The political posturing in Congress over the Solyndra ”scandal” has its latest act today when the Solyndra CEO and CFO are scheduled to take the fifth today rather than tell what honestly happened. Meanwhile, the DOE Loan Programs Office is rushing to process the remaining Section 1705 applications in hopes of giving away $9.4 billion before the program expires a week from today.
The New York Times covered both stories on Friday, with Solyndra on the front page — above the fold — and an update on the LPO buried on page B7. Going with the politics angle, the NYT got its priorities backward — as did the LPO.
The article inside was the real bombshell:
First Solar Says It Won’t Meet U.S. Loan Guarantee DeadlineTo be fair, the NYT may have buried the story because it was scooped by TheStreet.com.
By Matthew L. Wald
First Solar, a major solar panel manufacturer, said Thursday that it would not be able to accept a partial loan guarantee of $1.93 billion for a giant solar farm in San Luis Obispo County, Calif., because it could not meet the statutory deadline of Sept. 30 to complete the Energy Department’s requirements.
As the NYT and others reported, First Solar still expects to be funded for two other projects: Desert Sunlight (500MW) and Antelope (350MW). However, the 550 MW Topaz Solar Farm is one of the largest (global) PV installations ever planned, and is also an important project for California (specifically PG&E’s) efforts to meet RPS quotas). It would be located near the existing Diablo Canyon transmission lines, and also would also increase geographic diversity as one of the most westerly solar farms in a state that since the 1980s has sited generating capacity in the southeast (Mojave) desert.
First Solar shares are down 25% in the past week — both because of the specific concern about the loss of the loan guarantee and hit to projected earnings, but also the pall over the entire industry caused by the Solyndra scandal.
Testifying last week before Congress, LPO head Jonathan Silver emphasized that the DOE was emphasizing solar (and other RE) generating facilities over manufacturers (35+ vs. 4 IIRC) because the former have more predictable cashflows and thus are better investments. Particularly with power purchase agreements in place, once completed there is no market risk akin to what took out Solyndra.
Perhaps First Solar wasn’t going to get the loan for other reasons (such as environmental controversies). Still, leaving unfunded major solar farms is a big problem for industry, for society, for taxpayers and for greenhouse gas reduction.
It’s not that the Page One Solyndra story was uninteresting, as it noted all the warning signs available to the administration before the loan guarantee was issued. The online version released a series of documents showing various doubts about Solyndra’s application, impending commoditization, and then concerns by career officials about the process being rushed both in March and September 2009 for political reasons. It also shows the doubts that arose after the loans were granted, as well the successful efforts by Solyndra execs and lobbyists to convince officials to ignores these warning signs.
However, the DOE is rushing out the projects it can most quickly review which are not necessarily not the best projects. The problem of the frantic rush in the final month to commit half the loan balances — after badly investing the first loan guarantee — suggests a problem of prioritization.
A VC, startup or even a multinational knows that it can’t do everything and thus has to prioritize its efforts. Perhaps with the heady funding of stimulus windfall — plus an academic as department secretary — the DOE failed to have the market discipline and realism to focus its attention on the most important priorities. (Or maybe Congress just screwed up, by not allocating it as $6 million/year over three years.)
There’s the old saying: “put all your eggs in one basket — and then watch that basket.” With $18 billion available to invest, the LPO was not limited to a single basket, but there were other, safer investments it could have made that would have supported the cleantech industry.