The Wall Street Journal's False Solar Statistic
An editorial in today's Wall Street Journal urges Congressional Republicans to defund the Department of Energy's loan guarantee program, and claims: “Bloomberg reports that half the solar companies that have received loan guarantees have gone bankrupt.” But Bloomberg was referring specifically to solar manufacturers, which account for only a quarter of the solar projects supported by the 1705 program and less than 4 percent of the total program funding.
The Journal used the false solar statistic to argue that government investment in clean energy was a bad bet:
Bloomberg reports that half the solar companies that have received loan guarantees have gone bankrupt. Renewable energy deserves every chance to compete in the open marketplace backed by private investors. But DOE's taxpayer bet on alternative energy is looking steadily worse over time, as abundant natural gas for electricity generation is making renewable energy less competitive even with subsidies.
But Bloomberg actually reported that “Half of the four solar manufacturers that received loan guarantees have failed,” referring to Abound Solar and Solyndra. This does not include 12 loan guarantees for solar generation projects -- none of which have declared bankruptcy. As Bloomberg noted, solar manufacturers represent less than 4 percent of the total loan program funding:
The Energy Department has provided almost $35 billion in loans, loan guarantees and conditional commitments to renewable- energy companies. About 35 percent of that is for solar- generating projects, which benefit from falling panel prices, compared with less than 4 percent for solar manufacturers.
Solyndra and Abound Solar were among the few higher-risk solar manufacturing investments in the loan portfolio, which is designed to help clean energy be deployed on a wide-scale. By contrast, solar generation projects are required to secure contracts with utilities before receiving a loan guarantee, virtually eliminating the risk of default. A Bloomberg Government analysis found that 87 percent of the funds for the 1705 loan guarantee program went to low-risk projects.
Congress set aside ample funds to cover any losses from the loan guarantee program, anticipating that not all investments would be successful. The Bloomberg Government analysis found that even if even if all 10 of the higher risk projects defaulted on the full amount of their loan guarantees, we'd still have nearly half a billion dollars left in that fund.
By failing to distinguish between companies that manufacture solar panels and companies that create large-scale solar farms to generate power, the Journal misunderstands the current economics of solar energy. Chinese solar panels flooded the market with help from large subsidies, leading to a sudden shift in the market that hurt U.S. solar manufacturers that had previously looked promising, like Abound Solar and Solyndra. But this drop in prices has helped solar generation projects by reducing the costs of their installations. The Wall Street Journal's distortion of the success rate of solar loans indicates that the paper is more interested in supporting the right-wing narrative that solar energy as a whole is failing than in understanding the promise of the solar market.