Solyndra crash shows shakiness of market subsidies
Solyndra, the Fremont solar-panel manufacturer that went belly up last week, was the subject of a hearing Wednesday all the way in the nation’s capital.
Lawmakers on the House Energy and Commerce Subcommittee Committee on Oversight and Investigations wanted to get to the bottom of how the much-hyped “green” company scored a half-billion-dollar federal loan guarantee two years ago this month.
The rise and fall of this startup is a cautionary tale for California Gov. Jerry Brown, who proposes that the state subsidize renewable energy technology, including solar, wind, hydro, geothermal and biomass.
Brown promised that the subsidies — or, as he prefers, “investment” — will stimulate “creation of more than half a million green jobs” by 2020.
That’s the same kind of unfounded optimism that prompted the U.S. Department of Energy to award Solyndra its taxpayer-backed loan guarantee, funded by the federal stimulus.
The guarantee was announced at the September 2009 groundbreaking ceremony for Solyndra’s manufacturing plant. Both U.S. Energy Secretary Steven Chu and then-Gov. Arnold Schwarzenegger were on hand to fete the company, which was held as representing the promise of renewable energy.
Chu, a University of California, Berkeley professor before joining the Obama administration, said that Solyndra’s new plant would “kick off many more” groundbreakings by renewable energy companies, which, he said, would usher in “the second industrial revolution.”
The Energy Secretary’s giddy remarks were echoed in May 2010 by President Barack Obama when he toured the solar-panel manufacturer’s plant, accompanied by Solyndra Chief Executive Officer Chris Gronet.
The solar company was “leading the way toward a brighter and more prosperous future,” said the president, who touted Solyndra as a model of how government and private sector collaboration could create green jobs.
What we know now, thanks to federal investigators, is that two months before Obama visited Fremont, auditors for Pricewaterhouse Cooper warned the administration that the company was in financial jeopardy and could very well go bankrupt.
This month, the warnings came to fruition as Solyndra shuttered its Fremont plant, filed for bankruptcy protection and eliminated the jobs of its 1,000 workers.
At Wednesday’s House hearing, Rep. Henry Waxman, D-Los Angeles, said Republicans were using Solyndra to taint other renewable energy projects. He also said that other nations are spending billions of dollars to support their nascent green industries, threatening to dominate the global market.
But while renewable energy has promise — notwithstanding Solyndra’s implosion — the hype that motivated the Obama administration to throw $535 million at Solyndra and that motivates the Brown administration to throw taxpayer subsidies at the state’s developing green energy industry simply has not matched reality.
In fact, a report last year by the Beacon Hill Institute concluded that “forecasts of future green jobs,” like the one Brown made, “are completely unreliable.”
Even more damning, a report by the state Legislative Analyst’s office suggested that California actually would suffer net job losses in the near term as the state mandates increasing use of high-cost renewable energy and decreasing use of lower-cost fossil fuels.
There may come a time when renewable energy accounts for more than 1 percent of California’s jobs. If that happens, it won’t be because of government subsidies or loan guarantees. It will happen because of the same free market forces that have fueled the growth of every great California industry.