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The Solyndra bankruptcy: Let’s talk “big picture” here

SolyndraAs Congress takes up hearings about the U.S. Department of Energy’s loan guarantee to Solyndra, there will be plenty of time for debate about the role of the federal government in energy innovation. So far, testimony has focused on the specifics of the deal, whether warning signals were sufficient to avoid ever making the loan, and whether the loan program has adequate controls to avert additional losses.

But amid the din of reporting, several clean energy analysts are helping keep some big picture points in the debate. Michael Greenwald, writing for Time, argues that the program is still worth it and is producing many successes, including a $344 million loan guarantee that backs solar installations on 160,000 rooftops at 124 military bases in 33 states. In Forbes, Alex Trembath and Devon Swezey have highlighted a new report released by the American Energy Innovation Council—a group composed of industry titans like Microsoft chairman Bill Gates, Bank of America chairman Chad Holliday, and leading venture capitalist John Doerr. The report, “Catalyzing American Ingenuity: The Role of Government in Energy Innovation,” doubles down on the Council’s earlier calls for increased and sustained public investment in clean energy technology, and offers new ideas about how greater energy innovation investment can be paid for in a new era of fiscal austerity. Adam Browning, of the Vote Solar Initiative, has shown that Solyndra’s business idea of a solar panel that doesn’t rely on silicon was a very mainstream idea when silicon costs were skyrocketing and holding back the whole industry. The bad bet was that silicon would stay expensive, but instead it got cheap.

More than anything, Adam shows that Solyndra was a victim of the industry’s phenomenal success in reducing costs.

Since October of 2008, the average price of solar modules has fallen from $4.20 per watt to around $1.20 to $1.50 per watt today. These are mind-boggling reductions. And these new prices are resulting in extraordinary market development. As of June, California utilities have signed over eight gigawatts of solar contracts—half of which are below the price of new natural gas generation.

And just yesterday, a new report by Lawrence Berkeley Labs (LBL), “Tracking the Sun IV: An Historical Summary of the Installed Cost of Photovoltaics in the United States from 1998 to 2010,” shows how rapidly solar prices are falling. In its analysis, LBL shows that the average cost of installed solar photovoltaic was $6.20/watt for systems installed in 2010, falling 17 percent from 2009 (a $1.30/watt year-over-year decline) and 43 percent below 1998. Prices fell an additional 11 percent from 2010 to the first half of 2011.

A company went bankrupt, yes, but a new industry is exploding, and it offers great opportunity and huge numbers of jobs that can’t be exported offshore. Solar manufacturing will be a dog-eat-dog competitive business and I predict there will be other bankruptcies, but last time I checked, we won’t be able to export buildings to China to have solar installed. Josh Agenbroad of the Rocky Mountain Institute makes just that point.

U.S. solar photovoltaic installation increased by an impressive average annual rate of 64 percent between 2005 and 2010, with over 70 percent of the value produced domestically. Globally, the solar industry has grown at an even faster rate, with revenues reaching $82 billion in 2010 (up from around $17 billion in 2007). This growth will almost certainly continue, as the cost of solar is rapidly reaching grid parity. It’s estimated the United States already has over 90,000 direct and indirect jobs in the manufacturing and installation of solar panels. That’s more than in either steel production or coal mining (not including transportation and power plant employment).

For our part, Fresh Energy is working with Vote Solar and others on a statewide coalition of business and trade unions and non-governmental groups seeking to build on the solar opportunity here in Minnesota. We will be working hard to change the rules of the game, develop markets, add solar to public buildings like schools, incentivize solar for utilities, businesses and homeowners, including new laws to reach 10 percent of our electricity from solar energy within 20 years. Find out more at solarmn.org.

Image from the Washington Examiner.

When it comes to the Solyndra story, it makes more sense to look at the big picture.

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