A message from Sunetric CEO Alex Tiller.
Whenever I travel, people who learn that I’m the CEO of a solar power company ask me about Solyndra, or about the Chevy Volt, or Evergreen Solar, or other ‘green’ energy companies or projects backed by the government that have either failed or are doing worse than expected. I run into a lot of anger about malfeasance and bad management, and a lot of that anger is justified.
The ‘No More Solyndras’ Act
Last Wednesday, July 25, 2012, a House of Representatives committee tasked with energy issues approved the ‘No More Solyndras Act’, a legislative package designed to drastically tighten, if not eliminate, the Department of Energy’s ability to issue loan guarantees to green energy projects and companies. Our industry’s trade group, the Solar Energy Industries Association, opposed the bill as being too restrictive, and was disappointed that the subcommittee approved provisions that ‘throw the baby out with the bath water.’
In the wake of the decision, the SEIA issued a statement noting their intent to continue working to improve the DOE loan program and noted its many successes, pointing to a more secure energy infrastructure and a solar industry that employs more than a hundred-thousand Americans:
The loan guarantee program has yielded notable successes. In solar alone, the program is providing crucial financing to support the construction of 11 utility-scale solar power plants in the Southwest that will produce 2,700 megawatts of safe, clean power—enough to power 630,000 homes. These are financially sound projects with guaranteed revenue streams.
1,484 Successful Companies
Of course, nobody wants to see government waste, but the net result of these restrictions is counterproductive—it will likely lead to more company failures, not less.
News stories that talk about the loan-recipient companies that have defaulted on their loans or gone bankrupt consistently lack a critical point of context: all of the companies that have received government assistance and have succeeeded. As mentioned in the SEIA statement above, the last round of DOE loan assistance funded 11 large-scale solar plants, plants which are running great and have added 2.7 gigawatts of clean, renewable solar power to the national grid.
At last count, sixteen companies that receive or have received government financial assistance have gone bankrupt or had similar problems. The exact total of lost funds is hard to draw a line around, but is typically estimated at around a billion dollars.
Sixteen firms, a billion dollars—nothing trivial. But in context, the impact is lower than you might expect. The truth is that 1500 companies received funding from the government, and only 16 of them failed—that’s a 1% failure rate, and 1% of the total funds. A one-percent failure rate is extremely low when it comes to investment.
Nobody is laughing off a billion dollars, and nobody is happy about whatever politicized process may have given some firms money they ought not to have gotten. But it’s important to look at the issue in perspective.
Solyndra and the Bigger Picture
Solyndra didn’t fail because government funding for green power is doomed. Solyndra failed because they focused on a proprietary technology that cost too much, was deployed too early, and launched against competition that had the upper hand. The Chevy Volt got off to a slow start not because government subsidies for electric cars are irrational, but because of a complex web of issues—customer perception of electric vehicles in general, quality issues with the vehicle, or a lack of true commitment to the sector by the manufacturer.
The green power industry in this country is much bigger than these troubled firms—a lot bigger. Solar power alone has more than 100,000 employees at more than 5,600 companies, in all 50 states. Some of those firms are doing poorly, and a few may even be broke. But the overwhelming majority of them are doing OK or better. Government funding or support for them may or may not be a good idea—it depends on the company, on the program, on the idea. But we let a handful of high-visibility foul-ups poison our perception of a profitable and growing industry at our own peril.
It is completely understandable to be outraged when we see or read about a government program that’s gone wrong. We shouldn’t disregard the failure of Solyndra or companies like it, nor the miscalculations on the part of the Department of Energy that led them to give money to these loser operations. Money was wasted and actions should be taken to ensure it doesn’t happen again. But inefficiency and error are intrinsic to human affairs, government included.
Government Investment in Alternative Energy Must Continue
The bottom line is that overall, these programs have been well-managed, have gotten money into the hands of companies that have used it well and wisely, and are helping to build a more secure energy future for our country.
Punitive, reactionary, and shortsighted regulations will serve only to slow our progress towards a better and more sustainable energy industry in America. Let’s take a close look at the mistakes we’ve made, correct the procedural defects that allowed them to happen, and continue to improve the work that our solar industry does with the government to secure a better future for us all.