As the echo of Solyndra’s demise continues to reverberate throughout the clean tech industry, more details have begun to emerge regarding the federal government’s clean energy loan-guarantee program, including the revelation that many renewable energy startups have begun to view the program as risky and inflexible.
According to a recent article in the Washington Post, some clean tech companies have begun to feel that the loan program is “a bad bet.” For example (as reported in the Post), Solar Trust—which was awarded a $2.1 billion loan guarantee by the DOE—turned down their loan guarantee after determining that accepting the funding would be “too risky.”
“For very sound businesses reasons, we opted not to go forward,” says Solar Trust chief executive Uwe T. Schmidt in the article. Schmidt made the decision after watching the market become inundated with a tidal wave of cheap flat solar panels—with prices per unit so low that they undercut his company’s own business plan, which involved using a field of mirrors to concentrate sunlight. Had Solar Trust continued with federal funding, the stringent requirements of the DOE program would have left the company in the lurch—unable to switch from their current business plan in order to capitalize on a new, less expensive option. In order to retain that flexibility, Solar Trust chose to pursue private financing instead.
In addition to strict—and some say inflexible—loan requirements, the DOE program has also suffered from its own inherent popularity. As the Post reports, the DOE’s loan office was “initially overwhelmed, and companies complained that it was moving too slowly.”
Complicating the matter was the call for oversight (and even more controls) by many top White House economic officials—including former director of the National Economic Council Lawrence H. Summers—that the Office of Management and Budget should oversee the program in light of the government’s possible inability to “shape a new industry.” All the while, international prices for silicon kept falling, and costs were changing at a rate “faster than the bureaucracy could make decisions.”
So what do you think? Is Solyndra’s demise just a symptom of a larger issue? Is it true, as some critics are now asserting, that the DOE’s loan guarantee program was destined to fail, in part because of the inability of government bureaucracy to “play nice” with venture capitalism and the ever-evolving clean tech market? And if federal funding is not the answer, what can the US do to help domestic clean energy businesses compete in a world economy at a time when foreign governments are pouring millions (and billions) of dollars into their own renewable energy industries?