The U.S. solar industry had $1.8 billion in net exports last year. But it faces daunting challenges from both Chinese competitors and GOP budget cutters. Not every U.S. company will survive global industry consolidation. But the PV segment as a whole has seen more than 10% annual job growth since 2003 and is certain to continue being a big job creator — if the U.S. government doesn’t let the playing field tilt to foreign companies.
The news broke yesterday that solar manufacturer Solyndra was filing for bankruptcy. The thin-film producer closed its California-based manufacturing facility and laid off 1,100 workers.
One more business going bankrupt in these tough times wouldn’t normally make big news and draw GOP cheers. Solyndra, though, had received a $535 million loan guarantee from the federal government to manufacture a unique cylindrical solar module that reduced installation time, increased efficiencies, and didn’t use the most expensive material in conventional solar modules, silicon.
GTM Research Senior Solar Analyst Shyam Mehta made an accurate (if somewhat understated) observation about the coming blowback:
Unfortunately, most coverage of today’s news is likely to gloss over the market’s subtleties and conclude that supporting domestic solar manufacturing is a waste of taxpayer money. Thus, the image of the U.S. solar industry is likely to be affected negatively in the minds of both policymakers and the general public in this post-Solyndra world.
The fact is that with a glut of solar panels on the market today, depressed silicon prices, and the Chinese government lavishing huge amounts of subsidies on domestic manufacturers — 30 times the amount of loans as the U.S. in 2010 — Solyndra’s cost structure simply couldn’t compete in an increasingly-commoditized market. In a statement yesterday, the company cited “global economic conditions” as the main reason for the shutdown.
Conservatives are dancing all over Solyndra’s grave, trying to turn it into a referendum on renewable energy and green jobs. But the U.S. invented the modern solar cell half a century ago, and the route to sustainable wealth can’t possibly be one where we invent technologies and other countries manufacture them.
No, rather than a referendum, this should be is a chance to learn the lesson of how the US can compete in one of the fastest job-creating sectors in the world.
No doubt, this is a big story. Many people in the industry were critical of Solyndra even before it received a loan guarantee. While trying to scale the manufacturing of its technology too quickly, Solyndra ended up being a capital-inefficient player during a time when market forces were dramatically pushing the price of conventional PV down.
But rather than ask what we can learn from the Solyndra failure in order to inform future investments in renewable energy – a goal that Vice President Biden rightly called “absolutely necessary” in a speech at this week’s National Clean Energy Summit – the company’s bankruptcy will likely be used as ammunition in an all-out assault on the Obama Administration’s clean energy objectives.
Republican Representatives Fred Upton and Cliff Stearns were first out of the gate: “We could smell a rat from the onset,” they wrote in a statement. “Unfortunately, Solyndra is just the latest casualty of the Obama Administration’s failed stimulus, emblematic of an economic policy that has not worked and will not work.”
As Climate Progress pointed out in a debunk of green jobs criticism, multiple non-partisan organizations have shown that the stimulus created millions of jobs and prevented the economy from collapsing. The National Bureau of Economic Research found that “the stimulus had a positive, statistically significant effect on employment.” Over 65,000 jobs were created or saved (now 64,000) by the Department of Energy’s loan guarantee program alone.
That doesn’t seem to matter to opponents of renewables. Expect the Solyndra debacle to be re-hashed over and over this political season in an attempt to completely tear down the Obama Administration’s investments in clean energy.
Upton, chair of the House Energy and Commerce Committee, has been investigating the Department of Energy’s Loan Guarantee to Solyndra. He now says he’ll redouble that investigation.
There are questions to be answered about the prudence of this particular loan, given previous concerns about the competitiveness of the company’s technology. But if this investigation is used for political grandstanding and to back-handedly celebrate the loss of 1,100 jobs in order to label Obama a “failure” – which is exactly what is happening – we lose a heck of a lot more than those jobs. We will lose our opportunity to learn from this incident and continue making smart investments in renewable energy.
In today’s market, companies like Solyndra and others are forced to compete with low-cost Chinese manufacturers who benefit from significant state support and a government policy which creates markets at home and abroad for their products. In 2010, the China Development Bank provided more than $30 billion in loans to Chinese solar manufactures, and Chinese companies bought millions of Chinese-made solar panels. The United States provided less than $1 billion.
As a result of the innovations driven by China’s investments and U.S. venture capital, the price of solar cells is down 42% in just the last nine months, and down over 70% since Solyndra’s founding.
Solyndra highlights the broader choice we face as a country: do we want to compete in the global market place – creating American jobs and selling American products in the process – or do we want to buy the technologies of tomorrow from countries like China? This isn’t about picking winners and losers. It’s about choosing to succeed, or choosing to fail.
Some of the individual investments may fail, but we know today that the clean energy sector is one that will play a growing role as the world struggles to reduce pollution and dependence on fossil fuels as it adds billions more people by mid-century. Throughout our history, government has supported emerging industries – from electricity, to aerospace, to the microchip. As a result, American companies have set industry standards and dominated their fields. Now is not the time to stop making those kinds of investments in our nation’s future.
Opponents of clean energy are going to take their attacks as far as they can – even if they have no idea what they’re talking about. The media mouthpiece of the Republican party, Rush Limbaugh, was next up with a mind-bending, nonsensical rant about why the solar industry “has no reason to exist.”
Now, global economic conditions. However, the prime ingredient for a solar company is still there. What is that? The sun! The sun is still there. It may be behind clouds, but it’s still there. Solar power comes from the sun. The sun is still there, and yet this company shuts down because of “global economic conditions”?
You know, I’m not a solar or wind expert, but when your primary source is still up there, and there’s not a damn thing anybody can do to it, and you still can’t make money? We’re not there yet, is what tells me. We haven’t figured out how to harness it yet. The market will tell us; this is not the market. This is the government subsidizing something that doesn’t yet really exist and has no reason to exist, purely for the political advancement of a doofus, a jackass.
Thank goodness Limbaugh identified himself as a non-expert in wind and solar, as he might have confused a lot of people with his incredibly deep knowledge of the industry.
The fact is, this market has plenty of reason to exist. When matched side-by-side with incentives provided to the coal and natural gas sectors, solar is far less expensive than peaking generation, and in sunny markets is competitive with the cost of building new coal and nuclear plants. And even with pressure from Chinese companies, the U.S. is a $1.9 billion net exporter of solar products – proving the value that the industry provides to the U.S. economy.
As GTM Research’s Shyam Mehta pointed out, the Solyndra incident does not point to any inherent failure in the solar market:
At the same time, the U.S. continues to be a world leader in PV research and development, polysilicon feedstock manufacturing, and capital equipment for PV. Moreover, competitively positioned firms such as First Solar are still investing in domestic panel manufacturing facilities – the latter has begun construction of a 250 megawatt plant in Arizona.
While the price of limited fossil energies continues on an upward trend, the cost of producing and installing solar has come aggressively downward. Those exceedingly good economics are what made it difficult for Solyndra to compete.
Surely there are questions to be answered about the loan issued to this particular company. But that should not mean attacking the idea of clean energy itself. We can only hope that any investigation into this loan guarantee – if it finds anything – is about how to make the process better, not about dancing on the grave of an American company in order to score political points.
Sadly, members of Congress are already practicing their dance steps.
– Stephen Lacey and Joseph Romm. CAP’s Richard Caperton also contributed to this story.