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> Solyndra

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Solyndra

Paul Sakuma/Associated Press

Updated: Nov. 17, 2011

Solyndra, a California-based solar panel manufacturer, declared bankruptcy in
August 2011 after having received $528 million in federal loan guarantees.

The loan guarantees, part of the 2009 stimulus package, were the first to be
allocated out of the $18 billion Congress has committed to dole out. But the
failure of Solyndra — which could cost taxpayers more than a half-billion
dollars — has renewed the highly partisan debate in Washington over the benefits
or failings of Mr. Obama’s stimulus program and the wisdom of clean energy
subsidies in general.

Solyndra’s problem, according to outsiders, was that the product looked
better when it was conceived than when it hit the market. Solyndra’s design
avoided the use of silicon, a commodity that was selling at very high prices in
2009 when the loan guarantee was approved but that since crashed.

The design also sought to cut costs with an innovative cylindrical design
that reduced the labor required for installation. But the capital costs for
manufacturing were high. At the same time, Chinese companies had ramped up their
output, flooding the market and pushing down the price of solar equipment at a
time when slack demand in Europe contributed to a surplus.

Solyndra became one of the administration’s most costly fumbles after the
company declared bankruptcy, laid off 1,100 workers and was raided by F.B.I.
agents seeking evidence of possible fraud.

Although the government in such programs typically guarantees loans made to a
company by a commercial bank, this was not the case for Solyndra. It borrowed
the money from the Federal Financing Bank, part of the Treasury Department, so
in effect, the government was lending the money to the company directly. The
Energy Department gave Solyndra a conditional guarantee for $535 million, in
multiple stages, contingent on reaching a variety of milestones, and it had
received $528 million before going under.

The Solyndra loan guarantee was the Obama administration’s first. The
administration, seeking to forge a “clean energy” economy and provide jobs in
the face of a growing recession, picked the project partly because it was what
government officials were then fond of calling “shovel ready.”

The government’s backing of Solyndra came as the politically well-connected
business began an extensive lobbying campaign that appears to have blinded
government officials to the company’s financial condition and the risks of the
investment, according to a review of government documents and interviews with
administration officials and industry analysts.

Investigating What Went Wrong

Two Congressional subcommittees, the Department of Energy’s inspector general
and the Department of Justice, are investigating the Solyndra case.

On Sept. 23, the chief executive and chief financial
officer of the company took the Fifth Amendment before a House subcommittee as
they were verbally pummeled by committee members until Democrats complained that
the badgering was becoming unseemly.

Read
More...

On Oct. 7, according to e-mails provided to Congressional investigators, a
senior Energy Department official had
pushed hard for the government’s loan, even after he had disclosed that his
wife’s law firm represented the company and he had promised to recuse himself
from matters related to the loan application. The official, Steven J. Spinner,
then a senior member of the Energy Department’s loan guarantee oversight office
and a 2008 Obama fund-raiser, inquired frequently about the progress of
the  loan, urging the White House budget office to move more quickly on
approving it. The e-mails provided further evidence of high-level cheerleading
on behalf of Solyndra.

On Nov. 17, testifying before a subcommittee of the House Energy and Commerce
Committee, Secretary of Energy Steven
Chu defended the loan, telling
lawmakers that the bankruptcy of Solyndra was “extremely unfortunate.” He
also rejected a suggestion put forward by a Republican that he or his department
should apologize.

Companies fail when “the bottom of the market falls out,” Mr. Chu testified.
That, he said, is what happened to the solar panel business, for two reasons
that he maintained could not be foreseen. “This company and several others got
caught in a very, very bad tsunami,” he said. New plants to manufacture solar
panels started up in China and elsewhere, while the market for the panels was
softening because of economic troubles in Europe. Prices dropped 70 percent in
two and a half years, he said.

But Republicans pursued the theme that the problem was incompetence and
political influence. Representative Clifford Stearns, Republican of Florida,
said that the policy was simply an effort to keep President Obama on a “green
jobs pedestal.”

