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jgroelinger • 7 years ago

Someone mentioned "due diligence" - a point I'd like to further explore. At a high level, there are two major steps to the process before a company can lose the money it receives. First it has to receive a loan guarantee. Then it has to receive the money from a lender (because a guarantee is just that a guarantee, not money). In the 80s I was a consultant to, and then a senior officer of, the US Synthetic Fuels Corp., a US government corporation formed late in the Carter administration. Our authority was to issue federal loan guarantees to alternative energy projects. I found that, for such high-risk projects, the issuance of a US government guarantee was a necessary, but not a sufficient, step for the owners to receive funds. Financial institutions would still perform extensive due diligence on the borrower and the project, because the last thing lenders wanted to do was to try to collect from the US government against the loan guarantee. So, Ive been puzzled. Even if the US governments Department of Energy saw fit to issue the loan guarantee, what lender saw fit to actually provide the $535 million? It turns out that it was also the US government, through the Federal Financing Bank (FFB). Why was the FFB involved? According to its website, FFB has statutory authority to purchase any obligation issued, sold, or guaranteed by a federal agency to ensure that fully guaranteed obligations are financed efficiently. Was there no other source of efficient financing? Did the FFB perform any due diligence? Did the FFB step up because independent lenders wouldn't lend to Solyndra despite the loan guarantee? Was this a package deal that bypassed what would normally be a legitimate third-party project review? The answers to these questions would show the extent to which this was a political or a business deal. If it was a business deal, I'd agree that all deals don't turn out to be winners. If, however, this was a political deal, shame on those involved.

jambo • 7 years ago

Thanks jgroelinger for some not-seen-elsewhere insights into this mess. I didn't know about the FFB involvement. If true, that does sound really problematic. And, it would make me want to ask if FFB were also financing other DOE-guaranteed projects.

solarloper • 7 years ago

jgroelinger: Spot on! These are excellent questions, and hopefully there are like minded people on the Hill who will ask similar ones.It's one thing to make your best educated guess and invest with private money, as most efficient markets do. It's an entirely different game when the govt uses taxpayer money to make political plays (as it would appear in the solydra case). The inevitable backlash to this waste of taxpayer money is the cancellation of the 1705 (and similar) programs - and then we all loose. It would have been much better to have done some REAL due diligence, and treat the taxpayer (and their money), with respect. And this is not me being snarky or gloating (as i'm sure many will accuse) - This should be a cautionary tale that we all in the green-tech world should pay attention to and learn from.

For the record: Solyndra discussion between Dr. Lewis Fraas at JX Crystals Inc and Jason Strauch at Sandia National Labs (a DOE LAB) on March 30, 2009Jason Here are my comments on the Solyndra deal.Solyndra is a tragic waste of money. The circumference of a circle is (Pi)D. If they deposit the CIGS on the circumference of the tubes, they are creating a low efficiency semiconductor with area of (Pi)D. The sun at any time during the day will illuminate an area = D. This is the inverse of concentration. Their utilization of the semiconductor material is 1/(Pi) or 1/3.14 = 0.32. I guess they really don't believe in motors for tracking and they do believe in paint with efficiency of 9% or now it is 9/3.14 = 2.9%. How stupid can people be??This is the thin film fantasy carried to even higher levels of incredibility. Also, they have a drawing and we have a photo of our 3-sun PV module and 2.5 years of operation.This should be a funny joke accept that they are serious. I looked at their web site. I do not see a module spec sheet. Also everything seems to be art work with no photos or performance data whatsoever. Has Sandia or NREL or any other gov lab tested this hypothetical product before the DOE issued this guaranteed loan? Lewis

SolarStillExpensive • 7 years ago

My observation a while back when I saw this "cylindrical panel", is that for the incident rays whose path meet the cylindar axis (perpenicular), the charge generation is normal for the material used (CiGS). So the efficiency is the highest. Outside that path I expect reflexion and the further you go from that path the lower is the current generated (lower efficiency)! So I expected that the "effective area" is shrunk!

ramon • 7 years ago

Well, well, now we have the case of Sunpower, a $1.2 billion DOE loan that's twice as bad as Solyndra.OK, you can proceed to defend this crooked deal as well.

