A better Solyndra – How to double U.S. solar power for no extra money
Leave Picking Winners and Losers to Venture Capitalists
The Solyndra debacle grabs so much attention because it’s such a sensational example of the government picking winners and losers, and because it’s loudly wielded as a weapon against the Obama administration. The latter fact is silly considering that the Department of Energy Loan program, what funded Solyndra’s loan guarantee, was actually started by President G.W. Bush. The program’s mission is to “accelerate the domestic commercial deployment of innovative and advanced clean energy,” – and provides loan guarantees to certain companies it chooses to. This means that private banks can fund the companies at low interest rates because, in the event of bankruptcy, Uncle Sam will foot the bill (the program actually set aside $10 billion to cover these losses). So far, including Solyndra, the losses are about half a billion. Private capital was lost as well, as it’s difficult for investors to sit on the sidelines and not play ball with a company that just got $500MM in effectively free money, regardless of whether it’s a good business or not.
The problem isn’t that the government is encouraging the development of renewable energy – that’s awesome. The problem is that the government is helping to pick the winners and losers and, well, even venture capitalists aren’t that good at doing it sometimes. The government definitely isn’t. Why should one company, like Solyndra, be deemed worthy of below-market loan rates while another company struggles to access capital? If this could be done efficiently, fairly, and most importantly, with a solid return, then it might be one of the tactics to bridge the gap between the incumbent trillion dollar fossil fuel industry which is heavily, heavily subsidized, and the budding, better, and less well capitalized challenger (solar). Unfortunately, it can’t, so it’s not.
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