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Solar Company Folds After $0.5B In Subsidies
First time accepted submitter dusanv writes "Solyndra, a Silicon Valley solar energy firm, subsidized to the tune of $500 million and held as a 'gleaming example of green technology,' announced bankruptcy yesterday. 1,100 employees fired."
Before anyone jumps to the conclusion that green technology is not profitable and therefore a big scam, or a modern religion if you will, with all of its guilt, shame and asking for money, let me state an opinion that might not be popular here: Maybe, just maybe, the subsidies was too low? I know what you think but let me play an evil's advocate for a second. How much the fresh air is worth to you? To your children? To your children's children? To your children's children's grandchildren? Well, you get the idea. And what about fresh water? What about cold weather? I am not saying that all of those things should be worth more than 500 billion to everyone but I suggest that we have to account for them in the business plans of companies developing green technology. We have to ask ourselves: Why do we develop green technology? How much money are we willing to waste? What sacrifices are we willing to make? What do we expect to get in return? Those are the most important questions that we should at least try to answer.
Karma: Positive (probably because of superiour intellect)
Led, of course, by Salon's Andrew Leonard, for whom no amount of subsidy is ever enough, and no amount of state intervention can possibly suffice. The reality is far different, of course, and starts with the lousy energy density of solar; but we are dealing with a very heavily government-controlled "market" that is steadily eroding as subsidies decline. The myth of green jobs is something like promising to feed people with tasty barbecued unicorn ribs.
Dog is my co-pilot.
...that this is the company that Obama visited when he was on his renewable energy tour. I guess this is a symbol for how well those policies worked out. We really should be supporting these kinds of companies, not throwing our money at foreign oil/power interests.
Bob is a troll.
Also by that metric neither does nuclear. I am a huge fan of it, but not a one has been built in the USA without a government backed loan and the Priceâ"Anderson Nuclear Industries Indemnity Act means that liability is very limited and your rights to sue are as well.
No power source in the USA is free from subsidies and typical corporatist protection.
An experimental business in an emergent technology fails to establish itself in a collapsing economy. Read all about it...
Give me a break folks, them and a whole bunch of other companies both old and new... Stop trying to make.
Two of my imaginary friends reproduced once
Ask any reputable Chiropractor
I LOL'd
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This is so much BS - what killed off Solyndra was competition from off-shore competitors. Even with 0.5B infusion from the DOE - they couldn't build a factory that was cost competitive. Oh - I live in the town where the factory was built - they wasted huge amounts of money building a second fab when they had one two blocks down the street of similar size and capacity. There is nothing magical here - it is simple economic forces that killed them off. Get over your Evil Big Oil conspiracy theories.
It also proves that the government does a lousy job of picking economic winners and losers. That is a game the government should stay out of.
Have you compiled your kernel today??
Dear Princess Obama:
Today I learned that you can't use legislation to force technology or change principles of chemistry and physics, no matter how heavy the subsidy, or from whom the subsidy money is coerced, or how many people who didn't vote for you which you blame. I also learned that economic practicality will trump blind idealism every time, as one is grounded in reality and the other in denial of reality. When a technology is ready and feasible, marketplace forces will ensure its rapid adoption if it is, in fact, superior as claimed. However, no matter how good the intent, a technology that is not ready cannot be forced upon the public.
Your faithful tax-sucking green-liberal Pollyanna,
Solyndra Sparkle
Everybody gets what the majority deserves.
Therein lies the challenge of power production. It's cheaper to produce energy than store it (in a battery for example), and the source technology doesn't effect the end product. Green energy is, to the end consumer, indistinguishable from that produced by slave labour. In other technology fields new technology does something different, so you can charge a premium for it, and a handful of customers will keep you afloat until you can bring costs down.
Green tech necessarily relies on lossy investments (usually from the government) to start up, or the addition of a cost for pollution or else it has no value. That goes to the second problem of producing anything, which is that pollution is relatively inexpensive, especially airborne pollution that is never forcibly cleaned up. If polluters are not expected to pay for the cleanup of the damage they do, it's very hard to persuade them any new tech is going to be viable economically.
So do we as a society want to make an investment in reducing pollution, and are we willing to lose money on that for long enough for it to turn out viable.
Of course any given company can still be completely incapable of producing a product, and if you're starting a new company, to produce something new, you're going to face a large selection of managerial problems to go with the technical ones.
Actually, no.
China's solar companies are doing well because they get *tremendous* subsidies, as is always the case for nascent, high tech industry.
if it weren't for massive government subsidies - paying for R&D costs directly, and providing a huge protected market mainly through the defense department - then the computer revolution which drove the 1990s boom WOULD NOT HAVE HAPPENED.
All you free market fantasists need to get that into your thick skulls - or, you could go love on Ayn Rand's island! Please do, so that we can run our country like sane people. In 10 years, when solar power is viable, it will be the Chinese who are reaping the benefits because free market fanatics in the US aren't willing to make the basic investments required.
