John beat me to the story of Solyndra’s collapse yesterday, but I can’t resist joining in his sack dance in the end zone. I’ve been following this story closely for quite a while, and indeed more or less predicted this outcome in a short piece on American.com way back in July of last year, “More Red Ink for Green Energy.” Here’s a little bit from that post:
Turns out Solyndra, having received $535 million in loan guarantees from the Energy Department, with another $469 million in loan guarantees in prospect, had to pull the plug on a comparatively modest $300 million equity IPO last month because its profit prospects going forward look so dismal. Solyndra’s auditor, PricewaterhouseCooper, said Solyndra “has suffered recurring losses from operations, negative cash flows since inception and has a net stockholders’ deficit that, among other factors, raise substantial doubt about its ability to continue as a going concern.” In its five-year life, Solyndra has lost $558 million.
To get by for the meantime, Solyndra has borrowed another $175 million from existing investors. Turns out many of those investors were also “investors” in the Obama campaign, such as George Kaiser, who bundled for the Obama-Biden campaign. The story of beltway cronyism doesn’t end with Solyndra. Jim McTague’s Barron’s story notes another company, Abengoa Solar, that has received $1.45 billion in loan guarantees for solar power. Whaddyaknow: Abengoa’s marketing team includes Russ Kanjorski, nephew of Pennsylvania Rep. Paul Kanjorski.
Looks like the green energy sector has figured out what farmers learned decades ago: the best place to reap profits is in Washington DC.
Meanwhile, if you go to Solyndra’s website today, you still find the photo of President Obama touting the place, along with this typically fluffy bit about how Solyndra represents the future:
Solyndra has received numerous awards and recognition including appearing on the MIT Technology Review list of the “50 Most Innovative Companies in the World”, the 2010 Wall Street Journal list of the “Top 10 Venture-backed Clean-Tech Companies”, and Wall Street Journal list “The Next Big Thing: Top 50 Venture Backed Companies”, and a 2009 Excellence in Renewable Energy Award from Renewable Energy World Magazine.
I’m sure that what the green energy crowd will now say is that, just as Krugman says with Obama’s stimulus package, Solyndra’s failure only shows that the subsidies and loan guarantees weren’t big enough. Rather, the lesson we should take is that the only true “green” job (in energy or anywhere else), is in an industry that can make a real profit. In other words, let’s get back to the old kind of “green” in our thinking, as in black on the income statement and balance sheet. In other words, if you are an energy investor, and you see a “green” energy company touting its awards and accolades, run away as fast as you can.
MORE: Don’t miss this terrific piece that beats down on the whole disaster even harder than I did. (Hat tip: AMF.)