In the wake of Solyndra's closing this week, what we need right now is a calm and reasoned discussion about what the proper role of government should be to support cleantech.
Unfortunately, there are three groups standing in the way: Republicans, the Obama administration and Solyndra. They need to lower their shields and give us a full accounting of the review process that led to the loan and the sequence of events since then, which led to Solyndra's bankruptcy announcement.
Let's start by reviewing what we know, and the questions that deserve answers.
First, critics of President Barack Obama and Solyndra should remember this: Solyndra originally filed its loan application in 2006, before Obama was elected.
Nearly everyone agrees that at the time of its application Solyndra had developed an innovative solar technology that promised to deliver solar panels at radically lowered prices.
But the loan review took three years, and was approved only after Obama took office. What if Solyndra had gotten money sooner and scaled up production? Would it have been in a better position to weather the storm?
We may never know, but we do need to know why the review took so long. By the time the loan was approved, the financial crisis had killed capital markets. Banks were not loaning money, and private investors had already put in $600 million. So the government needed to step in if Solyndra was going to scale up. After the government loaned Solyndra a big chunk of change, private investors would eventually put in another $400 million.
Still, this is where we find even more troubling questions. It seems stunning that Solyndra began to crumble so soon after receiving that money.
Within a year, the company had pulled its plan for an IPO. In October 2010, the company announced it was closing an older manufacturing facility. And earlier this year, it had to renegotiate the terms of its loan. The government persuaded investors to put in another $75 million as part of that deal, but that means they might be first in line to recover money from Solyndra, according to DOE representative Damien LaVera. The government would collect the next $150 million, and will hold rights to much of Solyndra's intellectual property.
Did the bureaucrats vetting the loan screw up, or is it possible that the market changed that dramatically in such a short period of time?
In Solyndra's defense, many people I talked to this week in the cleantech industry said the drop in cost of solar panels the past two years has shocked the entire industry. By some estimates, prices have dropped more than 70 percent, including 40 percent just this year. Part of that is due to the massive subsidies offered by the Chinese government to its own companies, which have seen their market share grow from 5 percent to 60 percent in two years.
Even giving the feds and Solyndra the benefit of the doubt, that what happened was unforeseeable, the company's actions over the past year still require explanation.
Given the severity with which things changed, we need to know exactly what the company was telling the DOE, particularly when it renegotiated the loan terms.
In addition, the company continued to insist this year that things were swell. Its executives disputed stories, including some in this paper, that raised questions about Solyndra's viability.
In a statement this week, the two Republican congressman leading the investigation into the Solyndra loan, Fred Upton, R-Mich., and Cliff Stearns, R-Fla., said they "smelled a rat from the onset." But they did raise legitimate complaints.
"Over the last six months, Solyndra executives, lobbyists and investors, as well as officials at the DOE and (the Office of Management and Budget) repeatedly told committee investigators that Solyndra was financially sound," they wrote.
LaVera said the administration has turned over 23,000 documents to the committee. And in its defense, the DOE in a blog post expressed disappointment in Solyndra's closure, while insisting that it should not cast a shadow over all government efforts:
"We have always recognized that not every one of the innovative companies supported by our loans and loan guarantees would succeed, but we can't stop investing in game-changing technologies that are key to America's leadership in the global economy. These projects, which include more than 40 other companies, are on pace to create more than 60,000 jobs."
Most people I talked to this week said the government needs to play some role, particularly by investing in research and offering programs to stimulate demand through tax credits and grants. Most also point out that, overall, the solar industry in the U.S. is a big success story, growing rapidly and creating thousands of jobs.
Still, there remains the stickier question of how directly the government should get involved in backing specific companies like Solyndra. To get the answers we need, the administration should turn over all of its Solyndra documents and House of Representatives investigators should immediately make them public, rather than selectively leaking them.
The failure of Solyndra is tragic for investors, taxpayers and employees. Let's not make it worse by failing to learn the lessons it has to teach us.
Contact Chris O'Brien at 415-298-0207 or email@example.com. Follow him at Twitter.com/sjcobrien.