The Real Story with Solyndra

The word “Solyndra”—the name of a solar company based in Fremont, California that recently filed for bankruptcy – has now become synonymous with government boondoggle. That is if one is to believe the Tea Party and other critics of the Obama Administration. They claim that the bankruptcy of Solyndra proves that solar energy doesn’t work, and that government efforts to develop energy sources are doomed to fail.

Let’s make one thing clear: All energy sources receive government support. In fact renewable investment pales in comparison to the amount of government spending on fossil energy. The oil and natural gas industry has enjoyed a century of federal support averaging $4.86 billion in subsidy spending each year, according to a report released last month by DLB Investors. That’s thirteen times the average annual expenditure on all renewables, including wind power, the leader in terms of total capacity new renewable capacity additions. 

As a country we’re not investing nearly as much as Europe or China is investing in renewable power, and yet this new booming clean tech energy sector is delivering strong returns on those taxpayer dollars. That’s even true for the loan guarantee program that’s under fire.

Solyndra represented only a small fraction – 2.8% - of the total loan guarantee portfolio, leaving plenty of room for further defaults without taxpayer losses. Let’s put this bankruptcy in proper context.  What did the $2.5 billion that the loan guarantee will cost net? It has already generated almost $19 billion in private capital flowing to retool our energy economy and create thousands of jobs during a recession. These guarantees are not government handouts. They only become liabilities in the rare occurrence of a company failure, such as is the case with Solyndra.

Solar power, with its ability to create energy independence at consumer homes, businesses and even in places where there is no grid in the developing world, is the ultimate of how to give power to the people. In the first half of 2011, renewable energy sources, including solar, generated 18% more power than did the the U.S.’s nuclear fleet, a clear sign of just how far this sector has come over the past decade.

What is especially appealing about solar photovoltaics (PV) are the employment statistics. By some estimates, solar PV creates 10 or even 20 times as many jobs as equivalent investments in nuclear, coal or natural gas. In fact, more than 100,000 people are working with solar in the U.S. today. That’s more than the number of Americans working in coal mining. And those solar jobs grew by nearly 7% since last year, a welcome bright spot in an overall economy that only increased employment by 0.7%.  

Ironically enough, Solyndra is a sign of solar power’s success -- not failure – since costs for the technology have dropped by a whopping 75% over the last three years. Those cost reductions, driven in part by China’s government investments designed to drive down manufacturing costs of traditional solar PV products – leaving Solyndra’s novel and relatively expensive product unable to compete. Even the conservative Institute for Electrical Energy Engineers -- hardly a liberal-left organization -- now predicts solar power will be the world’s cheapest source of power over the long-term due to its modularity and the fact that the best performing panels today are only 20% efficient. In other words, future innovation can radically increase performance since efficiency can be targeted at that 80% of the potential solar resource that is currently lost in the power conversion process.

The real story, the one that the Tea Party isn’t telling, is that those same record cost reductions have helped make solar power one of the fastest growing industries in America - and our federal and state governments have been absolutely instrumental to that American success story. Solar energy is booming and in my humble opinion, we’d be fools to pull the plug on this clean energy source. Today’s investments in solar power will insure that the U.S. captures its fair share of this clean tech bonanza.