R. Marks • 7 years ago

I beleive the whole process of giving loans is politically corrupt. Why is it that most loans go to CA based companies? My real issue is with the ATVMIP program for rebuilding the auto industry to produce advanced technology vehicles. This program was passed in 2008 as part of the trouble assets bill. Of the $25B in loans, there is $17B remaining which have not been given out. In June of 2009 Ford, Nissan, and Tesla were given loans, Fisher followed in September. None of the remaining 75+ applications have received anything. Now to my point: Tesla is in Polosi's district and it is reported that her VC husband is a Tesla investor, and then Fisker, is in Biden's home state. Now how does this process really work??

Roger Faulkner • 7 years ago

It appears to me that DOE has a high-tech bias that sometimes gets them in trouble. DOE support of hot fusion and of superconducting power transmission development are bigger boondoggles than Solyndra, for sure.

Bob • 7 years ago

Eric Wesoff Thank you for listing the DOEs solar loan guarantees. Interesting info. What jumps out is that a vast majority is for solar generation projects (as opposed to solar manufacturing). My question is: In the case of these solar generation projects, what specifically is being guaranteed? Project completion? Power output? Efficiency? LCOE? I mean, what would need to happen for these loans to default? Exactly what is the risk to the taxpayer?

Youwin • 7 years ago

Any one associated with Solar in any private or public endeavor is evil. The government is evil. The citizenry are helpless victims.Let's all go into plumbing...

ramon • 7 years ago

Solyndra goes far beyond just being a bad loan. It was only one of many crooked deals that have been used to enrich party faithful and administration relatives. Those seeking to cover up these deals or excuse them as simply a bad investment are ignoring the sleaze and incompetence involved. No one who looks at the actions of Chu and his dept and the White House can possible claim that this was an isolated case. I also note Obama's purchase of $150 billion in GM stock, now worth about half that amount. That loan was payback to the UAW and other unions, who contributed half of Obama's campaign funds in the last election. He called it a "good investment." Well, for him I suppose it was - he can count of plenty of support from those unions next election. This is called buying votes and campaign contributions, using taxpayer money. Obama has a history of corruption and throwing away money by the bucketful. Anyone who defends this kind of behavior is just as crooked as he is. And what about Evergreen Solar? And what about that brilliantly conceived "weatherization program"? It doesn't take much digging to find plenty of dirt and filth in this crooked administration. Now we learn that Pelosi's relatives were benefiting from all these corporate loans as well. Seems like the entire Democratic Party is involved. Pack of thieves.

Eric Wesoff • 7 years ago

Even Drudge retracted the false Pelosi accusation.

Eric S • 7 years ago

Forgive me for not reading the entire list of talking points, but one caught my eye. You need to look beyond the retracted Drudge headline on the Pelosi relative thing. Blindly repeating talking points like a good sheep will sometimes lead to embarrassment.

Archnemesis • 7 years ago

Why does anyone care about Solyndra? Every fund on Sand Hill Road has made investments that have lost capital. Why should the government be held to a different standard? Tax payer dollars? That argument is a crock. I could argue that keeping an entire generation of non-working seniors alive through SS and Medicare is a waste of taxpayer dollars too. Move on people.

Steve Adams • 7 years ago

Right on. We should let the DOE have 1 trillion dollars next year for this stuff. We can afford it and if they blow it all it wouldn't be much different then the VC folks. It's not like the money goes to singing robots and oboma cronies. We get real scientific progress from that stuff. Another 1 trillion for a transporter beam system and we cloud all be proud we 'did' something to fix CO2 pollution from transportation systems. - We own your life , we are your neighbors!Slavery is bad unless you are a slave of the state.

tesla_x • 7 years ago

"having some as a hedge on natural gas prices is not out of the ballpark dumb."I agree. But it needs to be economically aimed at the more expensive behind the fence peak power needs, not glass plating the desert where it is just not financially sustainable.Nat gas had a spike in 2008, but was pretty cheap before that....the latter part oft he 2000s were more of an anomaly, actually. It is cheap once again, and for the foreseeable future.Whether you think it is clean or not, or just 'cleaner' than most other fossil options, it is here to stay.Energy investors and technology suppliers ignore it at their peril.

