Photo courtesy of Steve Jurvetson.
Since the Freemont, Calif.-based solar cell manufacturer, Solyndra, declared bankruptcy in September 2011 after receiving over $500 million in back-door loan guarantees from the Department of Energy, similar companies and government investments have seen increased scrutiny from budget hawks and free market ideologues. The name “Solyndra” itself, like so many monikers rooted in political scandal, has taken on a life of its own.
The latest such incident, termed by columnist Tad DeHaven of the CATO Institute as “Pennsylvania’s Solyndra,” came earlier this month when Flabeg, another government assisted solar panel company from the darker skies of Findlay, PA., ceased production.
Compared to Solyndra, the public assets invested in Flabeg are chump change, at least on the national level: $1 million in federal grants alongside $10 million in tax credits set aside in the original stimulus package. However, Flabeg will end up costing the state of Pennsylvania much more — roughly another $9 million in grants and loans, the largest awarded to a clean energy firm in the state.
“I call it, ‘press release economics,’” DeHaven tells BTR, describing the problem of state politicians piggy backing off of larger federal initiatives like the Recovery Act that made the Findlay plant possible.
“The people that hand out the money – the state officials and the politicians – they’re not experts,” DeHaven continues, “and if things don’t turn out, if they don’t create the jobs they promise, if the investments never appear, well, they might be out of office, they might be long gone; but they got the short term press release, and they can tell people, ‘Look we created x amount of jobs, we’re growing the economy, we’re going to be the leader in green energy,’ etcetera, etcetera.”
“Unfortunately, you have a lot of wasted capital, a lot of empty promises, and people get hurt,” he says, “but politicians and bureaucrats go about their business.”
The issue of who is footing the bill aside, Flabeg does make for a case study for problems facing the future of American solar energy and the invested politics on every level.
Those problems first arose in 2010, when spokesmen said that they were having trouble securing approval for solar mirrors in sun-drenched southwestern states where business looked hopeful. From there, a blossoming payroll of 200 (only two thirds of the jobs that local politicians promised two years before) began dwindling. At the time of the Findlay closing, the company was comprised of only 70 employees.
“They also seemed to have a high turnover rate of CEOs,” observes Erich Schwartzel, writer for the Pittsburgh Post-Gazette who covered Flabeg’s closing for the paper – a fact he didn’t mention in his own story. “The CEO who cited those problems in 2010 was a different one than who announced the closing a couple of weeks ago.”
Though no one could have predicted the chaotic working environment that would follow the initial investment, Flabeg’s private backing would probably make most venture capitalists feel at ease. Their parent company is based in Germany, a country well known for both their thriving solar industry and government subsidies to support it. Furthermore, the company itself specializes in manufacturing automotive and technical glass as well as solar mirrors. This kind of backing would be a trifecta in the minds of Flabeg’s prospective investors.
If the press releases of Industri Kapital (Flabeg’s most impassioned investors) is to be believed, the company is “a leading tier 2 supplier for the global automotive industries.” However, they are only a “worldwide leading manufacturer” in the sale of solar mirrors.
The real problem is, as their German parent’s statement upon the plant’s closing mentions, “the current order and market situation in the North American solar market does not offer any prospect of profitably justifying to continue with the Clinton plant.”
Flabeg specializes in solar mirrors which are used in concentrated photovoltaic technology (CPV, as it’s known in the industry) which help focus a large amount of light into a smaller area. The technology is commonly used in large-scale municipal utility projects as opposed to small residential home solar generating systems, Greentech Media Editor-in-Chief Eric Wesoff explains to BTR, which use regular old photovoltaic (PV) systems.
Recent American market analysis reports from the Solar Industry Association have a lot of good news about photovoltaic systems, as the residential solar market saw healthy growth in 2012 and is expected to rise through this year.
On the other hand, the report only mentions a few major infrastructure projects using concentrated power systems – albeit a few of the largest such proposed projects in the world – seem to be just getting off the ground, primarily in states like California and Colorado. Not one such project mentioned in the report uses CPV technology, but a similar version that functions distinctly off of sunlight, called concentrated solar power, or CSP.
Making public relations matters worse, there is seemingly little regard felt by the powers that be for employees of these failing energy companies – especially for an initiative championed by the ever labor-conscious left.
As with Solyndra, the employees at Flabeg are being left out to dry. Though state and federal officials may not be feeling the company’s failure in their budgets, it is certainly felt by former Flabeg workers who are still awaiting $197,000 in severance packages since plants closed their doors.
Few of those conscious of America’s energy challenges question the benefits of alternative technologies. The failure of Flabeg and other, smaller “Solyndras” shows that the public price tag of building a larger solar infrastructure framework is slowly beginning to surface on a local level.