by Anne Haugaard
Though somewhat old news, I feel that the recent “green” technology scandal of Solyndra, Inc. needs to be addressed. The California based solar panel manufacturer declared Chapter 11 bankruptcy this past August, laying off over one thousand of its employees. Though it is well known that green technology companies in the U.S. can’t hold a candle to the feasible energy sources of petroleum and natural gas, there is more than meets the eye when it comes to Solyndra.
Renewable energy companies will and should struggle to make themselves competitive in the global market, however this means that the company may fail because we live in the fossil-fuel hungry world of the 21st century. So, then, isn’t the answer found in government funding? Wouldn’t it work if the government gave these “green” technologies a leg up in the market to make them competitive with today’s energy prices?
In 2009, Solyndra received a $535 million loan guarantee from the U.S. Department of Energy (DOE) under the Energy Policy Act of 2005. This loan guarantee conveniently came just in time for Vice President Biden to make an appearance at a widely publicized Solyndra event that revealed its plans for the future, all thanks to the new funds. In fact, in a recent memorandum from the U.S. Committee on Energy and Commerce, (which investigated the reasons for Solyndra’s bankruptcy,) it became very clear that the Vice President’s appearance at the event was scheduled before the reviewing of Solyndra’s application for the loan was even finalized.
White House officials were closely involved within the loan process and pushed it forward despite concerns from Congress. In early 2008, months before the loan guarantee was approved, DOE staff stated in an email:
The financial health of the parent corporation [Solyndra, Inc.] should be evaluated over the life of the project . . . . [A]nalyzing the project model alone would provide an incomplete picture of the overall creditworthiness of the guaranteed obligation. In short, a financial disruption at the parent level could directly affect the project’s receipt of revenues on a timely basis and the ability of the project to maintain uninterrupted operations.
The loan was given to a specific project company that was building a specific manufacturing plant for photovoltaic panels under the larger parent company, Solyndra. Following the DOE’s concerns for the financial responsibility and professionalism of Solyndra, further research during the investigation revealed emails from 2009. Shortly before the loan guarantee was announced from DOE staff, these emails stated that the project company would run out of money in September of 2011 if it kept its current financial model. As millions of dollars are passed from our government to flawed companies in full knowledge of a potential disaster, it seems wholly appropriate to say “I told you so.”
According to an article from Scientific America, there’s no flaw in the actual technology of Solyndra’s panels but rather in the fact that the government funds went through despite all of these red flags (you’re going to run out of cash in 2011). This brings me back to my initial question of whether or not government funding for green technology works? One of the main reasons for Solyndra’s bankruptcy was the fact that they couldn’t be competitive with the foreign market (i.e. China’s solar panel manufacturers). At the time that they declared their bankruptcy, Solyndra’s company memo stated that the company “could not achieve full-scale operations rapidly enough to compete in the near term with the resources of larger foreign manufacturers.” If other countries are so wonderful at making these same panels in larger quantities and at cheaper prices, what’s inhibiting the companies on our own soil? I understand that there is a long list of reasons why countries have moved overseas to do their business, and that discussion exceeds the boundaries of this particular article.
Despite whatever those reasons may be, the current administration’s approach of solving this is clearly not working. If attractive “green” companies that look good on camera are given loans and the White House pushes the paperwork in order to make a quick deal, there will be no reason for businesses to go out of their way to find success in the market. Bureaucracy alone will suffice all its needs. Government is not in place to hold the hand of renewable energy and keep feeding irresponsible companies like Solyndra so that they may have the means to continue. Government is there to support and manage a national economy in which the private sector has the freedom and incentive to invest in sources like solar energy.
The market will work out the kinks for itself if there’s a constructive
environment for small businesses to survive and large corporations to give back to their community. With a reputation already on the line, the last thing renewable energy needs is ill-placed government spending.
Anne Haugaard is an Environmental Studies student at Hawai’i Pacific University. Originally from Vancouver, WA, Anne has served several positions within the Student Government Association of HPU and PeaceJAM Hawai’i. She is currently the Communications Director for the Hawai’i State Federation of College Republicans.