Another Stimulus-Backed Energy Company Files for Bankruptcy

[joshh]

http://blog.heritage.org/2012/01/26/another-stimulus-backed-energy-company-files-for-bankruptcy/

Discuss....

[gwb72tii]

Freddy mercury did a song about this right?

[mrsleeve]

this will not be the end of it either. I will see if I can find the article when I get in tonight, that highlights about a dozen stimulus funded green energy companies that are now in dire straights

[Morrison]

This is sad to see, but not entirely unexpected. Keep in mind that if these ventures were not seen as risk - private investors would already have been dumping money into them. Hence there would not have been a need for stimulus monies.

The Spindletop Hill oil field in Texas was also a risky venture. Drilling began there in 1892 and after 9 hard years of drilling and dealing with agitated investors, oil was finally struck in 1901. Yes, I know this is different because it was not a government funded project, but it still illustrates that a few failures may happen before success. Edison failed to make a lightbulb a few times too.

So where does that leave us? Is it inherently wrong for the government to fund any project? What if these had worked out and brought us tons of affordable energy? What about the instances of the Hoover Dam, the federal highway system or NASA? I'm not being facetious here; I'm really wondering how we decide when its okay for government funds to be put into businesses.

The way I see it, each of these bankruptcy instances should be looked at individually rather than all clumped together. Solar panels, ala Solyndra? I believe this was dumb. The last I saw of the figures for solar power there just isn't a good cost/watt ratio and the physics of it all don't look like there is much potential there. Nuclear power is leaps and bounds better in this department and I consider it "green." Batteries on the other hand seem like a much better area to invest in since that is the biggest limiting factor to the electric car. We can make them fast and handle well, but the range is killing them. Combine a long range electric car with power derived from nuclear power plants and only then do I believe can we achieve energy independence.

[cale]

Honest question, not trying to start an argument. What is your purpose for pointing out failures of clean energy companies going under? Is it because they receive heavy government stimulus money, take away jobs in other industry, are unnecessary because renewable energy isn't needed? I want to know where you're coming from.

[joshh]

Honest question, not trying to start an argument. What is your purpose for pointing out failures of clean energy companies going under? Is it because they receive heavy government stimulus money, take away jobs in other industry, are unnecessary because renewable energy isn't needed? I want to know where you're coming from.

The government should not be in Venture Capital at all. It was never intended to be a bank or an investment company. The vast majority of inventions have come from the private sector.
Cheap energy is a huge part of what keeps the country's economy rolling. And yet here we are having very expensive energy shoved down our throats.
For me it's not so much that it's being done but in the virtuosity in the way it's done. Alternative energy source, of course. But not when it's a false market being created by environmentalists pushing their products. When you have to heavily subsidize a product to get it to sell, that's a false market. Or when you force a more expensive product (CFL bulbs) on your population. That kills jobs and helps other economies.

[z31maniac]

because they receive heavy government stimulus money

And it's not even just that, gov't accountants predicted the month Solyndra would go bankrupt...............if you're company model is so terrible you can accurately predict when you're going under...........why is the gov't supporting that?

[smooth]

Solar panels, ala Solyndra? I believe this was dumb. The last I saw of the figures for solar power there just isn't a good cost/watt ratio and the physics of it all don't look like there is much potential there.

The reason the cost/watt ratio didn't make sense in the past was the high cost of materials, primarily silicon. Solyndra developed panels that didn't use poly silicon to be more competitive with the higher priced silicon based products (manufactured in china). Some people could see this as a bad bet but no one at the time predicted that silicon would later become dirt cheap (smile), not even successful established tech companies like AMD, Intel, and nVidia. Look at the past couple years of ridiculously cheap dddr3 ram and read what Corsair and Crucial were saying about it because they certainly weren't betting on silicon prices plummeting. Companies like nVidia and Apple with large cash surpluses were able to weather it without too much of a blip but companies with less liquid assets were either concerned or actually considered by some in the tech industry to have to fold. Keep in mind though that china subsidizes its industries in ways the us can't possibly do for legal, political, and social reasons. Either way, their issues relate to market manipulation not because the market always rewards efficiency or innovation. Theirs is the more efficient method and would reduce costs over time so long as governments aren't subsidizing silicon based manufacturing.

