With A Government-Funded "Success" Like This, What Does A Government-Funded Failure Look Like?
Back in May, 2010, President Barack Obama, who appears to have a fetish for solar panels, visited the new Solyndra factory in California to praise it as a successful example of his administration's clean energy industrial policy. Among other things, the president noted in his speech [YouTube] at Solyndra:
….we invested … in clean energy because not only would this spur hiring by businesses but it creates jobs in sectors with incredible potential to propel our economy for years, for decades to come. There's no better example than energy. … Our competitors are waging an historic effort to lead in new energy technologies. There are factories like this being built in China. Factories like this being built in Germany. Nobody is playing for second place. These countries recognize that the nations that lead the clean energy economy are likely to lead the global economy. And if we fail to recognize that same imperative, we risk falling behind.
Fifteen years ago, the United States produced 40 percent of the world's solar panels. By 2008, our share had fallen to just over five percent. I don't know about you, but I'm not prepared to cede American leadership in this industry, because I'm not prepared to cede America's leadership in the global economy. So that's why we placed a big emphasis on clean energy. It's the right thing to do for our environment, it's the right thing to do for our national security, but it's also the right thing to do for our economy.
And we can see the positive impacts right here at Solyndra. Less than a year ago, we were standing on what was an empty lot, but through the Recovery Act, this company received a loan to expand its operations. This new factory is the result of those loans. Since ground was broken last fall, more than 3,000 construction workers have been employed building this plant. … When it's completed in a few months, Solyndra expects to hire a thousand workers to manufacture solar panels and sell them across the country and around the world. And this in turn will generate business around our country who will create jobs supplying this factory with parts and materials.
The president's vision for Solyndra was backed by taxpayer guarantees to the tune of $535 million. The New York Times reports that $527 million of the guaranteed loan has already been spent. Solyndra is now filing for Chapter 11 bankruptcy. So much for propelling our economy. I was particularly struck by a quotation in the New York Times from a Department of Energy bureaucrat justifying the Solyndra loans:
"The project that we supported succeeded," insisted Damien LaVera, a spokesman for the Department of Energy.
"The facility was producing the product it said it would produce, and consumers were buying the product," he said. "The company struggled because the market has changed dramatically."
The project "succeeded?" As Saturday Night Live's Seth Meyers might say, "Really!?!"
Solar-industry analyst Peter Lynch explained to the Associated Press the chief problem faced by government-funded Solyndra:
"You make something in a factory and it costs $6, you sell it for $3, but you really, really need to sell it for $1.50 to be competitive," Lynch said of Solyndra. "It was an insane business model. The numbers just don't work, and they never did."
For more background, see my article, "It's Alive: Alternative energy subsidies make their biggest comeback since Jimmy Carter," detailing the sad failed history of government energy RD&D subsidies.