tesla_x • 7 years ago

Regarding economics...We live in a commodity based supply and demand world.Nat gas hit $3.50 the other day, and I'm thinking that puts the retail price of electricity at sub 9 cents.When energy is cheap like this you put your dollars where they make value and money.Farmers and livestock owners do this every day with the crops they choose to grow and what feed they choose to buy for their animals. It deploys their capital prudently when they plant crops that are valuable or when they buy ones that are a lower cost alternative.When the commodity prices change, so do their purchase decisions.Energy is no different.Solar and other high cost renewables are a poor investment when demand is dropping and cheap clean alternatives are available.Right now that is natural gas.

scott • 7 years ago

Energy is very different. Food is on a one year cycle. Power plants take time to build 1-3 years, and the resource climate in terms of price and availability can change drastically. Just look at the 20 year tracking of natural gas prices. It was over 12 less than three years ago. In the 90's people saw cheap natural gas and built tons of plants. Gas prices soared, and many of them went bankrupt. Granted solar is still quite expensive, but having some as a hedge on natural gas prices is not out of the ballpark dumb. In many cases its actually quite smart. Its just a small market.

MattF • 7 years ago

I'm not sure how you can call natural gas most likely acquired from fracking a "clean alternative".

JoeJoe • 7 years ago

Yeah... These big solar projects really get me. If you add in the potential costs of new transmission the economics fall apart. http://wyia.org/projects/tr... are some other projects.http://switchboard.nrdc.org/blogs/... the big solar or big wind vision needs these transmission projects the economics don't work. You can hit all the RPS targets more economically by installing slightly more expensive PV locally. And if you install locally you build a larger constituency. That's invaluable.

SolarEnima • 7 years ago

Eric, thanks for this continued coverage.By the way, keep in mind, not all modules are made alike and appropriate for all applications. Also, before investing, it is called...due diligence. Not because it is a trendy company with lots of schwag and marketing hype, liquidated shares and inflated stock prices.FirstSolar - Hmmm, $4.38 billion in DOE loans and down to $60/share already (from $160 only six months ago!), I can't imagine what's going to happen if the House Committee of Energy and Commerce held the loan process up? Do ya think any execs sold at 300 in May 2008?...go figure, only suckers buy solar at that price.Does anyone know how Abengoa got on the list? Aren't there other American companies that could have benefitted from loans? As per Google Finance "Abengoa SA is a Spain-based company, which principal activities range from solar energy to industrial waste, information technology and engineering" Sounds fishyIn my opinion, it would have been nice to see many smaller solar installer companies benefit from loans. Since when did Solar Manufacturers excel in installing solar? Why don't us little guys just move out of the way and let the SunPower and First Solars who are in bed with the DOE install solar. How many of those Solar companies have NABCEP certified installers installing solar for their jobs?? once again...go figure Check those First Solar systems in the desert in nine years and see how many modules didn't make the 90% power warranty cut?

Archnemesis • 7 years ago

The program is voluntary. Companies applied. Solar installers have no technology, if they need loans they could have applied to the SBA. Why is this so hard to comprehend?

wirelessbluedog • 7 years ago

Unfortunately, I agree with ECD. Will SoloPower and Abound last until next November is the question.

ECD Fan • 7 years ago

Eric Wesoff: We know exactly what will be found: SoloPower and Abound cannot repay the loans, and whoever approved the loans knew (or should have known) that. We will also find that Mr. Kanjorski, the nephew, can run but cannot hide.

pyrroho • 7 years ago

Eric typo "keeps on giving"

Eric Wesoff • 7 years ago

Yes, it's all about Mr. Kanjorski.

tesla_x • 7 years ago

Are you *STILL* trying to cover Barry's backside on this?He and his cronies are the ones calling the shots on this program....NOT Bush.Have a SPINE to admit that your messiah is in deep DOO-DOO...OK?

Eric S • 7 years ago

Easy there, Tex.No. I would like to know the history of it. Did it pass with bipartisan support? Was it pushed through a Democratic congress? Where did the idea come from? What was the debate over the program at the time? Lots of people now seem to think it was a terrible idea. Who put it in place originally? Who is responsible for the framework? What were the expectations when it began?I'm not blaming or covering for anyone. I'd like to know some factual history about it before it became a whipping-boy.

Eric S • 7 years ago

I know the 1705 program was created during the Bush admin. What's the history of it? Who pushed it? Was it bipartisan?