Not the weather. And certainly not the failure of Solyndra, the solar company that went bankrupt after getting a $535 million loan from the Obama administration.
Today’s hearing of the Republican-led House Committee on Oversight and Government Reform, focusing in part on Solyndra, was more like an inquisition than a fact-finding exercise.
It was titled “How Obama’s Green Energy Agenda is Killing Jobs.” That was before the testimony began.
No matter that chief inquisitor Darrell Issa, who now denounces clean energy subsidies, once sought a loan guarantee for Aptera, an electric car maker that wanted to set up shop in his district. Dan Burton, the No. 2 Republican on the panel, supported a federal guarantee for Abound Solar, a company in his district.
Democrats are little better, particularly as they blather on about green jobs. Sure, when Washington subsidizes clean energy, jobs may be created. The thing is, when the government subsidize anything (oil exploration, ethanol, high fructose corn syrup, home ownership), you get more of it, and more jobs. Does this mean that market-distorting subsidies are an efficient way to create jobs? The question answers itself.
[By the way, there was some amusing back-and-forth at the hearing about what constitutes a green job. It turns out that bus drivers, whether driving they are driving hybrid buses or not, are doing "green jobs" because mass transport is greener than driving, my friend Matthew Wald reports in The Times.]
So what, if anything, can we learn from Solyndra’s failure? Should the government stop financing clean energy, as some Republicans say? Or preserve today’s subsidies, as the industry would like?
To put the Solyndra story in context, I listened to a call today with two solar industry veterans, Dan Shugar, the CEO of Solaria and Arno Harris, the CEO of Recurrent Energy. Neither company, for the record, has received direct loan guarantees from the energy department (and I know from my past dealings with him that Shugar’s a straight shooter).
First, Solyndra’s failure does not mean there’s anything wrong with the solar business. Just the opposite.
“Contrary to all the chatter out there, solar’s here, solar’s ready, solar’s booming,” said Harris. The Solar Energy Industries Association reported this week that the solar PV market grew by 69 percent during the second quarter of 2011, compared to Q2 of 2010. The group said:
The U.S. remains poised to install 1,750 megawatts of PV in 2011, double last year’s total and enough to power 350,000 homes.
The industry employs about 100,000 people. “Solar employs more Americans than coal mining or iron and steel manufacturing,” Harris noted. Then again, Walmart employs 1.4 million people in the U.S.
Second, Solyndra failed because it couldn’t compete. The costs of solar panels are dropping, which is a good thing, but not for Solyndra, whose panels were pricey.
Shugar said the costs of solar panels have dropped from about $6 a watt in the mid-1980s to about $1.25 per watt today. “The cost of solar has dropped ferociously,” he said.
Costs continue to fall. As the Lawrence Berkeley National Laboratory recently reported, the price of solar installation dropped 17% from 2009 to 2010, and another 11% in the first half of 2011.
Third, Solyndra and the rest of the solar industry remain entirely dependent on subsidies. Solyndra got the now-famous loan guarantee. Its customers enjoyed the 30% investment tax credit. What’s more, because more than half the states in the U.S. have renewable portfolio standards, requiring utilities to include renewable energy in their mix, solar often doesn’t have to compete with coal or natural gas but with other forms of renewable energy, principally wind; the utilities can pass the higher costs of solar onto their ratepayers. [See my 2010 blogpost, The Hidden Costs of Solar Power, written after I visited Solyndra.
Republicans are threatening to repeal the 30% tax credit. “That would be a terrible tragedy,” Harris said. “It would put at risk the momentum this industry has created.”
Interestingly, Shugar and Harris both said they would be willing to give up or sharply reduce the 30% tax credit as the costs of solar continue to fall, so long as subsidies for competing technologies (nuclear power, natural gas and coal) were eliminated, too.
“Solar is going to reach the point where it can be competitive without the investment tax credit in five years or so,” Harris said. Shugar agreed, saying: “We can certainly talk about removing all subsidies. Over the longer term, definitely, solar can stand on its own.”
In the meantime, the single best argument for clean energy subsidies is not “green competes” or economic competitiveness with China but the fact that fossil fuels enjoy an unfair advantage over solar and wind: They don’t have to pay the costs of emitting carbon pollutants, which are leading to catastrophic climate change. Taxing or regulating CO2 emissions would be better, simpler and more efficient subsidizing clean energy, but that’s not going to happen anytime soon.
