The Government Picks A Loser

Sep 1 2011 @ 7:45pm

Solyndra_Loans  

by Patrick Appel

Solyndra, a solar startup which was awarded a $535 million dollar federal loan guarentee in 2009, has filled for bankruptcy. Ucilia Wang provides backstory on the challenges Solyndra faced. The takeaway:

By its nature, the loan guarantee program picks winners and losers, offering some companies an edge in the market with its guarantees, while companies that don’t receive the loans are at a disadvantage. That could work OK if the [Department Of Energy] was really good at picking winners. But when the first company out of the lot crashes and burns so roughly, clearly the selection process hasn’t been all that great.

Amanda Peterson Beadle blames Chinese competition:

Energy Department officials cited China’s billions of dollars in subsidies to solar energy companies as one factor threatening American firms. The price of a solar array has dropped, decreasing the profit margins for solar cell manufacturers, while Chinese subsidies have increased rapidly.

Along the same lines, Green Tech Media posts the above chart:

Clearly, China is providing tens of billions of dollars in low-cost loans to Chinese solar companies. This chart is a bit misleading because the U.S. DOE loan program has spent more than $40 billion on a portfolio of greentech firms and approximately $10 billion on solar. The difference is that, to some extent, the U.S. is betting on new, unproven technologies, while China is banking on the expansion of proven crystalline solar technologies.