In a recent interview with Platts Energy Week TV, Sen. Ron Wyden (D-OR), incoming chairman of the Energy and Natural Resources Committee, discussed his plans to revise government loan programs that he claimed don’t do enough to boost innovative green energy projects.
“Right now they’re not doing enough to encourage innovation,” Wyden said. “You can have a young person with a promising idea, maybe they got a little bit of private sector support, they got people who buy their product on day one — they’re essentially dumped in the same bucket with Solyndra that didn’t really seem to have much that was innovative.”
That is a bit of revisionist history. In fact, Solyndra’s cylindrical solar panel design was widely hailed as innovative before it went bankrupt in August of last year. President Obama’s reelection campaign even used the term to describe the defunct solar company.
Industry observers once heaped similar praise on Solyndra. It made MIT Technology Review’s list of the nation’s 50 most innovative companies. The Wall Street Journal included Solyndra in its list of the top 50 venture capital-backed firms. The Cleantech Group put the company in its top 10 in 2009.
Of course, Solyndra turned out to be less promising than its boosters suggested. When plummeting silicon prices made its competitors’ (but not non-silicon-based Solyndra’s) solar panels cheaper, the company’s high installation costs rendered its product noncompetitive.
Invocations of the innovativeness of Solyndra’s design by proponents of federal support for the company, then, go to the heart of the problems with such support. Ever-changing market conditions mean a technology that is promising one day may lack commercial viability the next. Central planners who devise economic programs in the vein of the Energy Department’s 1705 loan guarantees have no way of knowing whether a promising technology will be viable only a short time later, as Solyndra so clearly shows.
Solyndra didn’t fail because it wasn’t innovative. It failed because the market is dynamic and extremely difficult to predict. Wyden’s notion that by simply focusing on different companies — the innovative ones, supposedly distinct from Solyndra — the government would produce better results is pure folly.