Finance Globe

U.S. financial and economic topics from several finance writers.
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Half Billion Dollars in Taxpayer Money Ends in Bankruptcy for Solar Panel Manufacturer

A solar panel manufacturing plant that received a $535 million loan backed by the Department of Energy announced on Wednesday that they were filing bankruptcy and cutting 1,100 jobs.

Solyndra, LLC based in Fremont, CA opened in 2005 and in the spring of 2009 was the first company to be funded with DOE money as part of Obama’s Recovery Act.

DOE public affairs director Dan Leistikow responded to the company’s failure in a blog on Thursday, in a called document called “A Competition Worth Winning.” He said that the company’s collapse was solar cell prices have plummeted 42% since the beginning of the year due to facing steep competition from solar panel manufacturers in China.

Leistikow said, “We have always recognized that not every one of the innovative companies supported by our loans and loan guarantees would succeed, but we can’t stop investing in game-changing technologies that are key to America’s leadership in the global economy.” Leistikow said the government’s investment in 40 projects is on track to create 60,000 jobs.

“Congress recognized the risks inherent in such an effort, and wisely set aside funding to offset any potential defaults or losses,’ Leistikow added. “That funding made it possible to support such a broad, promising portfolio of investments, and is significantly greater than the amount that the government stands to lose on this transaction. While we are disappointed by this outcome, we continue to believe the clean energy jobs race is one that America can, must and will win.”

The Energy and Commerce Committee has been investigating the $535 million loan guarantee that was awarded to Solyndra in the spring of 2009. Over the last six months, Solyndra executives, lobbyists, and investors, as well as officials at the DOE and OMB repeatedly told Committee investigators that Solyndra was financially sound.

“We smelled a rat from the onset,” said House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-FL).

“It is clear that Solyndra was a dubious investment, but DOE doubled down in March of this year and restructured the loan, possibly further increasing taxpayers’ liability. That is a question we want answered. In this time of record debt such disregard for taxpayer dollars cannot be tolerated,” Upton and Stearns added.

The loan to Solyndra has also drawn attention because one of the company’s biggest investors, oil billionaire George Kaiser, is also a large Democratic supporter who helped raise at least $50,000 for Obama’s 2008 presidential campaign.

Let’s hope Solyndra’s failure is not a sign of things to come. Just last week Energy Secretary Steven Chu announced a partial guarantee for an $852 million loan to support the development of the Genesis Solar Project, also based in California. The project is estimated to create 800 temporary construction jobs and 47 operating jobs.

“This project creates jobs, avoids greenhouse gas emissions and helps strengthen our nation’s renewable energy future,” said Secretary Chu. “With the support of loan guarantees, we will enable the deployment of clean, renewable sources at scale, which will help bring down the cost of solar power in the years to come.”

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Thursday, 30 March 2023

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