Obama’s focus on solar energy is no day in the sun

As the last of the stimulus money handed out under the American Recovery and Reinvestment Act 2009 - designed to stimulate innovation and the rise of new high tech industries - was handed out to four solar power projects, one of the largest beneficiaries of the stimulus scheme shut up shop. These two events at the end of last month symbolise the polarity in the US political debate over the effectiveness of the old stimulus, the need for a new stimulus package, and the Obama administration’s focus on Cleantech as a way to lift the country in both innovation and employment.

The US Department of Energy (DOE) signed $4.75 billion in loan guarantees for four solar projects by the September 30 deadline in a stimulus-funded programme that had also backed Solyndra. Despite receiving $527 million from the stimulus fund, this solar power company filed for bankruptcy in early September citing market competition and other pressures.

The four new projects being developed by three companies, ProLogis Inc., SunPower Corp., and First Solar Inc., add to the 25 solar, wind, and geothermal firms that earlier pulled in more than $11.4 billion in loan guarantees for schemes that are expected to create jobs. The loan guarantee programme ultimately means taxpayers will pay the bank loans if a project fails.

Solyndra’s shine eclipsed

President Obama had lauded Solyndra as demonstrating the promise of clean energy during his May 2010 visit to the company’s factory in Fremont, California. Solyndra received its loan, aimed at creating US jobs, at a time when 95 per cent of solar panels were manufactured overseas. The company did add 158 jobs, but those and 1,000 more jobs have now evaporated. The failure made the company and the solar industry in general, a lightning rod for Congress, which is scrutinising the DOE’s oversight of such funding and questioning whether the solar industry really is ready for prime time.

“Last year, for example, the China Development Bank offered more than $30 billion in financing to Chinese solar manufacturers, about 20 times more than US-backed loans to solar manufacturers,” Daniel Poneman, deputy secretary of energy, wrote in a September 13 USA Today editorial that questioned whether Uncle Sam should play venture capitalist.

“Government support has an important role to play in developing new industries and emerging technologies, where private financing is not sufficiently available to support investment at commercial scale…Now is not the time to stop investing in our nation's future.” He said the loan programmes support more than 40 companies that plan to employ 60,000 Americans in clean energy.

Those numbers seem to be in dispute, however, as the press, politicians and others use job creation to try to measure the stimulus package’s success. A Washington Post story on September 15 said that only 3,545 new, permanent jobs were created in the clean technology industry. The newspaper cited DOE statistics after almost half of the allocated stimulus amount was dispensed. The DOE responded the same day on its web site, with public affairs director Dan Leistikow calling the story incomplete and inaccurate, saying this did not include 33,000 jobs saved at Ford Motor Co. and more than 7,300 wind and solar related construction jobs.

Mixed signals

The debate over job numbers, which is likely to continue as opposing parties argue over how jobs are counted, comes at a time when the original economic stimulus monies have dwindled, the US economy has once again stalled, and the President is trying to push a second stimulus of sorts, called the American Jobs Act, through a deeply divided Congress.

The $450-billion plan would involve $253 billion in tax cuts and $194 billion in new spending, including to stimulate jobs at smaller companies.

Still, some supporters say there is early evidence the government stimulus is not just corporate welfare, but has instead has sparked innovation.

Massachusetts Governor Deval Patrick said his state saw success in job creation. “That's because we have a strategy. It's a strategy about investing in education, in innovation, and in infrastructure. And frankly, that's exactly what the President has been talking about at the national level. That's what the stimulus has been about, and that's what the jobs bill accelerates." Patrick made the comments in an October 2 panel on the NBC television show “Meet the Press.”

But like other parts of the nation, Massachusetts has had mixed success in renewable energy. Evergreen Solar Inc. of Massachusetts, which received a reported $5.3 million of stimulus money through a state grant to install photovoltaic panels in the state, filed for bankruptcy in August, citing competition from China, and cut 800 jobs. The company will now focus on building up its factory in China.

Meanwhile, Boston-Power Inc., which two years ago was passed over for $100 million in stimulus funding to build a lithium-ion battery factory in Auburn, Massachusetts, followed through on its warning that it might relocate manufacturing, its headquarters and some R&D to China. About 35 per cent of the company’s 110 employees in Massachusetts were expected to lose their jobs.

Obama’s original $787 billion stimulus package was generous to the clean energy industry. Energy efficiency funding included $5 billion for building insulation programmes, more than $6 billion in grants for state and local governments, and several billion to modernise federal buildings, with a particular emphasis on energy efficiency. About $11 billion was for smart grid investments, $3.4 billion for carbon capture and sequestration demonstration projects, $2 billion for research into batteries for electric cars, and $500 million to help workers train for green jobs.

The arguments over the effectiveness of the stimulus are likely to continue through the upcoming election season, stoked by Solyndra’s demise, which gave momentum to Republican attacks over how the Obama administration managed stimulus money and whether its focus on cleantech was misplaced.