Thursday, September 15, 2011

Latest from: CleanTechnica

Latest from: CleanTechnica

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Biggest Wind Farm in the US – in Nevada?

Posted: 15 Sep 2011 09:09 PM PDT

A gigantic wind farm with the power output of three or four average-sized coal plants has been been proposed by the US wind development subsidiary of the European renewable energy investor Good Energies, in Nevada, according to ReCharge.

The wind farm would be extraordinary, the largest wind farm in the US at a staggering 990 MW. But it would also be Nevada’s first ever wind farm. Wind power in the US now totals 42,432 MW of capacity. Texas is number two in the world. Iowa gets 20% of its energy from wind.

But unlike every state on its borders, all of which have at least 128 MW of turbines churning out wind energy, Nevada till now has had no wind farms at all. The hold-up has been the difficulties in getting a permit.

The Good Energies subsidiary Wilson Creek Power Partners’ application to the PUCN (Public Utilities Commission of Nevada) is for a gigantic 990 MW project comprising up to 350 turbines, buried power collection lines, communication cables, access roads, meteorological towers, one or more substations and switchyards, an operation and maintenance building and an overhead transmission line.

The application cites the "above average wind speeds" at the sparsely populated region under consideration, Mt. Wilson, Table Mountain, White Rock Mountain and Atlanta Summit. The land is used mainly for cattle grazing, and would still be, if the wind farm was permitted there by the PUCN.

Good Energies says it aims to invest up to $1.5bn of development capital in North American renewable energy projects and companies. For Nevada, this would be a huge change.


Why We Should Democratize the Electricity System — Part 4

Posted: 15 Sep 2011 04:29 PM PDT

A serialized version of ILSR's new report, Democratizing the Electricity System, Part 4 of 5. Click for Part 1 or Part 2 or Part 3.

Roadblocks to Distributed, Local Renewable Energy

 

Despite technology's march toward more efficient and distributed energy production, there's a substantial tension between the decentralized opportunity and the institutional and policy inertia generated from a century dominated by the paradigm of centralized generation. Motivated by the urgency of global climate change, many renewable energy advocates hope to transform the electricity grid by building ever-larger wind farms and solar power projects in remote regions, and sending power across the super grid to cities. These competing visions for the grid will compete for limited resources for clean energy development.

The tension between decentralized and centralized is most clearly seen in the battles over the construction of a new high voltage transmission network. In 2005 Congress gave the Department of Energy and the Federal Energy Regulatory Commission (FERC) new authority to accelerate the construction of this network. The new law allowed FERC to approve a new transmission line if the state utility commission had not done so in one year after submission of the request. FERC then asserted its authority to overrule states that disapproved of the request for a new transmission line. The federal courts twice ruled that FERC did not have this authority.

States have actively expressed their opposition to being forced to pay for a new transmission infrastructure that assumes they will be importers rather than generators of renewable energy. Ten East Coast governors signed a letter to Congress in 2009 asking them to reconsider proposed legislation pre-empting state authority over new transmission.[1] Editorials in the Detroit Free Press in 2011 decry the cost to Michigan ratepayers of expanding high-voltage transmission that largely uses Michigan as a waypoint between windy points West and big cities to the East.[2]

The existing electricity system – and the rules that govern it – privilege money and power, and punishes people and communities of the 21st century paradigm.

The vision of a distributed electricity system requires designing policies that can overcome a number of roadblocks.

Roadblock 1: Federal Energy Regulatory Commission (FERC)

There is an inherent tension between federal and state and local energy regulatory agencies. FERC sees its primary goal as accelerating and enabling the long distance transmission of electricity while in the era of renewable energy many states see their primary goal as maximizing in-state production of energy and the economic benefits that derive from that.

Preempting State Authority

FERC has asserted that it has preemptive powers to impose new, high-voltage transmission lines on recalcitrant states (so far denied by the courts). The claim came from a section of the 2005 Energy Policy Act that gave FERC the authority to approve transmission lines in Department of Energy designated "National Interest Electric Transmission Corridors" if states did not act on proposals within one year. FERC took this to mean that it could approve any transmission line, even one that a state had rejected. The 4th Circuit Court of Appeals disagreed in February 2009, ruling that FERC had overstepped its authority.[3]

FERC has also encouraged a shift in the locus of transmission planning from local and state, to regional and national bodies.

