plant is completed that same month — on time and on budget — employing around 3,000 construction workers during the build-out, just as the DOE projected.
February 2011: Due to a liquidity crisis, investors provide $75 million to help restructure the loan guarantee. The DOE rightly assumed it was better to give Solyndra a fighting chance rather than liquidate the company – which was a going concern – for market value, which would have guaranteed significant losses.
March 2011: Republican Representatives complain that DOE funds are not being spent quickly enough.
House Energy and Commerce Committee Chairman Fred Upton (R-MI): "despite the Administration's urgency and haste to pass the bill [the American Recovery and Reinvestment Act] … billions of dollars have yet to be spent."
And House Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-FL): "The whole point of the Democrat's stimulus bill was to spend billions of dollars … most of the money still hasn't been spent."
June 2011: Average selling prices for solar modules drop to $1.50 a watt and continue on a pathway to $1 a watt. Solyndra says it has cut costs by 50%, but analysts worry how the company will compete with the dramatic changes in conventional PV.
August 2011: DOE refuses to restructure the loan a second time.
September 2011: Solyndra closes its manufacturing facility, lays off 1,100 workers and files for bankruptcy. The news is touted as a failure of the Obama Administration and the loan guarantee office. However, as of September 12, the DOE loan programs office closed or issued conditional commitments of $37.8 billion to projects around the country. The $535 million loan is only 1.3% of DOE's loan portfolio. To date, Solyndra is the only loan that's known to be troubled.
Meanwhile, after complaining about stimulus funds moving too slowly, Congressmen Fred Upton and Cliff Stearns are now claiming that the Administration was pushing funds out the door too quickly: "In the rush to get stimulus cash out the door, despite repeated claims by the Administration to the contrary, some bets were bad from the beginning."
What critics fail to mention is that the Solyndra deal is more than three years old, started under the Bush Administration, which tried to conditionally approve the loan right before Obama took office. Rather than "pushing funds out the door too quickly," the Obama Administration restructured the original loan when it came into office to further protect the taxpayers' investment.
What actually happened, how it could have been prevented and who's responsible, are these things are orthogonal to the battle taking place in political circles. That battle has nothing to do with the facts.
For a mix of financial and ideological reasons, U.S. conservative movement activists, operators, and politicos hate clean energy. They don't believe in climate change, they love fossil fuels and fossil-fuel campaign donations, and they think, or want the U.S. public to think, that clean energy is weak, unreliable, marginal, and dependent on government subsidies. They have been trying to make that case for a long while.
What Solyndra gives them is a symbol, something to use as a stand-in to discredit not just the DOE loan program, but all government support for clean energy and indeed clean energy itself.
Cons understand post-truth politics. They understand that truth is utterly inert in an era when mainstream institutions are viewed with hostility and skepticism, the media is fractured, and there are no shared norms or referees to enforce them. The side that wins is the side that plays to its audience's existing preconceptions with a simple message repeated over and over and over again in multiple venues.
That's what is happening now around Solyndra. The right is going after this whole hog, trying to make the name synonymous with clean energy boondoggle. And the left is flailing around, throwing out this fact and that fact with no coherent message. Additionally, the right pretty much has a lock on the US media so that the message that this was yet another Obama and environmentalist failure is repeated over and over.
That works with the Low Information Voters who believe that global warming is a hoax, or in some way a disputed theory. Unfortunately, they are the people who need to be reached with better information rather than fed more of the corporatocratic propaganda.
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