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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.
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
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??
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.
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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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."
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).
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.
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.
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.
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