FERC has also undermined state's ability to establish premium prices for renewables in order to accelerate and maximize their use. In particular, FERC has prohibited states from setting prices above the utility's avoided cost – the price the utility says it must pay to get an additional kilowatt-hour of power – generally too low to attract investment in all but the least expensive renewable energy sources. FERC did recently open a loophole in its denial but it remains to be seen whether states are going to be able to do what they want within that narrow wiggle room.[4]

Disproportionately Rewarding Transmission

FERC provides a higher, guaranteed return on investment for high voltage transmission lines than are provided for power plants or lower voltage lines. While the 2005 Energy Policy Act authorized a higher return under exceptional circumstances, FERC has generally extended substantial incentives to every transmission project, with little consideration for the specific benefits the projects bring to ratepayers.[5]

Ignoring Least Cost Analysis and Careful Analysis

FERC's insistence in shifting decisions up the food chain undermines the least cost planning processes that have been painstakingly put in place over the last 30 years in many states. States are usually required to analyze alternatives (e.g. efficiency, renewables, distributed generation) to new power plants or transmission lines. FERC has been insistent that neither it nor the regional transmission planning authorities are required to analyze alternatives while at the same time insisting that FERC can overrule state decisions regarding transmission lines.

Roadblock 2: Federal Renewable Energy Incentives and Guarantees

There are many ways federal incentives for renewable energy have been biased toward large, absentee owned centralized power generation. One of the most pervasive is evident in the two major incentives for renewable energy production: the Production Tax Credit (PTC) and Investment Tax Credit (ITC). The PTC provides a 2.1 cent per kWh incentive for several renewable technologies over 10 years. The ITC provides an up-front 30% tax credit to defray project capital costs. Both federal tax incentives require the renewable energy producer to have sufficient tax liability to absorb the credit.

The use of tax credits for incentives eliminates any non-taxable entity from access to the incentive, including municipal or county governments, tribal entities, non-profit organizations, and cooperatives. In the case of wind power, the limitations on access are particularly profound because each investor in a wind project must either have "passive income" to apply the credit against or be materially involved in the day-to-day operation of the project. This limitation is particularly onerous for wind projects with many owners, such as cooperatively- or community-owned projects.[6]

For solar, the use of tax credits is particularly onerous for homeowners. As many as half of American households do not have sufficient tax liability to absorb the federal solar tax credit before it expires.[7] These households could go solar, but only at a higher price than those who can use the credit. In other words, those with money and income can go solar, while the rest of us stay in the "dark" ages.

In addition to limiting participation in renewable energy development, the federal tax incentives also make renewable energy more expensive than alternative incentive strategies.[8] Providing incentives through the tax code forces project developers to partner with "tax equity investors" such as large investment banks. These banks want a return on their investment, so they add cost to the project, costs that are passed on to ratepayers (and also come out of the pockets of taxpayers). Additionally, the number of such tax equity investors is limited, both constricting the total market and allowing them to set their own price. A recent study found that a cash grant (as was enacted as part of the federal economic stimulus package) could provide the same impact on project finances at half the cost to the government and taxpayers.[9]

Tax credits have also provided an opportunity for financing hijinks. Banks who finance leased residential solar PV projects have taken advantage of rules allowing them to substitute the "fair market value" of the installation rather than the actual project cost. The cost inflation is as high as $4.00 per Watt and can cause million of dollars in overpayments of federal tax credits to bankers.[10]

One other federal incentive is the use of loan guarantees to support large-scale, centralized renewable energy projects. For example, a 250 MW parabolic trough concentrating solar power plant in Arizona received a $1.45 billion federal loan guarantee,[11] which means the federal government will pay the loan back if the developer is unable to, helping the developer borrow at a lower interest rate. Such guarantees skew the playing field when, on the other hand, Southern California Edison is building 250 MW of distributed small-scale PV projects for a levelized cost of 16-18 cents per kWh, with no federal loan guarantee. Big solar gets additional federal support that distributed solar does not.

