Solyndra and Ferdinand Adolf Heinrich August Graf von Zeppelin

A pretty cool name ruined by a shitty design

Like Zepplin, Crapper or Steely Dan, the name Solyndra will live in infamy, a symbol to some of the Obama administration’s overall failures.  Now maybe it is a stretch to say Thomas Crapper's name will live in infamy but I would not be sure how else to describe what they did to his name. The poor bastard didn't even invent the flush toilet. 

Just a shitty name ruined by a good idea

But back to Solyndra - I hadn't followed the story very much and only heard snippets which included accusations against the Obama administration, financial contributors and the company itself.  

Today I heard a story on NPR’s “Fresh Air”, Washington Post environmental correspondent Juliet Eilperin explaining  how and why the clean-tech industry boom hit a wall. (http://www.npr.org/2012/02/02/146280685/clean-tech-industry-facing-lean-times-after-solyndra). Solyndra was of course included.

And just a cool name for a shitty band

Her report prompted me to look into the story a little more.  Solyndra was a manufacturer of cylindrical panels of CIGS thin-film solar cells.  The CIGS cells were meant to compete and replace the more costly silicon panels that are currently in use.   Two things were responsible for the downfall of Zepplin, I mean Solyndra.  One was  the dramatic drop in the price of natural gas (fracking) since 2008, down 75% from its high, thereby lowering the incentive to invest in alternative energies like Solyndra.  The second item was the drop in the price of silicon, the very material Solyndra’s business model was based on replacing.  In 2009 things began to spiral down for Crapper I mean Solyndra.  In 2008 silicon for solar cells cost 450 bucks a kilo on the spot market.  In 2009 it was closer to 100 and projections were if you waited a month it may be cheaper still.   As of 2011 prices for immediate delivery fell to an average $50 to $53 a kilogram as demand dropped after European nations slashed clean-power subsidies according to Bloomberg New Energy Finance data.

Solyndra bankruptcy and the governments financial backing has become the poster child for Obama’s failures and has negatively impacted other alternative energies going forward.

Two fundraisers for Obama were linked to Solyndra LLC, the California solar company that received a $528 million federal loan and then later declared bankruptcy, prompting a federal investigation. Steve Spinner, an Energy Department adviser, raised at least $500,000 and Steve Westly, a venture capitalist who was an unpaid adviser to the department, raised between $200,000 and $500,000.

Listening to Juliet Eilperin’s story I am not so sure there the criminal accusations being made are entirely correct.  In looking into the story a bit more it seems the Solyndra loan guarantee was a multi-year process that the Bush Administration launched in 2007.  It has been said that the Bush administration 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.

Because one of the Solyndra investors, Argonaut Venture Capital, is funded by George Kaiser — a man who donated money to the Obama campaign — the loan guarantee has been attacked as being political in nature. 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. The Waltons have donated millions of dollars to Republican candidates over the years. 

And that about wraps it up for future alternative energy....

It appears that there is plenty of shame to go around – there was evidence Solydra’s realized that it was in trouble while still touting its chances for success to government officials.  

To me the shame in this story is the negative impact on alternative energies going forward. 

Below is a timeline published by Climate Progress and verified by Department of Energy officials - that shows how the loan guarantee came together under both administrations.

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·       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.

·       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.

·       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.