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By Samuel R. Avro on Sep 22, 2011 with 18 responses

This Week in Energy: Solyndra, Solyndra, Solyndra

For the past few months, the normal schedule on R-Squared Energy has been altered in order to ease Robert’s load so he can devote more time to writing chapters for his book on energy, slated to be published sometime next year. Instead of the customary twice-weekly essays written by Robert, we accepted guest articles once per week to keep the blog filled with fresh content while Robert published one essay (and sometimes two) of his own per week.

While we still welcome guest post submissions, our plans moving forward are to cut down on how often we publish them.

What we’re kicking off now is a weekly segment that will cover the stories of the week making headlines — and even those that aren’t — in the world of energy. Primarily, stories will be pulled from headlines that have been posted throughout the week to our Energy Ticker page. This compilation of stories will be called “This Week in Energy” … unless one of our visitors suggest a catchier name.

The purpose is to stimulate discussion on energy issues, and community members should feel free to turn these into open thread energy discussions. Suggestions and news tips are welcome. I (Sam) can be reached at editor [at] consumerenergyreport [dot] com .

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Solyndra

The story dominating headlines this week — and not just in the world of energy news — is the Solyndra bankruptcy. So we’ll lead off with a quick roundup of the coverage on the bankruptcy and its aftermath:

Energy News Roundup

Now on to the next block of stories. Global energy use, EPA, oil and gas tax breaks, ethanol mandates, and more:

World energy consumption through 2035. OECD vs. non-OECD. (Energy Information Administration)

  1. By Kit P on September 22, 2011 at 2:55 pm

    “The White House threatened to veto a GOP bill aimed at blocking pollution regulations. EPA administrator Lisa Jackson recently threatened to quit after President Barack Obama pulled back proposed smog standards.”

    Obama is at war with the energy industry but the collateral damage is anyone who uses energy.

    “The George W. Bush administration set the primary standard at 75 parts per billion in March 2008, but Jackson chose to revisit the standards early because that level was significantly higher than the 60 to 70 parts per billion recommended by the EPA’s scientific advisory committee at the time.

    In January 2010, Jackson announced that she would set the standard between 60 and 70 parts per billion. In July, she informed the Senate that the Bush ozone standards — which will now remain in place — “were not legally defensible given the scientific evidence in the record” of the current rulemaking.”

    I looked at the ‘scientific evidence’. It is pretty clear that levels of pollution at the 120 ppb level has health effects. However the curve flattens out between 60-80. Rejecting 75 ppb has nothing to do with science, it is pure politics.

    The problem Obama has is that he is a brilliant amateur. Solar will get you some votes in California but bungling solar will lose lots of votes for those who are concerned with the economy. Millions of American now have higher electricity bills because of new pollution controls. For me it is about 20% higher.

    That is fine until they come back two years later and say it is not enough. It would appear that it will never be enough until the economy is ruined and nobody has jobs except at the EPA in DC.

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  2. By Rufus on September 22, 2011 at 3:54 pm

    The US solar industry has created 6,735 new jobs across the country since August, 2010, a 6.8% growth rate, bringing to 100,237 the number of Americans working in the industry, according to a preview of The Solar Foundation’s “National Solar Jobs Census.” That compares to an overall nationwide job growth rate of 0.7% and a 2% decline in jobs in fossil fuel electric generation.

    Creating Jobs

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  3. By Wendell Mercantile on September 22, 2011 at 4:34 pm

    The US solar industry has created 6,735 new jobs across the country since August, 2010

    Rufus~

    Subtract from that the 1,100 that used to work at Solyndra.

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  4. By Benny BND Cole on September 22, 2011 at 5:39 pm

    I am not for Solyndra, or government subsidies.

    But imagine this: Obama proposes solar industry legislation that 10 percent of the nation’s power come from solar, and moreover that power be subsidized at 3 cents per kilowatt.

    The outrage! Obama is a socialist Muslim! Horrors!

    Of course, I just described the nation’s ethanol program. until subsidies recently were spiked. (the mandate is still in).

    So, while everyone is frothing about Solyndra, it is but a mouse next to the Elephant Ethanol program.

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  5. By mac on September 22, 2011 at 5:40 pm

    Rufus said:

    “The US solar industry has created 6,735 new jobs across the country since August, 2010, a 6.8% growth rate, bringing to 100,237 the number of Americans working in the industry,”

    Wendell said:

    “Subtract from that the 1,100 that used to work at Solyndra.”

    I did.

    That still leaves appx 100,00 solar jobs, the vast majority of which did not exist 10 years ago.

