SHEDDING LIGHT ON SOLYNDRA
The Solar Sleight of Hand
Dramatic as the story of Solyndra's failure is it should not be seen as a paradigm for renewable energy or even for government support of emerging private enterprise and technology. Solyndra is different from virtually all other federally supported solar ventures, whether this support comes in the form of rebates or loan guarantees. While various U. S. agencies supply grants for reasearch and development and occasionally even to manufacturers, these grants are nowhere near the half billion dollar total of loan guarantees given to back Solyndra. The support given to Solyndra, is unique not only in its size but also in the fact that this government backing was given to a solar manufacturer, not to a solar project. Because of this the taxpayer has been committed to accept the risks of largely unproven technology and an enormous start-up manufacturing venture. This is very different from offering rebates and other subisdies to projects which will install proven technologies and recoup their costs through power prurchase agreements with operating utilities.
Solyndra is failure on steroids. The story of Solyndra's stunning demise and its loss of one and a half billion dollars is a text book example of how not to do business. It is also a primer in the black art of government support for private industry. Where to start?
First, we must conclude that the Solyndra drama is not the story of renewable energy or even of solar energy. Rather, it is the story of bad management, poor decisions, ineptitude among government overseers and perhaps even fraud. Solyndra failed because it should have failed. But, its death will cost U. S. taxpayers half a billion dollars and will take over one billion dollars of private equity capital off the renewable energy table. The loss of this private venture capital will have a major impact on our ability to bring energy innovation to market. Looking on as a spectator in this mess I come rapidly to the conclusion that Forrest Gump was so right, "You can't fix stupid."
Solyndra was built on shifting sands. Its technology was brilliant, far more advanced than the standard flat panel solar systems we all now know so well. However, the business premise was a gamble, a speculation a roll of the dice. The Solyndra founders believed that their technology, which is more expensive to produce than flat panels, would become competitive as the worldwide price of Silicon rose to dizzying heights. At one point in the early years of this century the price of silicon rose by 40% in little more than one year. Although silicon is the second most abundant element on earth after oxygen its price significantly impacts the price of everything made from it. Humans are funny people; we persist in pricing even abundance beyond our means to afford it.
Generally speaking the story of Solyndra's fall seems to assume that we all know what solar power is, what silicon is and how solar power works. Therefore, some homework might be in order: solar power is far more than just sunlight. My defintion of solar power is the combination of human intelligence, silicon, assorted hardware and large sums of money - all of these shaped by market forces and mounted on roofs or bare ground. Solar power does not function in the dark and not well in shade. So, let us shed some light on this seeming alchemy of science and finance.
There is energy in everything, even seemingly inert matter such as earth, water, even rock. Coal is a good example of energy locked into something cold, hard and motionless. Our sun is in practical terms an endless source of enormous energy in the form of light and heat. We feel the sun's warmth and we bask in its light. Solar power can be divided into two types; thermal and photovoltaic. Releasing energy from matter and converting it into useful power is perhaps man's oldest endeavor. Fire, water and wind power, the conversion of gravity to our uses, all these are obvious examples of how we seek to convert energy to power. Solar power has advanced our ability to accomplish this conversion through the science and technologies we have developed over millenia. Solyndra seemed to be at the very leading edge of this technological advance.
Thermal solar power simply uses the sun's heat to do things such as warm water. A simple magnifying glass can focus sunlight sufficently to create ignition - set something on fire. Photovoltaic (solar) power is more complex. It requires a conversion of the sun's light into power through chemistry and physics. Today's flat solar panels use thick-film silicon to produce electricity (power) using the sun as an energy source. It is this silicon, the single-crystal variety, whose price saw the dramatic increases that underlie Solyndra's claims. Thin film silicon, made from polycrystaline silicon, is the medium used by Solyndra in manufacturing its cylindrical solar receptors, its power tubes. All photovoltaic collectors have one thing in common; when exposed to sunlight they produce electricity through the physical and chemical changes which occur in their silicon cores. Take a solar panel out of its shipping wrap and it immediately produces an electrical current.
What was Solyndra's technical and market advantage? The answer seems simple. Imagine lying on a beach , feeling the sun's warmth, even heat on your skin. Of course, only that part of you facing the sun would receive this energy. If I lie on my back on a beach only my front feels the sun. The same is true for flat panel solar systems. Flat solar panels mounted on roofs receive sunlight fonly rom their upward facing surfaces. Solyndra's solar tubes gathered the sun's energy on the entire 360 degree surface of each tube. Solyndra systems were mounted on flat-to-low pitched roofs where the roof was covered in white membrane, the so-called cool roof advocated by the Department of Energy. The cool roof concept seeks to reflect sun light and therefore its heat away from buildings, saving cooling costs. Because of their cylindrical design Solyndra solar tubes are able to gather this reflected light and convert it to electricity.
As simple as this sounds it is not cheap. Flat solar panels are made of layers of monocrystaline (single) silicon crystal silicon while Solyndra's tubes are made using polycrystaline silicon in so called thin film technology. Thin film technology is also being used to make solar roof shingles and other advanced and so far largely unproven solar systems. And, thin film technology requires large manufacturing facilities with substantial open floor areas for running out the endless lengths of thin film material used to fabricate various solar products. Also, polycrystaline silicon is simply more expensive to buy, process and use than monocrystaline, whose price has steadily fallen until, well....until what happened to Solyndra became inevitable. The bet did not pay off. We all lose in this contest.
Among the marketing ploys used by Solyndra was the claim that their energy efficiency, the amount of electricity produced by their system, would equalize their costs with those of traditional flat panels. Also, the Solyndra system weighed considerably less than traditional solar panels and therefore could be placed on roofs that would not support flat panels and there was less labor involved in installing a Solyndra system than for other solar technologies. The jury is still out on the production (capacity) claim and the labor and weight claims may simply be wishful thinking.
Regardless of the conclusions drawn by different analysts, there can be no dispute that Solyndra was taking in less money than it needed to service its debt, satisfy its investors and continue production. George W. Bush's administration refused to back Solyndra with loan guarantees. Their analysis showed that the deal was bad from the start, a loser. Similar comments came out of the Obama white house's Office of Management and Budget, yet President Obama's administration, and his Department of Energy committed more than half a billion dollars in public money to back Solyndra. The Obama OMB's analysis stated clearly that Solyndra would run out of cash in August of 2011. Solyndra laid off its entire work force and shut its doors, declaring bankruptcy on August 30 of 2011. So, at least we can say that the White House has some folks on the payroll who know what they are doing.
Now that we understand what Solyndra is all about in technical terms we are still left with the question: What happened to make the Obama administration take this risk? Is the culprit political influence or deceipt? The next installment of this series will explore the fantastic marketing scheme Solyndra used to fool the government.
Copyright 2011 By Peter A. Kenney