Solyndra

Cross post-from MikeB

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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.

See also:

• Exclusive Timeline: Bush Administration Advanced Solyndra Loan Guarantee for Two Years, Media Blow the Story


• Solyndra is the next ‘Climategate’