The Phony Solyndra Scandal

[dtotire]

The Phony Solyndra Scandal

By JOE NOCERA

Published: September 23, 2011



If Brian Harrison and W. G. Stover, the two Solyndra executives who took the Fifth Amendment at a Congressional hearing on Friday, ever spend a day in jail, I’ll stand on my head in Times Square. »


It’s not going to happen, for one simple reason: neither they, nor anyone else connected with Solyndra, have done anything remotely criminal. The company’s recent bankruptcy — which the Republicans are now rabidly “investigating” because Solyndra had the misfortune to receive a $535 million federally guaranteed loan from the Obama administration — was largely brought on by a stunning collapse in the price of solar panels over the past year or so.

The company’s innovative solar panels, high-priced to begin with, became increasingly uncompetitive in the marketplace. Solyndra didn’t have enough big commercial customers to create the necessary economies of scale. And although Harrison and Stover remained optimistic up to the bitter end — insisting six weeks before the late-August bankruptcy filing that the company was going to be fine — they ultimately failed to raise additional capital that would have allowed Solyndra to stay in business.

The Republicans are trying to make that optimism appear sinister, but if we’ve learned anything from the financial crisis, it is that wishful thinking in the face of a collapsing market is not a crime. Otherwise, Richard Fuld, the former chief executive of Lehman Brothers, would be wearing prison garb.


http://www.nytimes.com/2011/09/24/opinion/the-phony-solyndra-scandal.html?_r=2&ref=opinion

[murielm99]

1. They are just trying to create a Whitewater for Obama.

As if it worked for Clinton.

[ThoughtCriminal]

4. If you asked almost any rightwing-nut about Whitewater

They could show considerable outrage, but not one detail about what the fuss was all about.

[vets74]

6. The Clintons lost $25,000 on "Whitewater" then aliens ray-gunned Vince Foster.

R.I.P., Vince.

[kristopher]

2. The Republicans should be careful...

I'll bet that all of them on that panel have supported nuclear loan guarantees ever since Bush got them into the 2005 Energy Bill. Here is what the CBO said:

For this estimate, CBO assumes that the first nuclear plant built using a federal loan guarantee would have a capacity of 1,100 megawatts and have associated project costs of $2.5 billion. We expect that such a plant would be located at the site of an existing nuclear plant and would employ a reactor design certified by the NRC prior to construction. This plant would be the first to be licensed under the NRC’s new licensing procedures, which have been extensively revised over the past decade.

Based on current industry practices, CBO expects that any new nuclear construction project would be financed with 50 percent equity and 50 percent debt. The high equity participation reflects the current practice of purchasing energy assets using high equity stakes, 100 percent in some cases, used by companies likely to undertake a new nuclear construction project. Thus, we assume that the government loan guarantee would cover half the construction cost of a new plant, or $1.25 billion in 2011.

CBO considers the risk of default on such a loan guarantee to be very high—well above 50 percent. The key factor accounting for this risk is that we expect that the plant would be uneconomic to operate because of its high construction costs, relative to other electricity generation sources. In addition, this project would have significant technical risk because it would be the first of a new generation of nuclear plants, as well as project delay and interruption risk due to licensing and regulatory proceedings.

Note the price - $2.5 billion was to be only for the first plant. Future plants were, according to the assumptions provided by the nuclear industry, expected to have lower costs as economy of scale resulted in savings.

In fact, since the report was written (2003), the estimated cost has risen to an average of about $8 billion.

Wonder what that does to the “risk is that … the plant would be uneconomic to operate because of its high construction costs, relative to other electricity generation sources”?

Does that risk diminish or increase when the price rises from $2.5 billion to $8 billion?

And then you have the declining costs of solar and wind that also serve to diminish the viability of any nuclear plant to operate in a competitive market. The current push for nuclear (with 80% loan guarantees) is designed around having virtually their entire costs underwritten through the back door.

[saras]

3. Of course it's phony. That they're trying to tar the entire solar industry with it demonstrates that

[quaker bill]

5. Compared to ENRON

The losses are tiny and Solyndra was actually making something.