The good and new comes from no quarter where it is looked for, and is always something different from what is expected.
So we have about 312,026,572 people in America, roughly 53% of them pay taxes (which is insane btw). The investment was 500 million. If my math is correct all 165,374,083 of us tax payers deserve to get a $3.02 tax write off on this bs just to stick it to the man for them making poor business decisions with our money. Boooo big gov.
And this is a prime example of why government subsidies of production are a bad idea. I haven't firmly settled on a position with regards to federal funding for R&D (although certain examples, like sick shrimp running on treadmills, should be an obvious choice for budget cuts...), but trying to force adoption through subsidies only distorts the market, without adding any value.
In this case, the US Government effectively forced every US citizen to invest $1.60 in a company that had never been profitable and showed no prospects for profitability. The investment was not for development of technology that would make solar power economically viable, but rather it was for purchasing capital equipment for existing, uneconomic technology. The results were perfectly predictable. If no private investors see the value in the company, we should be thinking awful hard about whether it's a good idea to force them to invest in it anyway.
I would love to see solar power prove profitable, but such a goal will come as a result of research and development, not as a result of government subsidies for production of inefficient technology.
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"reputable Chiropractor"
Oxymoron.
"Ask any reputable Chiropractor about how radiation causes serious subluxations due to DNA malformation."
http://www.quackwatch.com/01QuackeryRelatedTopics/chirosub.html
So, I live (literally) around the corner from one of Solyndra's offices. And one thing I noticed is that, no matter when I left for work in the morning, drove out to the grocery store, or took the kids on a Sunday walk to the park, Solyndra's parking lot was always full and the lights were on in every laboratory.
At first, I was fairly intimidated. I was new to the Valley, and wondered if this was the pace I would be expected to keep for my employer. After a few months, though, I realized that Solyndra was the exception, not the norm, and not even the more hardcore start-ups in my field matched the hours their employees put in.
As I watched their work pattern, I wondered at the office culture that would lead to such employee behavior, as well as the pay and benefits that had to be backing it up. I could never shake the uneasy impression that Solyndra was vigorously burning the candle at both ends, with potentially disastrous consequences in store.
Steady as she goes, I guess. Even in Silicon Valley.
>> Standing on head makes smile of frown, but rest of face also upside down.
ABC News did a story on May 24th, which discusses how the Obama Administration "bypassed procedural steps meant to protect taxpayers as it hurried to approve an energy loan guarantee to a politically-connected California solar power startup", and how the loan "benefited a company whose prime financial backers include Oklahoma oil billionaire George Kaiser, a "bundler" of campaign donations. Kaiser raised at least $50,000 for the president's 2008 election effort."
The summary is misleading. The company was given $500 million in loan guarantees. That doesn't necessarily mean a subsidy. If the company went broke and never got the loans no government money was spent.
Reading through the Solyndra web site, there's the following announcement of the departure of their Founder and CEO
http://www.solyndra.com/2011/08/chris-gronet-takes-on-advisory-role-for-solyndra/
from August 18th, about 2 weeks ago. Coincidence? Founder / CEOs don't normally leave after the first 5 years of a startup. Is there more to the bankruptcy story than what's in the OP's article?
Put my fist through my alarm clock with its ding-dong death inside my ear. - The Blackjacks.
China is subsidizing their solar panel industry so that when solar finally gets traction, they will be in the driver's seat. Of course, it helps that they're less concerned about dumping waste and paying western-level wages.
It sounds, though, that this particular process was doomed to failure from the beginning, since the manufacturing process turned out not to be "scalable".
Is it just my observation, or are there way too many stupid people in the world?
It's too bad that Good Thoughts won't help these companies out.
They don't need 'Good Thoughts', they need a viable business plan.
Of course that's not actually possible with 'green technology' because very little of it makes any financial sense.
What do you mean, they had an awesome business plan. Talk big, attract the interest of the government who offers to guarantee your loans, max out that new credit line and transfer the funds to your board, executives, and "supplier" cronies.
On a more serious note, it seems to me that with an emerging technology like this it would make more sense for the government to put in steady orders rather than directly subsidize the company. If $500 million of guaranteed orders over a couple of years aren't enough to keep them stable and/or growing, then not much is. Plus, that would at least leave the government with the useful (if probably overpriced) products at the end, rather than having nothing (well, they may have a share of whatever equity is left in the company after creditors are paid off - which I somehow think will be very little, see baseless accusations above).
Yet solar still can't compete without enormous subsidies.
At the utility-scale level, solar costs about twice as much per kWh produced compared to coal right now. On the other hand, when looked at from the retail side of the equation, where end-users pay several times the actual cost of power to provide a profit margin, it competes marvelously. I can either pay the power company $.12/kWh, or make it myself for substantially less. So I am.
