In a major setback for clean tech funding and the future of financing for a host of renewable energy projects, last week Solyndra—a poster child for the president’s push for a “green economy” and the recipient of $535 million in federal loan guarantees—announced it had filed a Chapter 11 petition in US Bankruptcy Court, after revealing that the company was over $1 billion in debt.
In a filing released in conjunction with the bankruptcy petition, chief financial officer W. G. Stover pointed to the company’s inability to compete with foreign manufacturers, who benefit from funding by their governments and are able to produce solar panels at a much lower price.
“The combination of general business conditions and an oversupply of solar panels dramatically reduced solar panel pricing worldwide,” says Stover. “Solyndra’s ability to timely collect on its accounts receivables was negatively impacted as foreign competitors offered extended payments terms, resulting in Solyndra’s customers refusing to honor their previously agreed payments terms.”
Earlier this year, when discussing the SunShot initiative, I highlighted the cost conundrum as it relates to solar power: with an ROI “so far in the future that it seems to disappear beyond the horizon” and installation and permitting costs that make solar prohibitively expensive for many potential customers, solar power is the sexy energy solution that intrigues many, but seduces few. The SunShot Initiative itself is an attempt by the DOE to remedy this situation by making “large-scale solar energy systems cost competitive without subsidies by the end of the decade.”
The idea of aiding and abetting the clean tech industry has already been heartily embraced by many of the world’s largest economies. According to a report released by the Pew Charitable Trust, “Accounting for more than 90% of worldwide finance and investment, G-20 countries dominate the clean energy landscape.”
In fact, the Pew report indicates that despite “the worst financial downturn in over half a century,” investments in the clean energy sector declined by less than 10% and have in fact experienced robust funding—$32 billion in each of the last three quarters in 2009—due in large part to the fact that “many governments prioritized clean energy within economic recovery funding, the bulk of which will reach innovators, businesses, and installers in 2010 and 2011.” And while the US itself has seen its market share in annual PV production decline from almost 50% two decades ago to only 5% as of 2009, the rest of the world has exponentially expanded clean tech funding.
According to the report, “As the country profiles in this report demonstrate, virtually all G-20 countries have seen investments grow by more than 50% over the last five years. Within the G-20, our research finds that domestic policy decisions impact the competitive positions of member countries. Those nations—such as China, Brazil, the United Kingdom, Germany, and Spain—with strong, national policies aimed at reducing global warming pollution and incentivizing the use of renewable energy are establishing stronger competitive positions in the clean energy economy.”
So what do you think? Did Solyndra fall into the gap—that $16 billion crevasse between the Chinese and US clean energy investment—or was it more a matter of the wrong company at the wrong time? Will Solyndra’s failure—already being touted by the Administration’s foes as validation of the “clean energy boondoggle” House Republicans warned about earlier this summer—sound a death knell for future clean tech funding? And when federal oil subsidies keep fossil fuels cheap while the clean tech industry must beg for scraps, can we really argue that freedom from foreign oil and a more sustainable future is too costly because of one $435 million misstep?