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Chris Gronet founded Solyndra in 2005 when he developed a revolutionary cylindrical solar panel made without silicon. His technology was touted as the future of solar energy.
However, the Department of Energy under the Bush administration rejected Solyndra’s loan application in early 2009 due to concerns about the company’s high manufacturing costs. Just two months later, President Obama’s newly appointed Energy Secretary, Steven Chu, approved the loan. Critics today argue that Chu acted despite numerous red flags in an effort to jump start the President’s green-tech initiatives.
Since its inception, Solyndra continued to cause problems at the federal level. In 2011, when Solyndra was about to default, Chu agreed to a $75 million infusion of private capital and a restructuring of the debt.
Chu defends the terms of the refinancing as “entirely legal.” But it is not just the terms of the loan that troubles critics and investigators. George Kaiser, Oklahoma billionaire and major Obama donor, is one of the original investors in Solyndra. It is currently under investigation as to whether politics influenced Solyndra’s government loans, a controversy which will play a role as the presidential campaign heats up next year.
At the state level, officials were also eager to jump on the Solyndra bandwagon. Just two weeks after Solyndra closed its original factory and laid off 150 people in November of 2010, the California Alternative Energy and Advanced Transportation Financing Authority approved tax exemptions for the company worth as much as $34.7 million.
But it was not just Solyndra’s status as a green tech firm that caused problems—the company’s management was not entirely transparent.
Rep. Cliff Stearns (R-FL.), chairman of the House subcommittee panel investigating Solyndra, maintains that: “Even as late as this summer, Solyndra executives told us here in Washington that the company’s finances were improving. [But] Solyndra was never profitable, and it was obviously poorly managed and unviable in the global market.”
Democrats have expressed dismay as well. Congresswoman Diana DeGette (D-CO.), who recalled meeting with Solyndra CEO Brian Harrison in July, stated, “I don’t know how they could paint such a rosy picture to us, and declare bankruptcy five weeks later.”
In the wake of the Solyndra scandal, officials have questioned what direction to take with new solar ventures and other green tech initiatives. The controversy has also brought up discussion about the role of government in funding private sector ventures in general.
Jeremy Carl, a Hoover research rellow and renewable energy expert, maintains that there is an appropriate role for government in the funding of new technologies. But he argues that government’s role should be in supporting research projects rather than using the “venture socialism model” in which the government uses taxpayer money to arbitrarily fund private companies. It is also unacceptable, he says, that taxpayers be subordinated to private investment.
President Obama, in an interview with ABC in September, did not appear to be overly concerned about Solyndra, saying, “There are going to be some failures, and Solyndra’s an example.” Obama also argued in his own defense, saying that if the United States is to compete with China, Germany and other countries that are heavily subsidizing clean energy, then “we’ve got to make sure that our guys here in the United States of America at least have a shot.”
While Republicans are promoting a giant step back from such ventures, the President’s team appears ready to go full steam ahead. Jonathan Silver, a former hedge fund manager who oversees the Department of Energy’s loan program, believes that in the aftermath of Solyndra, increased government funding is the right choice because “the race for solar manufacturing is a race worth winning [and] over the next few decades, this will become a global market worth trillions of dollars.”