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  6. By Tim C. on September 22, 2011 at 5:57 pm

    The KiOR plant in MS is intriguing. Does anyone know anything about this? The KiOR website gives some sketchy info on their catalytic cracking process, but leaves most substantial questions unanswered, such as:

    >KiOR’s process includes hydrotreatment of the crude renewable oil. How much H2 is used, and where does the H2 come from? If the H2 comes from natural gas, is the oil product really renewable?

    >Oil at $100/bbl is about $700/ton, or about the same price as low grades of paper. Paper mills are closing all over North America. How will KiOR make money converting wood chips to a $700/ton product, when paper mills are losing money doing the same thing?

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  7. By mac on September 22, 2011 at 6:53 pm

    Solyndra

    Thank Goodness !!! We finally got a “Solar Scandal”. It was about time. We have had scandals in virtually every other area of business. Why not a ‘solar scandal’ ? It was long overdue………

    The problem is that Solyndra was a company that failed primarily because it was no longer competitive, and not because of some pre-meditated, well-thought out conspiracy to scam the government.

    Here’s a stock market view from a Motley Fool analyst concerning the precarious situation for western solar companies vis-a-vis China. Many other analysts also see a big shakeout for solar in the next two or three years.

    Solar Companies Face Headwinds

    By Keki Fatakia |
    September 22, 2011

    Solar companies in America and Europe have been facing sunstroke of late, due to numerous factors. Competition from heavily subsidized panel makers in China, coupled with a global mountain of inventory, has sent solar panel prices tumbling by 70% in the past 24 months. Let’s take a Foolish look at what this means for solar energy companies.

    Some bad news

    Three solar panel makers in the U.S. have filed for bankruptcy protection. California-based Solyndra, which had received more than $500 million in federal loan guarantees, is the latest. Earlier in August, SpectraWatt, an Intel spinoff, and Massachusetts-based Evergreen Solar filed for bankruptcy protection, citing too much competition from Chinese panel makers.

    Solyndra and Evergreen Solar had, in fact, invented unique technologies that allowed them to make solar panels using less polysilicon, which is the main ingredient of any photovoltaic cell. But polysilicon prices have fallen like a rock, making Solyndra and Evergreen’s manufacturing processes less cost effective.

    China heats things up

    Chinese competitors are fast outpacing U.S. and European companies in the solar energy race, thanks to cheap credit being offered by Chinese banks and government support in the form of free land. These incentives add to the economies of scale and price competitiveness of these companies.

    One key difference between subsidies in the U.S. and China is the way they are given out. In China, subsidies are offered to manufacturers, while in the U.S., buyers of renewable energy are subsidized for their purchase (irrespective of who the producer is). Thus, the Chinese get an extra edge here.

    Inventory and input costs

    At present, the solar energy market is bogged down because of subsidy cuts in Europe and a buildup of inventories, caused by overproduction from Chinese players. Unfortunately, according to analysts, this extra stockpile is likely to stay until 2013.

    When supply exceeds demand, market prices are bound to go down. This phenomenon works in favor of low-cost Chinese producers and kills off those that produce at higher costs.

    Polysilicon, the stuff inside solar cells that makes electricity out of the sun’s light, forms a higher percentage of costs for Chinese firms such as JinkoSolar (NYSE: JKS ) , Trina Solar (NYSE: TSL ) , and Yingli Green Energy (NYSE: YGE ) . So falling prices have increased their competitiveness as they mostly buy this essential material at spot prices.

    The numbers

    Solar companies have seen a general trend of declining margins and rising costs, with a few exceptions.

    For instance, Suntech Power Holdings (NYSE: STP ) has seen its second-quarter revenue expand from $25.1 million to $30 million. But despite this, its net losses widened to $259.5 million from $174.9 million in the year-ago quarter due to inventory writedowns and other one-time charges related to cancelation of a wafer supply agreement with MEMC (NYSE: WFR ) .

    Trina Solar’s second-quarter revenues rose from $371 million to $560 million, but soaring costs and operating expenses ate up everything, leading to a big drop in net income from $38 million to just $11.8 million this quarter.

    First Solar’s second-quarter revenues declined slightly to $532 million from $588 million in the year-ago quarter. Rising costs and expenses did not spare this company, either. Second-quarter net income dropped from $159 million to just $61 million in the quarter.

    On the sunnier side of things, Chinese manufacturer Yingli’s second-quarter revenues climbed from $2.7 billion to $4.3 billion. However, the company’s gross profits remained relatively flat due to a sharp rise in cost of goods sold, from $1.7 billion to $3.4 billion. Despite this, Yingli managed to post an impressive increase in second-quarter net income, from $217 million to $375 million.

    JinkoSolar has seen its second-quarter revenues swell from $900 million to $2.2 billion. Its net income for the quarter has also risen, from $180 million to $235 million.

