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The Solyndra ‘Business Model’
It always depended on government spending.


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Andrew Stiles

How does a fledgling solar-panel company with dim prospects for survival in the free market become profitable? Well, in the case of Solyndra, a good first step was to have the federal government put up a considerable investment — a $535 million loan guarantee. But as the company’s backers would soon discover, coming up with a viable step two is a little more complicated. In many cases, the only feasible way forward is to go to whatever lengths necessary to repeat step one.

Continued support from the federal government was always a fundamental aspect of Solyndra’s “business model.” On Dec. 18, 2009, three months after the Department of Energy (DOE) loan guarantee was formally awarded, Solyndra submitted a filing to the Securities and Exchange Commission for a planned initial public offering of company stock. In that filing, the company said that it planned to become profitable in part by “strategically aligning our products with key government programs that provide financial incentives, export credit and project finance.” Having someone like billionaire Obama fundraiser George Kaiser as a primary investor certainly couldn’t have hurt, either.

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Of course, the only thing better than a government program designed to promote an otherwise undesirable product — expensive and inefficient solar panels — would be a law encouraging the purchase of those products. Which is why Solyndra’s backers were so eager to see Congress pass cap-and-trade legislation, which would have made other forms of electricity more expensive. One can quite reasonably suspect that this was a central focus of the company’s multi-million-dollar lobbying effort in Washington. But Solyndra’s bosses weren’t just rooting for cap-and-trade to pass; they had essentially baked it into their business strategy.

In a May 24, 2010, e-mail to a senior White House official, Department of Energy stimulus adviser Mike Rogers explained that the company’s executives “have been counting on an energy bill to pass.” As a result, Rogers warned, “if Europe goes south and we don’t see an energy bill here, [Solyndra] will face issues in the 18–24 month window.”

The cap-and-trade bill fizzled out in the weeks following the e-mail, and Rogers’s premonition proved optimistic: Solyndra filed for bankruptcy only 16 months later.

Solyndra is eerily reminiscent of another failed company — Enron. Though originally founded as a natural-gas company, Enron made aggressive inroads into the green-energy sector in the 1990s, developing strong alliances with members of the Clinton administration — with Mr. Climate Change himself, Vice President Al Gore, in particular. In fact, Enron was a major investor in Solarex, which was then the second largest American manufacturer of photovoltaic solar cells, the very kind that Solyndra specialized in.

Enron was instrumental in helping to establish the EPA’s $20 billion–per–year sulfur-dioxide cap-and-trade program in the early 1990s and soon became a major trader on the “pollution credit” exchanges, raking in hefty profits. Eying an even more lucrative opportunity, the company set its eyes on setting up a regulated credit-trading scheme for carbon dioxide, furiously lobbying the Clinton administration (and later, the George W. Bush administration) to ratify the Kyoto accords — which would have done just that, and also would have unleashed a slew of new subsidies and federal mandates for “green” energy.



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