Where are the green jobs? The Green Skeptic on MPR's Midmorning

I had a very stimulating conversation this morning with Kerri Miller of Minnesota Public Radio's "Midmorning" talk show about Solyndra, green jobs, and the state of cleantech manufacturing in America.

Darren Samuelsohn, a senior energy and environment reporter for Politico, and Tim Greeff, policy director for the Clean Economy Network, were also on the program.

Here is the podcast:



And here is the link to the show page, with audio: The Green Skeptic

Solyndra Saga Continued: Did Obama Aides Grease the Wheels?

Solyndra Tubes

The Solyndra saga just gets worse every day. 

This morning, The Washington Post reported that it had obtained emails from August 2009, that allegedly ask the Office of Management and Budget (OMB) reviewers to expedite the federal loan in advance of a press event announcing the deal.

OMB officials apparently expressed concerns about being rushed to approve the company for the loan without adequate time to assess the risk.

Bloomberg also reported on the emails this morning, noting that one email from an OMB official to a colleague in March 2009, which was earlier in the process for Solyndra's approval, claimed "This deal is NOT ready for prime time."

"Solyndra was the first loan guarantee issued by the Obama Administration using stimulus dollars.  Administration officials held out the company as a glowing example of how the stimulus was creating jobs and invigorating the economy," said the Honorable Cliff Stearns of the House Energy & Commerce Committee.  The Committee opened its hearings on the Solyndra DOE deal this morning.

"However, just two years after receiving this half of a billion dollar loan guarantee, and six months after DOE restructured the terms of the deal, Solyndra has closed its doors, laid off over a thousand workers, and filed for bankruptcy. Last week, FBI agents raided the facility. million loan guarantee to Solyndra," opined Stearn in his prepared statement.

One email between DOE staff dated August 19, 2009, which is quoted in a slide show developed by the House Committee, reads

 "we still have a major outstanding issue . . . . The issue of working capital assumptions has been a major issue repeatedly raised since December [2008]."

Another from the following day says,

"The issue of working capital remains unresolved. . . . the issue is cash balances, not cost. [Solyndra] seems to agree that the model runs out of cash in Sept. 2011 even in the base case without any stress. This is a liquidity issue."

Solyndra filed for Chapter 11 last month and laid off over 1,000 employees.

"If Solyndra really is the 'litmus test for the loan guarantee program's ability to fund good projects quickly,' as DOE's stimulus advisor called it in an email to DOE officials," Stearn wrote in his prepared remarks. "I am  very concerned about where the $10 billion DOE has left to spend before the September 30 deadline is going."

Solyndra Saga: The Kaiser Connection

In my post Wednesday on Solyndra's bankruptcy I alluded to the fact that some people are questioning why the government took such a strong interest in backing this particular company with an expensive, risky technology. 

I wrote then that I'd leave it to the pundits.  However, Thursday morning's reported FBI raid of the company begs comment.

According to the Washington Post, "a House investigation is looking at possible White House involvement in Solyndra winning the loan, and said it has found evidence that White House officials were monitoring Solyndra’s status in the application process.  The Department of Energy has asserted that it chose Solyndra through a competitive, non-political process."

One of Solyndra's leading investors, The George Kaiser Family Foundation, is the foundation of Obama fundraiser and supporter George Kaiser. 

As reported by Bloomberg this afternoon, the foundation, "a charitable organization based in Tulsa, Oklahoma, and backed by donations from Kaiser, holds about 35.7 percent of Solyndra, according to a company filing with the Securities and Exchange Commission."

"A Government Accountability Office audit last year found Solyndra was among a handful of companies that the agency awarded billions in loan guarantees before completing required reviews of their applications," reports the Post.

Bruce Krasting of iStockAnalyst explored some of the Kaiser connection in a post Wednesday afternoon.

At the very least, this situation doesn't pass the sniff test.  What more will the FBI shine a light on?  And what impact will this have on other cleantech companies?  Stay tuned.

The Market Sorted, Solyndra Lost

President Obama Visiting Solyndra, May 2010 (Solyndra)

The sun has set on Solyndra. The solar panel manufacturer, once the darling of the US Department of Energy, which bestowed its blessings in the form of a $535 million loan guarantee, is shuttered.

