Solar panel manufacturer Solyndra received upwards of $527 million in federal loan guarantees and was singled out by Obama as an example of American know-how and entrepreneurship. However, it filed for bankruptcy unexpectedly last week. It was so sudden that employees going to work that morning had no idea and were stunned when they were told to go HR and collect their final check.
The reverberations from the collapse of Solyndra are increasing. There are a number of intertwined issues. First off, foes of renewable energy are using this as an example of how the government shouldn’t be in the business of picking technology winners, most especially when it comes to new and untested ideas like the unusual circular solar panels that Solyndra was trying to market.
Solyndra attempted to make solar panels without silicon, hoping that silicon prices would remain high, thus making their circular rooftop solar more competitive. The circular design captures the sun’s rays more efficiently than flat panels. But silicon prices dropped instead, and other companies were able to compete effectively with Solyndra. The company appears to have spent $527 million in federal loan guarantees. This raises legitimate questions about what kinds of loans the government should backstop, and under what terms the loans should be made.
ABC News reports that Solyndra got the lowest interest rate of any green energy company, 1.025%. Other such companies paid rates three to four times higher. The DOE says this was due to the specifics and length of the loan. Yet, outside agencies like Dun & Bradstreet were cautious about Solyndra from at least early 2010.
So why were the loans guaranteed at such apparently favorable rates to Solyndra? You’ll not be surprised that Republican lawmakers want to know.
Last Thursday, the FBI and Department of Energy raided Solyndra’s offices and the home of Solyndra CEO Brian Harrison. The investigation centers on whether Solyndra lied to the government to get the loans. This can hardly be good news for the company or the Obama Administration – or for George Kaiser, a billionaire oilman from Oklahoma. His affiliates own 39% of Solyndra’s parent company. He’s also a prominent Democrat and bundled campaign contributions for Obama in 2008.
When the DOE refinanced Solyndra’s loan in February, they allowed $75 million in private financing to become senior debt. Some of this debt was financed by Argonaut, one of Kaiser’s companies. Thus we have the rather unfortunate circumstance, for the Obama Administration, of having a government loan be secondary to a loan made by a company led by a man who’s been a generous contributor to Democratic political campaigns. Further, Argonaut may now be in a position to take all of the assets of Solyndra for less than $100 million, should a buyer not be found in 30 days. This from former hedge fund manager Bruce Krasting, who notes that such a deal could be blocked by the government if it accuses Solyndra management of fraud.
As you might expect, Republicans find this all mighty interesting and are demanding details on the company from the Obama Administration and are promising investigations. Argonaut has made previous investments in Solyndra, so it still could lose money even if Solyndra’s assests are worth a substantial sum, which is debatable.
Conservative websites are perkily reporting that “Solyndra officials made numerous trips to the White House,” over 20 from March 2009 to April 2011, including 4 in the week prior to the loan being guaranteed. There may be perfectly innocent and reasonable explanations for all of this. I suspect we will find out because Republicans will force the issue (as well they should). As for the Obama Administration, as Ricky Ricardo said to Lucy, they could have “some ‘splaining to do.”