The Department of Energy (DOE) published a special report in late August of 2015 about a 4-year investigation into Solyndra’s application process that led to the thin-film solar company’s securing of a huge DOE loan.
The report is here, if you prefer to go directly to it.
The inquiry found that Solyndra did not apply to the loan program in the most ethical manner. “Our investigation confirmed that during the loan guarantee application process and while drawing down loan proceeds, Solyndra provided the Department with statements, assertions, and certifications that were inaccurate and misleading, misrepresented known facts, and, in some instances, omitted information that was highly relevant to key decisions in the process to award and execute the $535 million loan guarantee. In our view, the investigative record suggests that the actions of certain Solyndra officials were, at best, reckless and irresponsible or, at worst, an orchestrated effort to knowingly and intentionally deceive and mislead the Department,” the report stated
Federal officials who worked with Solyndra during the application process were on the hook too, though to a lesser degree. The report findings stated that they did not conduct due diligence and could have been more careful when they were receiving information from Solyndra, and reviewed it more closely.
Solyndra shut down in 2011, but the loan application took place in 2006. The federal loan was won in 2009. In 2010, President Obama visited the Solyndra plant in California.
In 2015, all of this information might seem like very old news. The investigation and report are significant, however, in that they seem to dispel the political discourse that was flying around when the incident or “scandal” was first reported.
A New York Times journalist wrote a succinct description of some of the 2011 maneuvers: “For an hour and a half on Friday morning, they peppered the two men with questions about this ‘taxpayer ripoff,’ as Representative Fred Upton, a Michigan Republican, described it, knowing full well that Harrison and Stover would invoke their constitutional right to remain silent.”
Attempting to turn the Solyndra failure into a Democratic failure was wrong, because you could say that the Solyndra loan resulted from the policy efforts of both Bush and Obama. The bill that Bush signed in 2005 was amended for the 2009 stimulus bill signed by Obama,
“The recovery act amended the Energy Policy Act of 2005 to create section 1705 for ‘commercially available technologies,’ as the Energy Department explains on page 12 of a 2009 report on stimulus funding. The stimulus provided more funding for the loan guarantee programs. The loans under the new program also came with no credit subsidy fees, making them more attractive and less expensive than those under the program signed into law by President Bush. It was under this program that Solyndra was able to get financing, although the company initially applied under the section 1703 program.”
One unfortunate effect of the Solyndra situation was the misleading impression that government support for solar power was a waste of money. In fact, the Department of Energy has had a number of success stories as well, and the overall program has been a wild success.
Another thing worth mentioning is that about 75% of venture-backed startups fail, so it isn’t realistic or fair to expect that 100% of the ones that receive government funding should be infallible. This DOE program’s failure rate has just been a few percent — something any professional investor would be happy about!
Image Credit: Pedro Xing, Wiki Commons