Despite this guarantee, which some sources say was almost completely drawn down, and hundreds of millions of private capital from such stalwarts as Madrone Capital, RockPort Capital, the George Kaiser Family Foundation, CMEA Capital, Redpoint Ventures, US Venture Partners, and Virgin Green Fund, Solyndra has filed for bankruptcy and laid off over 1,000 workers.

A gleaming, spotless new factory, a revolutionary new type of solar panel, and a government handout was not enough to keep Solyndra alive. Neither was more capital infusion by some of the initial investors last spring.

Monday morning quarterbacks are second-guessing this investment in a company with an expensive new technology that was built on two big bets: that the commodity used to manufacturer its competition's solar panels – silicon -- would soar and stay high, and that their first-mover advantage in flat-roof installation would cover roofs all over the country with their technology.

Both bets were lost.

Silicon prices have fallen, causing the price of traditional photovoltaic panels to fall. This was good for consumers, if not manufacturers, and it certainly wasn't good for a company like Solyndra with a more expensive technology solving a problem that had just gone away. Oh, and the other problem they were solving? That was being met by cheaper solutions from competitors.

Over the years, I've talked to many investors who shy away from companies with big, new technology risks. Risks are risky. They can also be expensive – and the more cutting edge the technology, the more capital-intensive it can be. It's very hard to pick the winning horse in such a race.

Such bets are even harder to make if the technology has unique manufacturing requirements, raw materials, or R&D needs.

In the case of Solyndra, apparently, they had all three.

And some are questioning why the government took such a strong interest in backing this particular company. I'll leave that to the pundits

I'm not saying the government should have seen this perfect storm coming with a company like Solyndra. After all, the private investors don't seem to have seen it either.

But the skeptic in me can't help questioning whether the government should even be in the business of picking winners or anointing companies. Rather, shouldn't they just make it easier for the market to sort them out?

This, by the way, is exactly what happened with Solyndra.

The market sorted. It did its job. Solyndra lost. Its investors did too. That's their job. They make bets and lose more often than they win. But what a shame that taxpayers have to lose along with them.

There will be a lot of lessons learned from the Solyndra failure. I hope one of them – for government and entrepreneurs alike – is that government sticks to making the playing field open for business and getting out of the way.

That seems a lot better than throwing a lot of our tax money away on a horse race.

First Solar Sets World Record and Hires an M&A Guy: Enough to Persuade the Street?

Heading into its 2Q 2011 earnings report this week, First Solar announced two pieces of news that may have an impact on its future, if not the past.

The company announced last week it set a new world record for cadmium-telluride (CdTe) photovoltaic (PV) solar cell efficiency at 17.3 percent.  The record was set using a test cell and was confirmed by the DOE’s National Renewable Energy Lab (NREL).  The previous record was 16.7 percent, set in 2001.

“This is a significant milestone that demonstrates the ongoing potential of our advanced thin-film technology,” said Dave Eaglesham, chief technology officer at First Solar in a press release. “This leap forward in R&D supports our efficiency roadmap for our production modules and will recalibrate industry expectations for the long-term efficiency potential of CdTe technology.”

The average efficiency of First Solar modules produced in the first quarter of 2011 was 11.7 percent, according to the company, up from 11.1 percent a year earlier.  First Solar has previously recorded full-module efficiencies over 13.5 percent, with a 13.4 percent module confirmed by NREL.

“First Solar’s innovation in both module technology and balance of systems engineering continues to drive us closer to grid parity,” said CEO Rob Gillette.
 
First Solar may lead in the CdTe thin film arena, but SunPower holds the title for silicon PV solar cells at 22.4 percent and Alta Devices' for gallium-arsenide (GaAs) thin film with efficiencies of 27.6 percent.
"The all-time winner," writes Jeanne Roberts in Energy Boom, "is likely Spire Semiconductor, which collaborated with NREL to produce a triple-junction solar cell with a 42.3-percent efficiency rating.   These ratings all represent how much sunlight (or the photons in sunlight) is converted to electricity."