Well... DocBob said to ask any "reputable Chiropractor". I imagine the people on Quackwatch are not.
Trolling is a art,
These guys and Evergreen Solar both had viable advanced products, good ideas, and solid business practices and a eagerness to hire local/american workers to do a job that desperately needs doing. The folded because of 'free trade' competition with China who is more than willing to dump silicon tetrachloride in people's backyards (rather than recycling it as is required here) and pay people nigh-on slave wages in the process. You can't compete with that. If you want high quality jobs here in the states... if you want progressive, good-intentioned, future-forging entrepreneurship... then exit free trade and renegotiate in fair trade deals... or reinstate rational tariffs.
Made out like a bandit.
There's a rich man or two, after this "Solyndra" scam was used by insiders to funnel 500Mil. Mark my words.
You live in a Kleptocracy. The "foreign competitiveness" front sound very plausible. That's why the whole "green technology boondoggle/buble exists. Not that it might not be needed - but any affair involving billionaires will be used for private extraction. We live in the "post-economic" era, where the pretense of an economy is used to commit outrageous crimes.
"Flyin' in just a sweet place,
Never been known to fail..."
First:A $535 Million loan guarantee is not the same as a subsidy....so.....maybe these articles need to be vetted a little better. Second: “Solyndra could not achieve full-scale operations rapidly enough to compete in the near term with the resources of larger foreign manufacturers,” - DUH!! And this will continue happening as long as the US is not China.... ....so instead....we should CREATE NEW TECHNOLOGY and license it for manufacture to other countries....welcome to International Business 101
Individuals must choose, decide their "essential" nature rather than having it given from some transcendent source.
So your argument is this:
Even though this company was given a substantial advantage in the free market (some might say an unfair advantage), it was rejected. Other green companies were able to produce better results with fewer resources, and produced products at lower costs to consumers. The free market directed its support to those better, cheaper alternatives, effectively killing the company in the article. But to you that rejection is evidence that people are too stupid to buy what you think they should buy. Therefore the free market system failed, governement should fully finance companies like the one from the article and require the populace to consume it's products, while giving consumers no chance to support the better, cheaper alternatives....
Yeah, that's a very compelling argument against libertarianism and the free market....
"But we have to pass the bill so that you can find out what is in it,..." - Nancy Pelosi
Just so everyone is clear, the article says that the Feds backstopped $535MM of the company's borrowings, which isn't the same as giving $535MM in subsidies. In BK, the company's assets will be liquidated to pay off creditors, with the Feds only covering the shortfall (because it's just a guarantee)... and it sounds like the company has a salable facility and marginal patent/IP rights. I'm not saying there won't be a sizable loss, but I don't think "US LOSES $535MM ON GREEN ENERGY SUBSIDIES" is fair to say either.
That plenty of Green Businesses here in the Bay Area are doing very well, primarily Petersen Dean, though others include SunWize, RPS Solar and REC Solar to name a few. Of course they are all private sector businesses that our current government wouldn't concern themselves with because they only want to give handouts to corporate america and green start-ups that have no legitimate plan for growth or success.
Ave Molech Setting
As long as both nuclear, coal and oil are allowed to release CO2 without paying the costs of it, yes green tech won't compete.
However, as we're seeing the ever increasing costs of fossil fuel continue skyward there will come a time when green will be cheaper. (Just as the tar sands up in Canada were once so expensive they weren't viable, now, because if $4/gallon gas they are becoming viable)
Sure you can just wait till then, but what if the damage to the environment is beyond repair at that point? It is actually better and much much cheaper to plan your conversion to sustainable energy rather than have it forced down your throats by external forces. And no, the government isn't forcing things down your throat when they try and plan ahead for change.
People in cars cause accidents....accidents in cars cause people
It also proves that the government does a lousy job of picking economic winners and losers. That is a game the government should stay out of.
Everybody does a lousy job of picking winners and losers. Some VCs try to make sure they pick winners, other VCs spread there money out more trying to pic a winner. I worked at a company that was funded by the same VC that funded Blackboard, Inc. We took $6 million and failed. A lot of companies in their portfolio took similar ammounts and failed. Blackboard IPO'd for $billion or something. When that strategy works, it still averages out to a good yield when you lump the winners with the losers. Also, most losers aren't 100%. If you can take a 30% loss on 10 companies and a 100 fold return on no. 11, you're golden.
Now that that's out of the way, the 2nd part of your statement becomes a question of whether or not the government should act as a VC. That's a separate issue. It's open to debate. If the government doesn't fund startups, then should it do anything else to help business? If you want to be a purist on this you need to strip out *all* the incentives, not just assistance for startups.
The best argument I've ever heard against subsidies for Green technology was from a VC in Silicon Valley and the interview was in Scientific American a few months ago - and I can't find the damn article.
