Solyndra scandal: A threat to the solar industry?

Republicans have seized on the case of the bankrupt company as a way to discredit the renewable energy sector

Topics: Environment,

Solyndra scandal: A threat to the solar industry?FILE - In this May 26, 2010 file photo, President Obama, center, is given a tour of Solyndra by Executive Vice President Ben Bierman, right, as Chief Executive Officer Chris Gronet, left, walks along at Solyndra Inc. in Fremont, Calif. FBI spokesman Peter Lee says agents executed multiple search warrants on Thursday morning Sept. 8, 2011 at the company's headquarters in Fremont as part of an investigation with the Department of Energy's Office of Inspector General. (AP Photo/Paul Chinn, Pool, File)(Credit: AP/Paul Chinn)

With yet another hearing about bankrupt solar energy firm Solyndra on Friday, congressional Republicans are keeping the heat on the Obama administration for its role in securing a $535 million federal loan guarantee for the company.

Top company executives repeatedly invoked their Fifth Amendment right to remain silent at a hearing on Friday. But the broader battle is over government support for the renewables industry itself and Obama’s so-called “green jobs” agenda.

“A green jobs-fueled recovery is a theory, and is yet unproven. There is a lot more green, in the way of cash, and a lot less energy and jobs than anticipated,” Rep. Darrell Issa (R-Calif.) declared this week, adding that, “It is reasonable to predict that we could have the collapse of the entire solar panel manufacturing business in America.”

In response, the solar power trade group in Washington has launched an aggressive P.R. campaign portraying Solyndra as an outlier and the industry as a promising one.

For an update on the case and the implications for the industry at large, I spoke to Grist staff writer David Roberts, who has been covering Solyndra closely.

What is the basic Republican narrative in this case, and what exactly is being alleged about the Obama administration?

As is typical in these kind of faux scandals, it can be hard to tell exactly what is being alleged. There’s just a lot of sort of sturm und drang and hand-waving going on. But if you drill down, basically what Republicans are saying is that it was knowable that this company was in trouble and had a terrible business model but because it was politically connected, Obama officials leaned on the Department of Energy to rush through the approval for the loan guarantee. The broader charge is, “This is what you get for propping up the kinds of energy that are dependent on subsidies. This is what you get when the federal government mixes itself up with specific funding decisions and picking winners and losers and so on.”

Obviously the Republicans’ broad goal is to discredit a government effort to boost this industrial sector, and indeed more broadly to discredit renewable energy entirely.

The political connection here is that a Solyndra investor is an Obama donor?

One of the big investors in Solyndra is a fund that is backed by George Kaiser, a guy who donated heavily to Obama’s campaign. That’s what they’re hanging everything on. But of course that was just one of a range of investors. Another was the Walton family of Wal-Mart fame, who no one would accuse of being Obama toadies. I don’t think anybody is even alleging that there was open collusion between the donor and Obama. The idea is more that the administration decided to do a favor for a contributor.

In February 2011, the loan guarantee was restructured because DOE concluded that it was better to try to get the company through the hard times than to just let it go. That allowed them to pull in more private money by restructuring the loan guarantee such that the private investors would have priority if something went wrong and the company was liquidated. The private investors would be paid back first. That gave a hint of impropriety that the GOP needed to go full hysterical.

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[Ed. note: Read a comprehensive take on Solyndra's financing here. ]

The FBI raid Solyndra’s headquarters earlier this month. Do we know what the bureau is investigating?

We don’t at this point. Solyndra executives were telling public officials, “We’re doing fine,” right up until the company went under. So — this is just a surmise — the FBI may be investigating whether the company knew more than they let on. But as far as I know, there is no concrete evidence of wrongdoing on Solyndra’s part, yet.

How explicit have the Republicans been about trying to broaden this scandal to discredit the entire solar industry?

The proximate goal here is to bloody the Obama administration, so most of the rhetoric has focused on vague allegations of impropriety by the administration. Once they establish that this is a scandal, the step after that will be to try to kill the loan guarantee program for renewable energy. The House Republican leadership is now trying to cut the program in exchange for Tea Party votes for a bill to avoid a government shutdown.

There are some Republicans, though, who recognize that this is a smart program. Of all people, [Rep.] Joe Barton yesterday said that Solydnra was not reason enough alone to kill the loan guarantee program. I don’t think a freestanding effort to kill this program in particular has the votes to pass the House. And even if it did, it would die in the Senate.

How much does the solar industry even need government assistance at this point? 

The industry still needs the government. Every industry does in this economy. It’s sort of unfair to try to judge the performance of a loan program in the context of a massive, borderline depression. These are small companies. Even if they have a good idea out of a lab, there’s still that valley they have to go through where they’re scaling up to a market-ready product. And the government has always been involved in helping companies at that stage.

How much of a blow do you think the scandal is dealing to the industry? Is it going to be a problem for the long term?

I thought early on that Republicans were going to ride this as long and hard as they could, that it would be just like Climategate. That means they would make a huge deal of it up front, launch a bunch of investigations, cast a bunch of aspersions and make it synonymous in the public’s head with the whole enterprise of clean energy. But I’ve actually been surprised that the Obama administration has pushed back against this pretty hard. And the press has been less gullible than they usually have been. Greens have been there. The pushback has been stronger and better than I would have expected. If I had to guess now — and obviously there’s a lot left to play out — I would say no, it probably won’t end up being that big.

Justin Elliott is a reporter for ProPublica. You can follow him on Twitter @ElliottJustin

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