In September 2009 as part of a swing through California to raise money for Democrats, in Silicon Valley, President Obama announced $535 million in stimulus funded loans to Solyndra to build new solar power manufacturing facilities in the San Francisco Bay area. In December 2009 Solyndra filed an IPO and said it sought to raise an additional $300 million. In May 2010 President Obama visited one of the Solyndra plants to tout the green jobs growth in California and every Democrat and Governor Schwarzenegger showed up for the free publicity.
But conveniently, the day after the election Solyndra announced that it was scrapping its new factory expansion, shelving plans to hire 1000 new workers and dramatically scale back its expansion plans due to competition from China.
Solyndra took the government funding to build a new manufacturing facility, despite not having demand for their old one. The market problem for Solyndra is that their technology is not yet proven so customers find it hard to finance projects using it, thus making it difficult for Solyndra to scale-up production and drive down costs. Until they have a performance track record in the market it is tough to be a viable competitor for commercial projects.
Solyndra makes copper indium gallium selenide (CIGS) solar tubes instead of the more typical and less costly flat solar panels. Solyndra’s tube-shaped modules are more efficient at producing electricity than the PV panels, but the technology is new without many referencable clients in the market. The IRS is also helping Solyndra with a private letter ruling that building owners can get tax credits for replacing their roof with a Solyndra system.
Some industry analysts have questioned the wisdom of the government making such a big bet on unproven technology by giving them all that stimulus money for premature expansion. Today it looks more like good politics rather than good economics.
Is there a role for the government in R&D to stimulate clean energy job growth—of course. But not if that R&D is used to create a fiction about sustainable clean energy jobs that evaporate right after the election.
But that’s the lesson isn’t it—green jobs are not always sustainable jobs when the economic fundamentals that underlie them are build upon sand.