Political fury over a failed $535 million loan guarantee to an Obama administration-backed solar company is threatening to poison the well for future green investments.
The Obama administration is doubling down on its support for renewable energy, stressing that it will move forward on more loans like the one to Solyndra, the California-based company that announced its bankruptcy late last month. In fact, as many as 14 new loan guarantees from the Energy Department — nine of which are for solar projects — could be finalized by the end of the month.
But congressional Republicans have signaled they’re prepared to start a huge political fight with the White House over the investments. The fight could be a major campaign theme next year, particularly since the loans are tied to the 2009 economic stimulus package the GOP already believes is a political liability for President Obama.
This fight, experts said, is likely to compound an already dismal outlook for federal investments in solar and wind power, despite arguments that the U.S. needs to act quickly to compete with China and other countries developing similar technologies.
“Can you imagine the Congress voting on anything generous for the solar industry right now? I don’t think so,” said Paula Mints, a solar industry analyst at Navigant Consulting.
Republicans ratcheted up their criticism of the administration over Solyndra this week, releasing a series of emails they say show that the White House tried to rush a final decision on the company’s financing so that Vice President Biden could announce approval of the loan guarantee at the September 2009 groundbreaking for the company’s new factory.
The White House has dismissed the allegations, arguing that the emails were a “scheduling matter” and had no impact on the decision to finalize the loan guarantee.
Still, Republicans have continued to pummel the administration on the Solyndra bankruptcy; Rep. Cliff Stearns (R-Fla.), chairman of the House Energy and Commerce Committee’s Oversight and Investigations subscommittee, said Friday that Jonathan Silver, executive director of the Energy Department’s Loan Programs Office, should be fired.
“We’re not done with this issue yet and we’re going to see where this takes us,” full committee Chairman Fred Upton (R-Mich.) told The Hill Thursday.
The solar industry is worried the fight will debilitate government support for a nascent industry.
“The Solyndra bankruptcy has definitely given the Obama administration and the solar industry a black eye, there’s no denying that,” said M.J. Shiao, a solar market analyst at GTM Research.
Still, although many have offered gloom-and-doom predictions about the U.S. solar industry, analysts say the reality is far more complicated.
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They stress that the future of the industry is “bright,” while underscoring the many challenges that face companies like Solyndra.
Shiao said the demand for solar is growing in the United States, noting that the number of solar installations doubled from 2009 to 2010 and is expected to further increase in 2011.
“The demand side is very bright,” Shiao said.
But solar manufacturing, Shiao said, is another story. China has invested billions in its solar industry and U.S. companies are finding it increasingly difficult to compete with the country’s cheap solar panels.
“The biggest hurdle for U.S. manufacturers is that they have to compete with these giant Chinese companies that have access to huge amounts of capital, cheaper labor and more relaxed environmental policies,” Shiao said.
U.S. companies are faced with plummeting solar panel prices that make it very difficult to stay in business.
One way the United States can compete with China is developing better and cheaper solar panels, Shiao said.
“You can’t really beat China at its own game. It’s going to be very difficult for an American company to be able to compete in the global market,” Shiao said. “So what U.S. manufacturers have to do is differentiate themselves technologically.”
That requires major investments in research and development, said Peter Lynch, an investment analyst who specializes in the solar industry. In addition, he said, policymakers need to help develop a predictable investment climate by offering consistent tax credits and other subsidies for the industry, as well as policies that encourage reliance on low-carbon electricity.
Democrats, including Obama, have been pushing for a standard that would require a certain percentage of U.S. electricity to come from wind, solar and other low-emissions technologies for years.
The proposals face major opposition from Republicans and others, who argue that the government should not be providing incentives for renewables. The Solyndra debacle has only hardened Republicans’ opposition to the renewable energy loan guarantee program.
“Should we be in the business of facilitating something that should be in the purview of the private sector? And if we’re picking winners and losers, then we’re going to make mistakes,” Rep. Michael BurgessMichael Clifton BurgessHouse clears bill to raise debt limit Democrats livid over GOP's COVID-19 attacks on Biden Maintaining the doctor-patient relationship is the cornerstone of the U.S. health care system MORE (R-Texas) told The Hill in the Capitol Thursday.
The Obama administration stuck to its clean-energy agenda this week, despite the full-frontal attack from Republicans.
“We have to be aggressive in competing in the global economy,” White House press secretary Jay Carney told reporters on Thursday. “And, you know, high-tech clean-energy industries are going to be key to winning this century economically. So he is absolutely committed to doing that.”
Energy Department spokesman Damien LaVera told The Hill that the solar industry could develop into a multi-trillion market in the coming decades.
“We have a choice — we can either compete in a global marketplace or we can buy these things from other countries,” he said.