Solyndra And Our Solar Future

Cross posted from Culture of Science

The prospect of a large-scale solar power installation has been increasingly appealing as a way to limit fossil fuel consumption. The fuel is free, renewable, and inexhaustible and since we consume the most energy during day, peak availability aligns well with peak demand. The greatest hurdles to widespread adoption have been the high cost of the technology and storage.

DOE has put close to $30 billion dollars into a large number of companies pursuing renewable technologies. Although media has recently focused on $535 million allocated as a loan guarantee to the now-bankrupt solar panel company Solyndra, they haven’t been telling the entire story. Rather than aim to chase down a so-called scandal, we should be celebrating great strides forward throughout the industry to provide the right incentives for renewed investment.

What’s important to remember is that funding for science is different from other government expenditures because failure is part of the process. It doesn’t mean we should stop looking for new game-changing technologies toward making solar power widespread and cost-effective domestically and internationally.

During times of economic uncertainty, it’s vital for the United States to stay competitive in the global market. We are on the cusp of an energy revolution, with solar power at the helm, but China—not the United States–has taken the lead.

Price reductions during the past year have been the result of 1) an unexpected 80 percent decrease in the price of polycrystalline silicon used to make panels, 2) new advanced tools from U.S. companies, and 3) dramatic decreases in manufacturing costs in China after the Chinese government provided funding, large subsidies, and free land for solar companies. These changes drove the price of solar panels so low that many U.S. corporations could no longer compete in the market place. Solyndra went bankrupt because worldwide prices fell so far, which is actually to the advantage of U.S. consumers, and in reality, not a bad tradeoff.

One company’s failure is not reason to pull back on federal investment of alternative energies. Instead, it’s incentive to double down on research toward new innovations to stay competitive and find new solutions that boost the American economy.

Copyright retained by author.

Comments:

  1. While I don't disagree, in general, with the thrust of the article, i.e., that the U.S. Government has an important role to fill in "funding science," this is not a valid argument for what happened with Solyndra. The U.S. loan guarantee was for the construction of a manufacturing plant, NOT for research or "science" per se.

    Whether the U.S. Government has a role in guaranteeing the financing of capital expenditures of private corporations is a subject worthy of debate (obviously, the Chinese Government thinks it has such a role in China), but it cannot be justified on the basis of "funding science."

  2. I agree the use of the word "science" here was jarring, at least. But the government does fund a ton of R&D work that isn't anywhere close to pure science. A huge chunk of the defense budget goes to that stuff, for instance (and of course much of the rest goes to buying the results of that R&D from those companies!) There's an R&D tax credit that's long been a form of government subsidy. I think most people view these sort of loan guarantees for emerging industries as another way of encouraging that R&D - it's only in actually deploying stuff on large scale that you can work out the kinks.

    So, no, it's not science, but it is in support of innovation. Loan guarantees for capital expenditures in mature existing industries is something I would feel is in a completely different category.

  3. I think it is a good idea to think carefully about this. The point is that it is a fake scandal - government guarantees of high risk businesses is common. In fact, picking winners in other ways is standard operating practice. I was mistakenly invited to a meeting between the state of Wisconsin and "entrepreneurs" once. The model of commercializing research is this:

    Engineering prof works on speculative research at the university on research grant money. Engineering prof works on founding company on state development grants. Engineering prof works on getting into production on federally guaranteed loans. Bank comes in and foists suited managers on engineer. Profit.

    That is, the government picks winners. This is not the rare practice. This is the common practice for innovative startups outside the info tech sector.

    You won't get this for your new pizza chain, but pizza is pretty much a zero sum game, so the state is not motivated to care.

    Should it be this way? Arguably not. But it;s been standard operating practice for decades.

    David Roberts goes after the hypocrisy nicely.

    I don't know that Solyndra is blameless, but the implication that the loan guarantee was unusual is a specially high-chutzpah brand of bullshit.

    The main thing Solyndra was, was too late to market. The government erred tactically, but the existence of the loan guarantee in no way proves or even indicates that the government behaved unethically.

  4. An alternative strategy to investing in R&D would be to provide rebates to home owners for rooftop solar panels. At about $15000 per home, the 30 billion dollars could have subsidized 25% of 8 million installations. There are currently about 160,000 in the USA, so this would be a substantial increase.

    The upside is that it would let the market decide the winners. The downside is that the investment won't necessarily stay inside the country. This would likely help build a local service industry but would also fund largely foreign manufacturing and intellectual property.


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