As I write this, the US government is mullung over claims by the GOP that the highly controversial, but equally highly successful government-backed solar loaning programme, is no longer worth anybody’s time or money, including the taxpayers of America.
The so-called ‘No More Solyndras’ Act, a cleverly named piece of legislation that aims to shut down all workings of the loan system is being hotly debated in the Houses involved, and there is no sign of Republican backing slowing. Standing on the shoulders of all those who were wronged and misguided during the entire Solyndra debacle and buoyed by the seemingly never-ending support for discontinuing further loans, it’s looking possible that the damn thing might actually get through the legal process.
Firstly, a quick recap. The US doesn’t employ feed-in-tariffs like those of the relatively successful European and Asian nations such as Germany or Japan, meaning that to raise funding and popularity in the renewable markets, other measures must be taken not involving direct payments to consumers or utilities. To this end, the US government, under the peruse of George Bush, set up the solar loaning programme in 2005, which would aim to invest taxpayer and private investor money directly into companies producing, manufacturing and selling solar cells, panels, technologies and the like. By propping up the as-yet immature industry and lending them a helping hand to wade their way into the global market, there was really no other way to go about it.
For a good time the programme was rather successful, if not very, lending money to multiple solar ventures which ultimately allowed the US domestic market to regain leadership status in the global trade, rising up to join the ranks of its eastern cousins who had been running clever programmes for years before. All in all, 33 separate companies were funded through government loans, with a total of $10bn set aside for mitigating any losses during loaning of up to $26bn, the original figure accrued for investment. Without this, it’s highly likely the US solar industry would have stagnated, or at best regained a tiny proportion of the status it has today, and in a world where Chinese and European solar is booming, that is a necessity.
Given how paranoid the US is over its domestic markets and anti-competitive trade, this is a godsend; you only have to look at the current trade war with Chinese solar companies to see this paranoia in its rawest form.
Then came along Solyndra, followed by three more, Beacon, Ener1 and Fisker. Here’s the crucial part; Solyndra was by far the programmes largets investment of the four listed, taking a total of $529m, a hefty sum undoubtedly, but just 5% of the entire backup fund set aside in the first place. Solyndra went bankrupt just two years after receiving the money, sparking massive controversy and debate over the usefulness of such government loans, and whether the loans were wasteful with taxpayer money (always useful to focus on ‘taxpayer money’ when fighting for something in the US, makes it seem so much worse for the everyday man). Making the situation worse, Beacon, Fisker and Ener1 also filed for bankruptcy shortly after investment, but there are some big differences between the four.
Solyndra was a bad mistake, there’s no issue there, but not only did Beacon receive a much smaller sum of just $12m, pocket change compared to Solyndra, but the final two were not even in the loan programme, instead gaining grants of much smaller value, not cash injections. Although this doesn’t completely remove them from the list, it puts them right at the bottom for sure. Combine this with the fact that Chinese solar is completely outcompeting the global market for price and labour, be it fair or not, and that US companies in particular are suffering the worst, to blame the closures purely on ill-conceived loans is shortsighted to say the least.
Other facts only compound the problem. With the ‘No More Solyndras’ Act, loans into nuclear plants are still allowed, despite the price tag of $10bn for one nuclear reactor, compared to just $529m for Solyndra, a much cleaner, safer and cheaper form of energy. WIthout a nationwide feed-in-tariff, cutting off what is potentially crucial investment to multiple US solar industries could cripple the market irrevocably, bringing the domestic capacity crashing back down to earth.
There is always inherent risk in investing in new and innovative technologies such as solar, but when the benefits of such an industry are endless, risk is surely worth the effort. Compare this to the horrendous subsidies and loans into fossil fuels throughout the US, and the ridiculous risks allowed to go unnoticed in the banking sectors, Solyndra et al look like haloed angels amidst a mess of demons. When there is still $9.5bn left in the kitty for mitigating such misallocated loans, it seems utterly stupid to me to shut the programme down and directly risk killing the US market at such a crucial time in growth.
Then again, it’s not hard to imagine the Republicans cutting all efforts in clean energy and government backing, when all they seem to care about is ploughing silly money into coal, oil and fracking.
However, if there’s one thing you can be sure of - the US doesn’t like being left behind in something it feels it can do better. Whilst Europe and Asia power on along renewable paths, US solar is going to have to get used to eating dust, and unless this ‘No More Solyndras’ Act is repealed, we could be seeing a future where trade penalties and ‘anti-competitive’ wars become a common theme. Now wouldn’t that be fun?