A Case of Political Favoritism?
After the bankruptcy,
Republicans on a House subcommittee charged that a final review of loan
guarantees for Solyndra may have been rushed so that Vice President Joseph R.
Biden Jr. could announce its approval at a groundbreaking in 2009.

They released a string of e-mails that had been sent among White House staff
that they said raised questions as to whether the Solyndra loan guarantee was
pushed to approval before it was ready. But at a hearing, officials of the
Energy Department’s loan office and the White House budget office defended their
decisions, which they said were carefully reviewed and not politically
inspired.

Democrats on the panel did not come to Solyndra’s defense, but they did
defend the idea of government help for the solar industry, arguing that China is
doing so on a large scale and that the United States must compete. Officials
from the Department of Energy backed this notion, explaining that government
subsidies are essential to keep the United States competitive in renewable
energy, and that naturally not all companies will succeed.

Solyndra’s problem, according to outsiders, was that the product looked
better when it was conceived than when it hit the market. Solyndra’s design
avoided the use of silicon, a commodity that was selling at very high prices in
2009 when the loan guarantee was approved but that since crashed.

The design also sought to cut costs with an innovative cylindrical design
that reduced the labor required for installation. But the capital costs for
manufacturing were high. At the same time, Chinese companies had ramped up their
output, flooding the market and pushing down the price of solar equipment at a
time when slack demand in Europe contributed to a surplus.

Solyndra did draw plenty of high-level attention. Its lobbyists corresponded
frequently and met at least three times with an aide to a top White House
official, Valerie B. Jarrett, to push for loans, tax breaks and other government
assistance.

During the period when Solyndra’s loan guarantee was under review and
management by the Energy Department, the company spent nearly $1.8 million on
Washington lobbyists, employing six firms with ties to members of Congress and
officials of the Obama White House. None of the other three solar panel
manufacturers that eventually got federal loan guarantees spent a dime on
lobbyists.

A critical piece of the stimulus bill removed a requirement that firms like
Solyndra pay a substantial up-front fee to cover the risk of a loan, a provision
that had slowed approvals of loan guarantees. Once that was removed, loans began
to flow and Solyndra was the first to benefit.

In January 2010, four months after the loan was finalized, Solyndra
executives and lobbyists pressed Gregory S. Nelson, an aide to Ms. Jarrett, a
senior adviser to Mr. Obama, for a meeting to boast about progress at the plant
financed with federal money and to discuss a possible second loan, according to
White House e-mails.

Positive Assurances

Signs were increasing in 2010 that the company’s business plan was imploding.
The dive in silicon prices, which had started in late 2008, accelerated by the
end of 2010. Solyndra sales were growing, but so were its losses. It was forced
to slash prices much lower than its costs in order to compete with conventional
silicon panel producers. Trade publications began to question whether Solyndra
would survive — even its own accountant in March 2010 said it had “substantial
doubt about its ability to continue as a going concern.”

But Solyndra and its lobbyists continued to provide assurances to the White
House and the Energy Department, which still could have stopped the flow of
federal money that was being given out for construction of a new factory.

Similar positive predictions were shared with members of Congress in 2011,
after the company sought and received permission from the Obama administration
to restructure its $535 million loan, which put private investors ahead of the
government for some of the debt if the company was liquidated.

That disconnect has led some members of Congress to question if Solyndra was
intentionally misleading officials in Washington.

