Solar Energy Under Scrutiny Again

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Solyndra founder Chris Gronet takes President Obama on a tour
Source: Paul Chinn, (accessed Sep. 16, 2011)

The bankruptcy of solar equipment manufacturer Solyndra has fueled concerns that alternative energies such as solar and wind power are risky investments. The Fremont, CA company received a $528 million federal government loan, which taxpayers are now liable for following the company’s collapse.

The closure of Solyndra’s factory and the subsequent FBI raid on its headquarters has raised serious doubts among policymakers about the government’s involvement in funding alternative energy projects. Representative Fred Upton (R-MI) said, “In this time of record debt, I question whether the government is qualified to act as a venture capitalist, picking winners and losers in speculative ventures and shelling out billions of taxpayer dollars to keep them afloat.”

According to the New York Times, three factors contributed to the downfall of Solyndra: “The cost of silicon, a key ingredient in competitors’ cells but not in Solyndra’s, fell sharply. The European economic crisis cut demand for solar cells. And China subsidized a huge increase of solar equipment production, producing a surplus.”

The Energy Department has guaranteed almost $38 billion in loans for 40 projects since the loan-guarantee program started in 2005. Solyndra, which represents 1.3% of the program’s portfolio, is the first loan to default. Tyson Slocum, director of the energy program at Public Citizen, believes that government subsidies must continue. “You can’t end loan subsidies for renewable energy. That would be a disaster. In countries like Germany and Japan, which have a much larger footprint in this area, subsidies have been remarkably successful.”

According to a June 2011 report by Ernst & Young, the combination of rising fuel prices and falling solar photovoltaic panel prices could make large-scale solar cost-competitive within a decade.


Matthew L. Wald and Charlie Savage, “Furor Over Loans to Failed Solar Firm,”, Sep. 14, 2011

Ronald D. White, “Solar Panel Firm Solyndra to Cease Operations,” www.latimes,com, Sep. 1, 2011