Solyndra Was An Anomaly, Independent Report Finds

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Unfortunate as the bankruptcy of California solar panel company Solyndra was, considering it defaulted on a $535 million loan guarantee from the Department of Energy, it isn’t reflective of the overall performance of the Energy Department’s loan guarantee program.

In fact, aside from Solyndra, the loan guarantee program is actually extremely sound, supporting low-risk investments and maintaining a reserve of funding to draw upon, and ending it — as Republicans have tried to do — wouldn’t help balance the budget. Instead, it would probably sacrifice advances in clean energy.

That’s at least the conclusion of a new independent report from Bloomberg Government analyzing the $16.1 billion Department of Energy’s loan program, which appears to further vindicate Energy Secretary Chu and the rest of the Department of Energy, who have said all along that they did due-diligence on Solyndra and all other energy companies that received loan guarantees.

“This report reaffirms that the loan program is working as Congress intended, and highlights the strength of the Department’s overall portfolio of clean energy loans,” the DOE said in a statement, The Hill reported. “Ultimately, this debate comes down to a simple choice: will America compete for and win the jobs of the future, or will we stand on the sidelines and allow China and other countries to dominate a market that Americans have pioneered.”

China and the U.S. are currently engaged in something of a solar energy trade war, with the International Trade Commission voting on Friday to investigate complaints of U.S. companies that Chinese producers have illegally dumped artificially low solar panels into the American market. Chinese companies, meanwhile, charge that American companies are flooding their country with artificially low-priced polysilicon, the raw ingredient from which most common photovoltaic solar panels are made.

In either case, the price of polysilicon continues to plummet, putting pressure on solar companies around the world, which is one of the prime factors that lead to the collapse of Solyndra in the first place.

As of America’s support of the industry, the Bloomberg report finds that to begin with, the DOE’s loan guarantee program has been wildly misinterpreted: The government isn’t handing out loans — or money of any sort — as some Republican lawmakers have characterized it. Rather, the program is designed to hand out loan guarantees, that is, conditional agreements to pay back a private lender if a borrower, in this case, a clean energy startup company, defaults.

As the report’s author, analyst Alison Williams, writes:

“When the government agrees to a loan guarantee, it promises to pay off the debt if the borrower doesn’t. If the borrower pays the debt, the government incurs no cost for its guarantee. In energy, loan guarantees help new-to-market companies or technologies overcome the so-called “valley of death” — when a company or technology is too established to receive start-up venture capital yet not established enough to afford traditional debt financing.”

Furthermore, the DOE “was appropriated $2.47 billion” to cover failures such as Solyndra, more than enough to pay for the cost of that loan, and a few others, too.

And it’s worth noting that Solyndra was but a drop in the bucket of the overall loan program portfolio: Only 3 percent of the total $16.1 billion, which itself is only “1.7 percent of the federal government’s guarantee commitments across all agencies,” according to the Williams.

China, meanwhile, invested upwards of $30 billion in domestic solar energy subsidies, according to the International Trade Commission, and is reportedly prepared to invest $7.1 trillion in green energy and other emerging technologies over the next five years.

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