Solar power at a crossroads
GOP attacks on solar energy are political maneuvers aimed at keeping us addicted to oil
By John Grula 11/10/2011
Congressional Republicans are ramping-up their efforts to derail the further development of clean, renewable energy sources by exploiting a flap over the recent bankruptcy of Solyndra, a maker of solar electricity systems in Fremont. Republicans are seeking to discredit government subsidies to the fragile solar power industry because Solyndra was the recipient of a $528-million federally guaranteed loan, and now it is defunct.
But closer examination of this issue reveals a more nuanced understanding of this phony “scandal.” Despite the failure of Solyndra, a victim of the heavily subsidized Chinese solar panel industry, a much bigger federal bet on solar energy is quietly paying off in California. According to the Los Angeles Times, six large solar power plants are currently on track for near-term completion, and they will help the state meet its ambitious clean electricity goals. All of these plants are the beneficiaries of federal loan guarantees, which have also been important to attracting private investment.
The most advanced of these solar power plants is the Ivanpah Solar Electric Generating System being built by Brightsource Energy Inc. in the Mojave Desert near the California-Nevada border. This plant, which will use mirror-concentrated solar energy to generate steam for running turbines, is expected to provide 392 megawatts of electricity to 140,000 homes during hours of peak demand. The project, which received a $1.6-billion federal loan guarantee, as well as private investment from Google Inc. and NRG Energy Inc., is expected to be online in 2013.
Two other commercial-sized solar electricity plants, Antelope near Lancaster and Desert Sunlight near Desert Center in Riverside County, also attracted private equity investments after receiving federal loans of $646 million and $1.5 billion, respectively. Combined, the two plants will generate 780 megawatts of clean electricity. Alan Bernheimer, a spokesman for First Solar Inc., was recently quoted in the LA Times as saying, “The Department of Energy’s loan guarantee program provided an important source of liquidity to help provide debt financing during a difficult time in the financial markets.”
To those who might object to government “picking and choosing winners in the energy marketplace,” the fact of the matter is this has been going on for a long time. Government subsidies have played an important role in the development of the energy industry since the 19th century. Even now, according to the International Energy Agency, global fossil fuel subsidies totaled almost $500 billion in 2010. The US nuclear power industry was essentially created by the federal government in the 1950s and to this day would not survive without taxpayer subsidies. The US coal industry was heavily subsidized during the 19th century, and the gas-and-oil industries have received tax breaks and allowances worth many billions of dollars a year for more than 50 years.
Just how bad a goof was the government’s bet on Solyndra? In a recent issue of The New Yorker, Financial Page staff writer James Surowieki points out that many private venture capitalists expect that of the new companies they fund, at least one-third of them will fail. Such is the nature of capitalism, in which new businesses fail all the time. Even the savviest of venture capitalists will often back the wrong horse.
By the standards of private venture capitalists, Surowieki argues, the government is actually doing quite well. Under the Obama administration’s stimulus program, the Department of Energy has granted almost $20 billion in loan guarantees to new renewable energy companies, and so far only Solyndra has gone belly-up. The amount of money lost has been a small fraction of the total guaranteed.
It is also worth noting that Solyndra’s product was a highly innovative successor to the standard solar panel and came in a convenient tube shape that does not require expensive silicon. New technologies are always risky business ventures. Even if the technology works well, economic factors may prevent it from becoming competitive in the marketplace. Government subsidies can make the difference between commercial success or failure for younger technologies, especially when private capital considers them too risky.
The Republican attacks on solar energy are nothing but a political maneuver designed to keep our nation addicted to dirty fossil fuels at a time when we desperately need to move toward clean energy technologies that will also reduce greenhouse gas emissions. Members of the GOP care more about their friends in the fossil fuel business than they do about the health of people and the planet.
John Grula, PhD, is affiliated with the Southern California Federation of Scientists.