It's also not the first record First Solar has set, according to Roberts, "In 2009, the company claimed it was manufacturing solar cells for $1 per watt, an industry milestone that represented the Holy Grail of solar cell costs, at least to fabricators."
 
Meanwhile, late last Friday came the news that First Solar hired Cory Steffek, a former investor at venture capital firm Altira Group, to help make strategic acquisitions and partnerships, a move that seems to hint at future M&A activity on the solar horizon.

FSLR will report earnings on Thursday after the close.  We'll see how the market reacts to their performance and whether these announcements of future potential will have any impact.


(Disclosure: I hold a long position in FSLR. This post is for informational purposes only and is neither intended to be investment advice nor an offer, or the solicitation of any offer, to buy or sell any securities.)

Philadelphia Innovation Cluster Seen as "Key to Future"

Rendering of Greater Philadelphia Innovation Cluster at Navy Yard

"I'm a bit like Ryan Howard," Philadelphia Mayor Michael Nutter told the crowd at the Navy Yard. "I get to bat clean-up and take us on to the championship."

The Mayor's reference to the city's major league baseball team seemed a good analogy for a championship he has long wanted, the title of "Greenest City in America."

The sentiments weren't lost on the other dignitaries, academics, industry leaders, and cleantechies gathered in a tented area on the pier of the Navy Yard's Cruise Ship Terminal to celebrate the launch of the Greater Philadelphia Innovation Cluster for Energy Efficient Buildings (GPIC).

The Mayor opened and closed the ceremonies, which also featured speeches by Pennsylvania Governor Ed Rendell, US Secretary of Energy Steven Chu, Assistant Secretary of Commerce John Fernandez, and Vice President Henry Foley of Penn State.

Penn State led the application for the energy efficiency hub, marshaling a consortium that featured other universities, major corporations such as United Technologies and Turner Construction, as well as a panoply of associations and other businesses.

The result was a successful bid for the nation's only energy efficiency cluster, and $129 million in funding from the Department of Energy (DOE) and other agencies.

The Navy Yard has plenty of old buildings on its 1200 acres and its own micro electricity grid to test new technologies. And the list of players and supporters of the proposal were just too hard to ignore, remarked Secretary Chu, who said that it was "a dream in my eye long before I was at DOE for such a center."

The Secretary confessed that he would have liked the Lawrence Berkeley National Laboratory win the bid, where he worked prior to becoming the 12th US Secretary of Energy. "But the fact that two of my former grad students are at Penn State makes up for the fact that they didn't get it," Chu quipped.

The GPIC is expected to develop and test new technologies for energy efficiency in buildings, first by renovating an existing structure on the campus.

Poor cooling and ventilation in the facility where the announcement was held provided a good example of the issues that will be addressed by technologies developed at the new innovation cluster.

The GPIC will be led by Penn State in partnership with the City of Philadelphia through its Philadelphia Industrial Development Corporation, along with Ben Franklin Technology Partners of Southeastern Pennsylvania, the Delaware Valley Industrial Resource Center, the Wharton Small Business Development Center, and numerous other public, private, and academic partners.

"This is the type of research and technologies that will propel the US going forward," Secretary Chu said. "And this type of broad cooperation exemplified here in Philadelphia will make it work."



(Disclosure: The author is co-founder of the Cleantech Alliance Mid-Atlantic, which provided a letter of support for the Energy Innovation Hub application and is an industry association partner in that effort.)

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DOE Announces $3.3B in Grants for Smart-Grid Initiatives

"The Smart Grid is the iPod of the energy industry," Audrey Zibelman, CEO of Viridity Energy, said last week. Getting a sophisticated, two-way communication system that matches knowledge with efficiency, and maybe even gets better information into the hands of energy consumers is a critical step in ensuring we have reliable power to meet increasing demand.

Now the U.S. Department of Energy (DOE) is getting into the act, the American Recovery and Reinvestment Act, to be precise, as they announce plans to distribute more than $3.3 billion in so called smart-grid technology development grants and an additional $615 million for smart grid storage, monitoring and technology viability.

Read the Full Story: DOE & Smart Grid.

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