Unfortunately, the incentive tax credit is an imperfect and wasteful subsidy because it’s cost-based. If I spend $30,000 to put solar panels on my house, which is shaded by big trees in Bethesda, MD, and my contractor overcharges me, I get the same tax break as an Arizona homeowner who spends $30,000 wisely and generates more environmental benefit. That’s wrong. There should be a way to subsidize clean energy based on its performance, as the NRDC’s David Goldstein argues here.
More important, though, I’m persuaded by the Solyndra story that there’s no compelling reason for the government to provide loans, grants, tax breaks or favors to individual companies, no matter how worthy they may appear to be.
Picking out promising technologies and management teams is a job best left toventure capitalists, whose success rate, by the way, is not especially high.
For a lot of reasons–the temptation to play political favorites, the risk of outright corruption, the fact that worthy companies can raise money in private markets–it’s not a job best done by experts at the U.S. Department of Energy.
Particularly because they’re betting with other people’s money.
SIM Publishes 2011 Winners of its Annual Contest in Green Building-
Sustainable Industries Magazine recently introduced its winners of the sixth annual Top 10 Green Building Products award. The winners were chosen by an expert panel of judges from more than 100 entries based upon design aesthetic, environmental performance, innovativeness, scalability/market impact, as well as value and compatibility using the U.S. Green Building Council’s LEED rating system. “The green building industry has seen unprecedented growth and change in the six years that Sustainable Industries has produced the Top 10 Green Building Products awards. This year’s winners reflect the diversity of exciting opportunities in the green building space,” says Brian Back, Founding Editor & Publisher of Sustainable Industries. Selected winners are as follows:
1. Adura Wireless Lighting Controls, made by Adura Technologies, slashes lighting-related energy costs by up to 70 percent using a system of sensors and controllers that creates a network to turn off unneeded lights while offering consumers complete control over their electricity through a unique web interface.
2. Breathe Living Wall, made by DIRTT Environmental Solutions, improves air quality and conserves energy by relieving the load of ventilation systems. The system fits any flat wall or vertical building surface. Plants are watered at one point at the top of the wall, and as the water moves through the trough system, wicks from other pots bring water up to the plants.
3. Greensulate, made by Ecovative Design, uses mushroom roots to make its innovative insulation and packaging material. The company doesn’t need any light to grow their fungi and only uses heat during the final drying process – making this product almost entirely sustainable.
4. HydroRight Dual Flush Converter, made by MJSI Inc., created a “drop-in” service for already existing toilets which offers water conservation up to thirty percent. To boot, it only takes about 7 minutes to install.
5. Indow Windows, made by – you guessed it! – Indow Windows, uses thermal inserts that can achieve 94 percent of the energy savings of double-pane replacements at a fraction of the cost. The inserts plus installation run about $13 per square foot, so refitting a house with 14 average-sized windows costs about $2,400.
6. Juice Bar, made by Green Garage Associates, (although not exactly a green building product) is an electric vehicle charging station that can either be bought or rented by property owners. The product is considered sustainable by the judges in that it will encourage more widespread purchases of EVs.
7. Mobile Solar Power System, made by Pure Power Distribution, designed its Mobile Solar Power System to replace dirty, noisy diesel generators, which create air pollution in the form of carbon dioxide, particulate matter and carcinogenic compounds. The company also makes a hybrid system that combines solar power with a biodiesel generator that kicks in when needed.
8. Modlet, made by ThinkEco, aims to cut power wasted by plug-in appliances when they’re not in use. For an office or building that plugs in modlets throughout its facility, that could mean a reduction in overall energy costs of about 10 percent – or a cut of up to 80 percent in the amount of power used by each plugged-in device, according to the company.
9. SageGlass, made by SAGE Electrochromics, offers a unique product using electrochromic glass that can change from clear to darkly tinted using a simple light switch. The good news? It offers a significant reduction in energy savings, lowering peak demand by as much as 24 percent.
10. SmartSlope Living Retaining Wall, made by the Furbish Company, took its inspiration from the tightly-populated central European landscape where buildings are designed vertically rather than horizontally due to the lack of space. Using concrete blocks with a cavity for plant roots, the hollow centers offer space for various plants to take root and, apparently within months, covers up the wall with natural growth. It can be built in open spaces near buildings, highways and other not-so-aesthetically-appealing areas while encouraging the growth of carbon-eating plants. And while concrete isn’t exactly environmentally-friendly, it does offer a structural soundness that other building materials don’t. Longevity is definitely sustainable.