One thing that made this nation great in its heyday was this: We didn't have a bunch of hand wringers from libertarian think tanks getting in the way of progress. If we had, this country would never have achieved anything that couldn't safely return a profit within the next two quarters.
When there was a major goal to accomplish, government and industry got together and put together the taxpayer funded handouts it took to do the job. Whether it was gifting free land to railroads, building canals in Central America, providing major subsidies for air mail, creating massive socialist highway building programs to help auto makers, or hundreds of other things., they stepped up to the plate and said: Git 'er Done.
Glassdoor.com rating for solyndra was only a 2.6, which is pretty bad considering the exciting tech they work with. Most of the posts (most recent was in May) are by Engineers who basically say "the tech is cool, but management is terrible and top heavy."
So, really not that surprising how it went down...
I think I can shorten your argument. The folks pushing alternative energy want "green" energy. The current options for "green" energy are simply "greenER" energy.
Every form of alternative energy has some negative impact. We can get very close to zero impact, but we will always have some impact on the environment if we extract energy from it. Its important to be honest about that. If you aren't honest about it, most people will catch on and you'll turn them off because they feel lied to. If you are honest about it, you can make genuine progress. Nuclear isn't perfect, but its a damn sight better than coal. Solar has some drawbacks too, but its got some benefits that are pretty good.
This.
I mean, the OP couldn't have been bothered to put any context in? And by the way, a one line/link post makes it to FP? Smells like freeping to me.
The DoE never expected 100% of the companies taking out loan guarantees to make it. It's like farming. Not every seed sprouts, but you throw them all out in the field anyway.
Oh, and this:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=115x123885
Now, if anyone can point to a company that didn't get finance from the DoE but had an obviously better prospective, or golf junkets with Solyndra Lobbyists, THEN there's something to wail about.
Someone had to do it.
As for creating demand, the most effective way of creating demand is to lower the price
Glad to see you were awake for the first day of econ 101. If you had bothered to attend the rest of the course you would have learned that reducing the price will only increase demand if price is the demand constraint.
Or do you think if buggy whip manufacturers reduced their price to $0.10 per whip that demand would spike again?
Also, you are making the grandious assumption that by reducing the COST of producing/marketing/selling an item or service, that the savings is passed on to consumers. Yet as we have clearly seen over the last 9 years, that is not the case. Corporate savings today is over $3 Trillion dollars. Tax cuts, subsidies, garunteed loans, grants, etc... to many companies are not being passed on to consumers, they are being put into war chests for future spend and into the hands of CEOs.
50 years ago CEOs made on average 30+ times as much as their non-executive staff's average salary. Today, that number is over 400 times as much.
The problem with demand and growth today isn't corporate taxation, its the destruction of the middle class. The US is on par with 3rd world countries in terms of income inequality. Uganda is giving us a run for the money! Countries we refer to as banana republics have a better distribution of wealth than we do.
I don't have the answers, but I'm sure as shit not going to put my confidence in someone who is counting on their Jr High education nor in someone with a D- average in college Econ classes (Bush Jr) for the guidance to see our country through these times.
-Rick
"Most people in the U.S. wouldn't know they live in a tyrannical state if it walked up and grabbed their junk." - MyFirs
Another wish for mod points..
people look at the public works of the great depression - we got something out of that money.. yes the government was paying for labor.. but that labor was going to work, and you only got it if you worked..
This handing out money and letting failed groups fail again is just stupid.
'...if only "Jumping to a Conclusion" was an event in the Olympics.'
You mean pollutes /differenly/. Every type of energy we've found produces some environmental impact (pollution). Whether it's waterwheels chewing up trout and salmon or solar panels made with highly poisonous chemicals -- killing the environment is kind of how we play the game.
It sucks, but that's why I'm pro nuclear -- at least Chyrnobyl teaches us that the radiation zones those leave behind are good for the environment.
-GiH
No, I mean pollute LESS, like I said. Oil is a very nasty business in both extraction AND use. At least solar is only messy in producing the panels, not in use (and really not messy at all when you use solar HEATING, not photovoltaic). And to say it pollutes DIFFERENTLY, is to imply they are equal pollution-wise. Finally, I hope your Chernobyl comment was sarcasm, as the only thing beneficial to the flora and fauna was that it kept people away.
And the highways weren't socialist. The Interstate Freeway System was designed as a Department of Defense project.
That's the biggest load of bull ever foisted on dimwitted "fiscal conservatives". Of course they said it's "for the military". We have to support the troops!
Bunk. You know full well that the entire reason they built those freeways was because the American public wanted to drive fast in big cars.
If all they wanted was to was move military convoys, they could have paved a right-of-way no wider than a single railroad track, at orders of magnitude less cost.
BTW, the US Department of Defense is one of the biggest socialist programs on this planet.