NCPA - National Center for Policy Analysis

For Solar, No Guarantees

September 2, 2011

With solar panel prices falling and a prominent manufacturer in bankruptcy, the U.S. solar industry has been hard-pressed for good news.  But Washington continues to hand out loan guarantees, says the Wall Street Journal.

  • The Department of Energy (DOE) says the guarantees will create U.S. jobs in the green energy industry.
  • But critics say the government is trying to pick winners instead of leaving that function to the marketplace, citing the struggles of several companies that received government funds.
  • The White House this month made final a $197 million guarantee for SoloPower Inc., a maker of lightweight solar panels in San Jose, Calif.
  • Two more guarantees for solar manufacturers valued at a combined $425 million are due to be approved before a September 30 deadline.

The funding comes from the 2009 economic-stimulus package, which set aside enough cash to back about $60 billion in loans for renewable energy and transmission projects.  Congress twice has raided those funds, leaving enough to back $25 billion in loans.

While demand for solar panels is rising, competition from Chinese manufacturers has driven down prices and made it hard for U.S. makers to compete.

  • Evergreen Solar Inc. this month filed for bankruptcy protection after closing a Massachusetts plant built with the help of state and local subsidies.
  • Solyndra Inc., which received a $535 million loan guarantee from the DOE to build a factory in northern California in 2009, just announced it will suspend operations completely and file for bankruptcy.

The DOE acknowledges that loan guarantees don't always pan out but says they are worthwhile nonetheless.

Source: Ryan Tracy, "For Solar, No Guarantees," Wall Street Journal, August 30, 2011.

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