    The sun will rise

    Demand for renewable sources of energy such as solar energy is expected to go up, primarily on the back of future increases in oil prices and due to waning global support for nuclear power. For now, consolidation in this sector will probably kill many companies that don’t keep costs at rock bottom. The future is bright for the sector as a whole, but panel producers would love to find ways of protecting their bottom lines from the scorching competition.

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  8. By Takchess on September 22, 2011 at 7:08 pm

    Interesting that too much fast money drove them to ruin.

    Interesting there are some don’t take advantage of the money.

    http://www.greentechmedia.com/…..deadline1/

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  9. By rrapier on September 22, 2011 at 10:04 pm

    mac said:

    One key difference between subsidies in the U.S. and China is the way they are given out. In China, subsidies are offered to manufacturers, while in the U.S., buyers of renewable energy are subsidized for their purchase (irrespective of who the producer is). Thus, the Chinese get an extra edge here.


     

    I don’t know where the author came up with this. The sorts of loan guarantees and grants that some U.S. solar companies have gotten are direct subsidies to specific producers. That’s what the controversy is all about.

    RR

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  10. By mac on September 23, 2011 at 6:13 pm

    “I don’t know where the author came up with this. The sorts of loan
    guarantees and grants that some U.S. solar companies have gotten are
    direct subsidies to specific producers. That’s what the controversy is
    all about.”

    RR

     

    I don’t know where the Motley Fool author came up with that either. 

    Perhaps,  the author sees the Chinese loading up the front end (manufacturing) with subsidies, free land for solar plants, perks etc. to make Chinese panels competitive on the world market, while on the other hand he sees the U.S. as busy mostlly subsidising the consumer or retail side of solar  in the form of tax credits to the end purchaser. 

    The Chinese approach apparently makes their panels more competitive on the world market. 

    On the other hand, consumer based subsidies in the form of installation tax credits in the U.S. make the actual purchase of solar panels more attractive.  What happens, of course, is that everybody soon begins importing and installing the heavily subsidised, cheaper Chinese panels and all the U.S. domestic solar panel manufacturers are eventually driven out of business.  (Similar to what happened with cameras, sewing machines, textile manufacturing, etc.)

     

    How about this ?  You cannot get the $7,500 dollar solar tax credit unless you buy domestically manufactured solar panels ?  As it now stands, the U.S. solar tax credit will ultimately end up stimulating Chinese solar panel companies,  not U.S. panel makers.

     

    You don’t like solar subsidies for U.S. manufacturers ?  

    Tell, the Chinese about it.  They don’t like U.S. solar subsidies going to American manufacturers either. Wink

     

     

     

     

     

     

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  11. By Rufus on September 23, 2011 at 7:37 pm

    So, why do we have a Trade “Surplus” with China in Solar PV Panels?

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  12. By mac on September 23, 2011 at 9:00 pm

    Rufus said:
    “So, why do we have a Trade “Surplus” with China in Solar PV Panels?”
    —————————————————————————————————
    Rufus, I think the trade surplus is in sales of raw materials and factory equipment to make the panels. This NYT article explains it better.

    U.S. Posted a Trade Surplus in Solar Technologies, Study Finds

    By KEITH BRADSHER
    Published: August 29, 2011

    HONG KONG — A study sponsored by the solar power industry has concluded that the United States ran a trade surplus of $1.88 billion in solar technologies last year, as exports of raw material and factory equipment for the solar sector outpaced imports of finished solar panels.

    The report is clearly aimed at addressing worries about the rapid rise of Chinese solar panel manufacturers, who now represent 58 percent of the world’s solar panel manufacturing capacity.

    American solar panel makers have been struggling, including Evergreen Solar, which filed for bankruptcy this month and had already moved early this year to shut down most of its production in the United States. (article continues ……..)
    http://www.nytimes.com/2011/08…..finds.html

    Or another article…..
    http://thinkprogress.org/romm/…..r-america/

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  13. By Oxymaven on September 24, 2011 at 11:19 am

