Cleantech Market Intelligence
What Solyndra Really Means for Cleantech
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. Critics of the Obama Administration’s clean energy program claim that the bankruptcy of Solyndra proves that solar energy doesn’t work, and that government efforts to develop alternative energy sources are doomed to fail. The Solyndra affair took a new twist on Oct. 14, when The Wall Street Journal reported that RockPort Capital, a primary Solyndra investor, helped promote the company to the Pentagon for a $1 million U.S. Navy pilot program.
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 13 times the average annual expenditure on all renewables, including wind power, the leader in terms of total capacity new renewable capacity additions.
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 will the $2.5 billion that the loan guarantee program will cost the U.S. government provide in terms of returns to the economy? 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 the U.S. nuclear fleet, a clear sign of just how far this sector has come over the past decade.
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, left Solyndra’s novel and relatively expensive product unable to compete. Even the conservative Institute for Electrical Energy Engineers 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 outraged headlines about the Solyndra “scandal” aren’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 we’d be fools to pull the plug on this clean energy source based on a single, expectable company failure. Today’s investments in solar power will insure that the U.S. captures its fair share of this clean tech bonanza.