Time to Investigate the DOE and Solyndra

by Greg Pollowitz

Solyndra, the solar panel manufacturer that was awarded over $500 million in taxpayer-funded loan guarantees, is in serious trouble. Last week they pulled their IPO and replaced their CEO and founder with an Intel executive who has no experience in the solar industry.

An excerpt from the San Jose Mercury News piece linked above:

Solyndra has received $535 million in federal loan guarantees and $970 million in an array of equity financing, primarily from venture capitalists.

The difficulties at Solyndra raise questions about why President Barack Obama’s administration spent considerable taxpayer dollars to buoy a company that has begun to list.

“Solyndra made some miscalculations, the venture capitalists miscalculated, Energy Secretary Steven Chu miscalculated, and ultimately the Obama administration miscalculated,” Wesoff said.

Bull. They didn’t “miscalculate.” The evidence was right in front of their noses when they made the investment, as I pointed out in March 2009. Here’s the key question I asked back then:

4.  Goldman Sachs downgraded the solar industry last yearBarrons reports from October 2008:

Solar stocks are trading sharply lower this morning after Goldman Sachs analyst Michael Molnar declared he has become cautious on the solar group, “as less generous subsidies combined with a wave of supply pose a real risk.”

Molnar asserts in a research note that the risk of oversupply in the solar market “will soon become a reality as considerably less generous demand subsidies take hold just as a wave of supply and tight financing hit the market.” He thinks that “liberal subsidies of the past in markets like Germany and Spain are unlikely to be replicated in the future givne fears of their ultimate cost in a bad world economy.”

As supply increases, he contends, prices will have to “adjust strongly downward to generate demand.” He thinks that trend will lead to below-consensus estimates for module manufacturers and compressed valuations for stocks in the sector.

Since Goldman was advising Solyndra on this project, did anyone in Chu’s Department of Energy question why taxpayers are guaranteeing the debt on a new solar plant for a market that Goldman’s own analysts have downgraded? Has President Obama’s election changed Goldman’s view on alternative energy to the point that it is now recommending the sector?

I called it a “bailout” of Solyndra then and I stand by that. Except it was a bailout with no strings attached. It is an investment that should not have been made with our money. Chu should make public all due-diligence materials he and his department reviewed, including e-mails and copies of the numerous contracts Solyndra has signed with potential buyers, so the public can see how this Solyndra bailout happened.