And it's not even just that, gov't accountants predicted the month Solyndra would go bankrupt...............if you're company model is so terrible you can accurately predict when you're going under...........why is the gov't supporting that?

I don't know if its factually true if anyone had previously accurately predicted solyndras poblems. It wouldn't have been difficult for anyone to see though just by knowing the most basic facts that here was a company developing around an expensive process and over the course of a couple of years of watching that expensive process trend downward in cost the consequences would or at least should have been clear to analysts. Even if true, it's certainly not evidence that the business model was faulty.

When a country sees a viable product start to emerge and it can undercut the cost through subsidies then that's the best thing for a country to do if it wants to retain it's product's viability. That doesn't make the product superior. A similar thing happened in the 70's in regards to the auto industry. Then, however, the political and social milieu was different than today, but if not for the bailouts we wouldn't have an american automotive industry. But you could really choose any current product and trace how it's produced to find that things are being manufactured much more cheaply, not necessarily better, not through greater efficiency but rather due to government subsidies. So we either engage in subsidies ourselves to compete on a more level playing field or resign our fate of being constantly undercut by developing countries. All of the developed countries are experiencing this issue, it's not a US specific problem.

[z31maniac]

I don't know if its factually true if anyone had previously accurately predicted solyndras poblems.

http://www.bloomberg.com/news/2011-11-17/solyndra-loan-decisions-mine-chu-to-tell-republican-led-panel.html

[smooth]

I read the article and my reading of it supports everything I wrote. I'm not sure how you come away from that article thinking it supports your point of view. Please explain your reasoning on this?

[joshh]

Jesus please. All you have to do is see what your competition sells for. If you can't compete then why would you open the company? Oh, because the government is giving you money. You just walked away with more money than you had before regardless of the bankruptcy. And you didn't lose a thing out of the whole project. Win win right.

[smooth]

OK, I'm going to conclude that it's my fault for typing long paragraphs that you two couldn't or wouldn't follow.

Silicon prices used to be high.
Solyndra said we have developed a panel that doesn't use silicon.
China subsidized silicon prices so their factories could continue producing panels cheaper than Solyndra's panels.
Silicon prices plummeted *after* Solyndra developed it's panels.
Now their panels cost more than the silicon based panels, but they didn't when the company was formed.

This might be asking a lot of you two, but I'm going to risk it anyway and ask you to consider what will happen to silicon prices and China's panels now that Solyndra is no longer making an alternative panel that would have been less expensive...

[bmwstephen]

hurray for government subsidized industries! private profits but socialized losses!

[z31maniac]

I read the article and my reading of it supports everything I wrote. I'm not sure how you come away from that article thinking it supports your point of view. Please explain your reasoning on this?

I'm not sure if you're trolling, or can't read.

"Among signs Republicans cited as warning flags was an e-mail written by an Energy Department official in August 2009 noting that a model showed a Solyndra project financed with the loan guarantee would run out of money in September 2011. Solyndra filed for bankruptcy on Sept. 6, 2011."

[joshh]

OK, I'm going to conclude that it's my fault for typing long paragraphs that you two couldn't or wouldn't follow.

Silicon prices used to be high.
Solyndra said we have developed a panel that doesn't use silicon.
China subsidized silicon prices so their factories could continue producing panels cheaper than Solyndra's panels.
Silicon prices plummeted *after* Solyndra developed it's panels.
Now their panels cost more than the silicon based panels, but they didn't when the company was formed.

This might be asking a lot of you two, but I'm going to risk it anyway and ask you to consider what will happen to silicon prices and China's panels now that Solyndra is no longer making an alternative panel that would have been less expensive...

Look at the dates of prices of silicon vs our giving 535 million to the company. Silicon was already falling. Plus the technology was very high risk from the start. Doesn't matter how you slice it high risk vs high risk at a bad time. We made a bad choice in giving them money when prices were already falling.