    It shouldn’t be surprising that there is a huge amount of hypocrisy in Congress, but to me that’s the primary take-home message of the Solyndra affair. To hear the GOP house members express their indignation is laughable. It’s no secret that from 2005-2008 the Bush DoE (and Congress during that time, both R’s and D’s) were huge proponents of advanced biofuels. Andrew Karsner, the DoE’s top boss for alt energy 2006-2008) was himself a venture capitalist and for his entire tenure was promoting DoE as VC for alt energy. For example, see his March 2008 speech – here’s an excerpt: “We must stop bailing out the agents of incumbency,” he railed. Instead, we need to unleash “the power of good ideas. The “beef” in Karsner’s speech was his announcement of a new “Entrepreneur-in-Residence” program in which real live entrepreneurs with track records and direct ties to venture capital firms will evaluate and nurture new technologies at three different DOE laboratories until the technologies are ready for investors.” That clearly has been DoE EERE’s main mission for the last 5 years, and the Chu DoE has just continued that policy. Even top tier VC’s are used to ‘success’ rates of only 10-25%, and I’m doubtful that a federal bureaucracy’s VC successes would match those of the private sector. So we’ll see more Solyndra’s, and Congress should not be surprised. Congress has had plenty of times to alter DoE’s mission whenever Karsner testified to various congressional committees, which he did often during his term (as have his successors). It’s fine to look carefully at these kinds of failures, especially when such huge $$ are involved, but it’s irritating to see Congress taking its usual pious tone and blaming the most convenient victim instead of looking in the mirror. It would be nice to see the media put some proper perspective on this. I’m not sure the loan guarantee program is the best use of DoE alt energy funding, but it’s pretty obvious that there was widespread consensus in Congress and Bush and Obama administrations that LGs were something worth trying.

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  14. By Kit P on September 24, 2011 at 1:26 pm

    “but it’s pretty obvious that there was widespread consensus in Congress and Bush and Obama administrations that LGs were something worth trying. ”

     

    That is because loan guarantees is a good program. For example, when DOE approved a LG for a new nuke plant in Georgia; Obama was in a control room of nuke plant taking credit for the Bush program. Southern company has spent about a billion dollars so far and has put a couple thousand people to work but no LG money has been issued yet because the NRC has not yet issued a COL. The state of Georgia has approved the project.

     

    The DOE did detailed due diligence, Nobody thinks Southern Company will default. The project will result in 2200 MWe of new capacity reducing the demand for NG benefiting all Americans. There are also a lot of American engineers work in Pittsburgh and Charlotte, NC working on the 4 new reactors of the same design we sold to China. Many of the ‘safety related’ components for the Chinese nuke plants will be manufactured in the US by companies with an ‘N’ stamp.

     

    Many wind and solar farms have also been funded. I suspect that the people of Georgia will end with an asset that provides lower cost electricity for 60 years and the people of California will get more expensive and less reliable power but those were local choices.

     

    The political problem for Obama is that neither he or DOE did due diligence on Solyndra. If you are going to personally endorse something, it is not hypocrisy when failure is used for political gain. It is politics.

     

    The biggest fault that Obama has is that he is driven by agenda and is not focusing on the issues at hand. Even if you think solar is the greatest thing since sliced bread it is not an important issue in troubled economic times.

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  15. By Rufus on September 25, 2011 at 11:13 am

    Poet Closes on Loan; Starts Construction.

    http://www.consumerenergyrepor…..om/ticker/

    First Abengoa; now Poet

    The News is getting better. :)

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  16. By dustin on October 8, 2011 at 11:52 pm

    coming into an election year I predict an increased number of mis-management allegations against the current administration et al. Solar is at critical mass and shouldnt require $.5B injections from the government to survive. In fact, had solyndra achieved what they were attempting we would have China dominating the manufacture of the new technology in 5 years and Solyndra would go then. Basically the government made a bet that solyndra would develop a new technology which would maybe benefit the cause but would inevitably be lost. I think tax dollar should be going to advances in health sciences, etc. and not to established industries for the sake of political gain.

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  17. By Kit P on October 9, 2011 at 11:33 am

    “mis-management allegations ”

     

    See dustin they are not allegations when it comes to energy and the environment. Obama’s base had a bad case of BHS or Bush hatred syndrome. Bush made AGW a priority but knew that legislation for things like the Kyoto treaty were a lost cause. Obama is at war with the fossil industry but the people in the administration only have the mindset to be fight against energy without the skills to promote better choices.

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  18. By Walt on October 10, 2011 at 4:19 am

    Opps, here is an example how Silicon Valley can get money…crystal clear!

    Mr Spinner, an energy investor and high-tech consultant, raised at least $500,000 for the President’s campaign before he was given a crucial job helping to oversee the energy loan guarantee program, it has been reported.

    According to ABC News, Spinner wrote in emails made public yesterday: ‘How hard is this? What is he waiting for?

    ‘I have OVP [Office for the Vice President] and WH [White House] breathing down my neck on this.’

    It has emerged that many of the emails were written days after Spinner pledged in an ethics agreement that he would ‘not participate in any discussion regarding any application involving [his wife's law firm] Wilson [Sonsini Goodrich & Rosati].’

    http://www.dailymail.co.uk/new…..antee.html

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