Hide

ARTICLES ABOUT SOLYNDRA

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By MATTHEW L. WALD

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The
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The chairman of the House subcommittee investigating the
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December 2,
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SolarCity
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By DIANE CARDWELL

SolarCity’s plans to install solar panels for more than 100,000
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to receive a loan guarantee from the federal government.
November 30, 2011

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The
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A Republican inquiry into the failure of the solar company
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November 25, 2011

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Federal
Subsidies for Renewable Energy

Readers respond to a recent front-page article about government
support for the alternative energy industry.
November 19,
2011

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Energy
Secretary Chu Defends Solyndra Loan

By MATTHEW L. WALD

Steven Chu, the energy secretary, said the company’s later
bankruptcy was “extremely unfortunate,” but he saw no need to
apologize.
November 18, 2011

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Energy
Secretary Steven Chu to Defend Solyndra Loan to Congress

By MATTHEW L. WALD

Steven Chu, in advance testimony before a House committee, will
defend the program that loaned $535 million to Solyndra, the solar-panel maker
that went bankrupt.
November 17, 2011

MORE ON SOLYNDRA AND: UNITED STATES POLITICS AND GOVERNMENT, SOLAR ENERGY, ENERGY DEPARTMENT, SOLYNDRA INC, CHU, STEVEN

Solyndra
Has a Cousin in the Poorhouse

By MATTHEW L. WALD

Steven Chu, the energy secretary, compared the market
misfortunes of Beacon Power, a manufacturer of mechanical batteries, with the
price decline that undid Solyndra.
November 17, 2011

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Report
Calls for Changes in the Energy Department

By MATTHEW L. WALD

Only half of the $13 billion spent annually on 16 federal
laboratories goes to actual research, a ratio that could be improved, a new
report says, by combining operations.
November 16,
2011

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Solyndra
Was Asked to Delay Layoff News Till After Midterms, Memo Says

By MATTHEW L. WALD

Energy Secretary Steven Chu has been asked to testify on the
failed solar equipment company before a House subcommittee.
November 16, 2011

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Solyndra
E-Mails Released by Lawmakers

By MATTHEW L. WALD

The e-mails were released by a Congressional committee
investigating the default by the solar power company Solyndra on a $528 million
government loan.
November 10, 2011

MORE ON SOLYNDRA AND: UNITED STATES POLITICS AND GOVERNMENT, SOLAR ENERGY, FEDERAL AID (US), HOUSE COMMITTEE ON ENERGY AND COMMERCE, SOLYNDRA INC

U.S.
and China on Brink of Trade War Over Solar Power Industry

By KEITH BRADSHER

Chinese solar panel manufacturers, which had virtually no
presence in the American market three years ago, now hold more than half of
it.
November 10, 2011

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Here
Comes Solar Energy

By PAUL KRUGMAN

Will our political system delay the energy transformation now
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November 7, 2011

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House
Panel Votes to Subpoena Solyndra Documents

By MATTHEW L. WALD

Republicans assert that White House documents could show that
it had extensive contact with a campaign donor who was also a Solyndra
investor.
November 03, 2011

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Solyndra
Auction Brings Out Bargain Hunters

By MICHAEL KANELLOS

Solyndra, the failed solar company that became a political
flashpoint, is selling off its equipment, but how much the auction will bring in
is uncertain.
November 1, 2011

MORE ON SOLYNDRA AND: SOLAR ENERGY, AUCTIONS, SOLYNDRA INC

SEARCH 60 ARTICLES ABOUT SOLYNDRA:

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Page: 1 | 2 | 3 | 4 | Next >>

Solyndra Navigator

A list of resources from around the Web about Solyndra as
selected by researchers and editors of The New York Times.

Solyndra

Video

Jay
Carney on Solyndra

“Solyndra Solar Panels for Flat Roofs”

Multimedia

Interactive Feature

Milestones:
Solyndra’s Meltdown

In August 2011, after receiving over $500 million in federal
loan guarantees, Solyndra, a solar panel manufacturer, declared bankruptcy. The
company’s collapse has renewed the debate in Washington over the stimulus
program and clean energy subsidies.

Interactive Feature

Blinding
Officials to a Solar Energy Company’s Condition

Government documents are evidence of a major lobbying campaign
that appears to have blinded government officials to Solyndra’s true financial
condition.

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