Solyndra Flop Doesn’t Slow $9.2 Billion Push to Aid Wind, Solar
The Obama administration, defying congressional Republicans after the failure of solar-panel maker Solyndra LLC, is working to award as much as $9.2 billion in government financing to renewable energy companies before a Sept. 30 deadline.
Loan guarantees for 14 companies will close by month’s end if the projects meet government lending rules, Damien LaVera, a Department of Energy spokesman, said in an interview. “We want to get as many of these done in a way that responsibly protects the taxpayers’ interest,” he said. “If they meet conditions set out in the agreement, then they’ll close.”
Solyndra filed for bankruptcy protection on Sept. 6, after receiving $535 million in loan guarantees from the administration, and the Federal Bureau of Investigation raided its Fremont, California, headquarters two days later. Republicans have called Solyndra a “poster child” for the failure of clean-energy subsidies awarded by the Department of Energy under President Barack Obama.
“I am very concerned about where the $10 billion DOE has left to spend before the September 30 deadline is going,” Representative Cliff Stearns, a Florida Republican, said at the Sept. 14 hearing of a House oversight panel he heads. “Taxpayers would be better served by not risking even more of their money, instead using it to reduce our mounting national deficit.”
Obama’s stimulus program, passed by Congress in 2009, set the Sept. 30 deadline for loan guarantees for most alternative energy projects. Programs to invest in advanced-technology vehicles and nuclear power plants will continue.
Third to Fail
Solyndra was the third U.S. solar manufacturer to fail in a month as lower-cost Chinese panels and weak global demand drive a wave of industry consolidation. Solyndra, the only one of the three with a federal guarantee, produced cylindrical devices that convert sunlight into electricity using copper-indium-gallium-diselenide thin-film technology. Standard solar panels are flat.
Nine of the pending loan guarantees are for construction of solar-power stations and one is for a wind farm, projects that carry less risk than manufacturing because the power they will produce is already sold, according to Shyam Mehta, senior analyst for GTM Research, a Boston-based analysis firm.
“Those I think are relatively low-risks investments,” Mehta said in an interview. “These farms are going to generate energy and are going to be paid a price for the electricity generated based on power-purchase agreements.”
Wind, Corn Cobs
Nordic Windpower of Kansas City, Missouri, a closely held maker of wind turbines, is seeking a $16 million loan guarantee. Abengoa Bioenergy Biomass of Kansas LLC, a unit of Seville, Spain-based Abengoa SA (ABG/P), and Poet LLC of Sioux Falls, South Dakota are seeking aid to build the first U.S. plants to produce ethanol using non-food feedstocks, such as corn cobs and switch grass.
Ormat Technologies Inc. (ORA) of Reno, Nevada, is awaiting a $350 million loan guarantee to build geothermal power stations that can convert heat into electricity in Nevada. Chief Executive Officer Dita Bronicki said she doesn’t expect the uproar over Solyndra to derail Ormat’s application.
“It’s hard to predict political fallout,” Bronicki said in an interview. “We are quite confident that we will close before Sept. 30.”
Ormat Technologies is a unit of Yavne, Israel-based Ormat Industries (ORMT) Ltd. Foreign-owned companies are eligible for loans if their projects are located in the U.S., according to the Energy Department’s website.
‘Moving Along Well’
“We’re fairly confident that our process is moving along very well,” Jeff Broin, CEO of Poet, said in an interview. “It’s expected that some project will fail. That’s why a loan guarantee program does exist in the first place.”
The Energy Department has provided about $9.6 billion in loan guarantees to 18 developers and manufacturers since 2009.
Since Solyndra said on Aug. 31 that it intended to file for bankruptcy protection, the Energy Department has closed a $1.2 billion loan guarantee for Abengoa to build a solar-thermal power plant in California; a $90.6 million loan guarantee for Cogentrix Energy LLC, a unit of Goldman Sachs Group Inc., to build a solar manufacturing plant in Colorado; a $150 million loan guarantee to 1366 Technologies Inc., a maker of silicon wafers for solar cells; and a partial guarantee of a $344 million loan to SolarCity Corp. (SCTY), a closely held installer and owner of rooftop power systems.
Democrats led by Representative Henry Waxman of California said Republicans were using Solyndra to taint other clean-energy projects.
“The majority of Republicans on this committee deny that climate change is real,” Waxman said at last week’s hearing. “If you are a science denier, there is no reason for government to invest in clean energy.”
Solyndra’s collapse argues for a halt rather than a rush to fund projects, House Energy and Commerce Committee Chairman Fred Upton, a Michigan Republican, said at the hearing.
“The administration was so wrong about Solyndra after nine months of due diligence, how can it possibly exercise the proper controls when billing out another $10 billion within the next couple of weeks?”
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