Chu says Solyndra was victim of collapsing solar panel prices

Four-and-a-half hours of questioning Secretary of Energy Steven Chu did little to resolve House members’ difficulties with the Department of Energy’s failed loan guarantee to Solyndra, the manufacturer of cylindrical thin-film solar panels that filed for bankruptcy in September and left taxpayers on the hook for $535 million. Chu, testifying to the subcommittee on oversight and investigations of the Committee on Energy and Commerce on 17 November, declined repeated suggestions from lawmakers to apologize for the episode or to admit that DOE had erred by providing a second installment of funding despite Solyndra’s failure to abide by terms of the loan guarantee. The company’s demise was “extremely unfortunate,” he acknowledged, but was caused principally by an unforeseen plunge, totaling 70% over two years, in prices for solar photovoltaic panels.

Chu insisted that Solyndra’s loan guarantee application was reviewed and approved in 2009 solely on its merits, despite GOP members’ assertions of political influence in the process. Chu said he didn’t know until recently that billionaire George Kaiser, a major fundraiser for President Obama, was among the private investors and venture capital companies that had provided nearly $1 billion in financing to Solyndra. He said he had learned only days before the hearing, from a report in the Washington Post, that someone in DOE’s loan guarantee office had asked Solyndra executives to delay announcing a major layoff of the company’s workforce by several days until after the 2010 November elections. Chu promised members that he will find out who wrote the memo and would take appropriate action. “It’s not the way that I do business,” Chu said, referring to the delay request.

Republicans on the panel were joined by Texas Democrat Gene Green in condemning DOE’s decision, during a restructuring of the loan that was completed in February 2011, to subordinate a portion of taxpayer-held debt and allow private investors to get the first $75 million recovered from liquidation. The 2005 law authorizing the loan guarantee program explicitly prohibited subordination. But Chu supported the DOE legal opinions saying the prohibition applied only to the original loan guarantee, not to subsequent restructurings. Subordinating the government debt, he said, was the only way to attract further private investment.

DOE continued to disburse monthly installments of the loan to Solyndra through August, despite numerous red flags at the company, which was burning through cash at the rate of $10 million per month. “DOE was receiving financial reports showing that Solyndra was bleeding cash and going bankrupt,” noted full committee chairman Fred Upton (R-MI). “DOE also failed to mention that, behind the scenes, they were continually taking extraordinary steps to keep Solyndra on financial life support.”

But Chu said he stood by the decision of DOE loan program managers to finish construction of Solyndra’s fabrication plant, because a completed facility would offer a better chance at recovering taxpayer investment than pulling the plug. Asked how much he expected DOE to recover in the bankruptcy, however, Chu replied, “not very much.”

Recognizing that some recipients of loan guarantees would fail, Congress set up a $10 billion “loan loss reserve,” $2.4 billion of which is reserved for clean energy loans. Solyndra had applied for the loan guarantees during the George W. Bush administration, he said, and was “first in line” when Chu took office in January 2009.

One day after the hearing, Chu toured a General Electric solar manufacturing facility in Arvada, Colorado. In October, GE announced plans to construct a factory to manufacture thin-film photovoltaics fabricated from cadmium-telluride. “The stakes are too high to turn our backs on the clean energy industry,” Chu said in remarks there.-"We can compete in the global marketplace—creating American jobs and selling American products—or we can buy the technologies of tomorrow from abroad."-