Roadblock 3: Insufficient Federal and State Oversight of Utility Interconnection Rules

Distributed generation developers can find financing and hardware with ease, but navigating the utility interconnection process is mind-boggling. In most areas of the country, the grid system is a black box and developers only learn about potential interconnection costs once they initiate the arduously slow interconnection process (and have sunk significant money into site development).

Even in California, a leader in distributed solar, the state and federal rules for interconnecting distributed generation projects create a major barrier.

For example, while there is supposed "Fast Track" approval for small-scale distributed generation projects (under 3 MW), California utilities managed to insert a "poison pill" into interconnection rules that exposes developers to "uncapped, undefined, and indefinite cost liability." There's little guarantee that a Fast Track application will not morph into a larger "Independent Study Procedure" of grid impact, because any system upgrades trigger this higher standard of review.[12]

To make matters worse, there are no objective criteria for this more complex Independent Study Procedure review so an applicant has little indication of success despite advancing a $50,000 fee. There are also no timelines for completing such studies, and recent interconnection standards approved by the California PUC will result in an average study timeframe of 2-3 years.

Furthermore, a large portion of the data a developer would need to clarify and expedite interconnection is considered proprietary by the utility, sealing it in a black box.

The following list of now-hidden data requested by the Clean Coalition for PG&E's interconnection rule docket highlights the level of obfuscation facing distributed generation developers:[13]

  • Number of [Wholesale Distribution Tariff] WDT applications in the PG&E queue, with dates of entry
  • Number successfully processed, time for processing, and costs of studies
  • Number of Fast Track applications in the PG&E queue, with dates of entry
  • Number successfully processed in Fast Track, time for processing and costs of studies. Information on rejected Fast Track applications, including specific screen that was failed (if relevant).
  • Actual cost to PG&E of feasibility studies, system impact studies and facilities studies for all interconnection queues, with methodology for determining actual costs
  • Cost of required upgrades for each project or cluster (PacifiCorp, for example, posts all of this information online as soon as it is completed)

Without basic information about the number of applicants in the utility queue, the prospects for obtaining interconnection, and the eventual costs, current rules remain an enormous barrier to expanded distributed generation development.

Roadblock 4: Local Permitting for Wind and Solar

Credit: Warren Gretz (NREL PIX)

Permitting and siting for wind and solar projects is typically handled at the local (city or county) level. This local authority provides an opportunity for local residents to discuss the merits of sometimes-large renewable energy projects. However, the inconsistency of municipal rules for wind and solar increases development costs and can prove a barrier to decentralized as well as centralized power projects.

For wind power, some counties have instituted complete moratoriums on wind projects and other have established setbacks and other stipulations that create a de facto ban on new wind turbine construction. Sometimes state rules are established to provide a more uniform set of rules for developers, but this process isn't without controversy. The Wisconsin legislature is currently embroiled in a debate over wind siting rules, with some draft rules so stringent – to appease local opposition – that they would effectively close the entire state to new wind development.

For solar power, permitting rules vary widely between municipalities, and costs often far exceed the cost to issue the permit. A recent report found solar permitting costs averaged $2,500 per project. As solar PV costs continue to fall, the portion of project costs devoted to permitting can rise as high as 20 percent.[14]

Proposed best practices for municipal permitting can reduce these fees by a factor of five, reducing the permitting share of project costs to 4 percent or less. In Colorado, the passage of the 2011 Fair Permit Act caps the permit fees that local governments can apply.[15]

Permit Costs Could Stall Distributed Solar PV:

 

Roadblock 5: Net Metering Limitations

A widespread state policy for supporting on-site generation – net metering – allows generation of electricity for a home or business to be deducted from the monthly electricity bill at the full retail electricity rate. This rate is often higher than the wholesale electricity rate that would otherwise be paid for electricity that feeds into the grid.

The major drawback of net metering is that it makes it economically advantageous to optimize the size of a solar array for on-site load rather than maximize it. For example, a homeowner installing a rooftop solar PV system would not want the production from their solar array to significantly exceed their on-site consumption, because they will receive inadequate compensation for that power. However, the overall cost of solar electricity would be lower if the homeowner could benefit from installing as much solar as could possibly fit on their roof.

Another issue with net metering is that utilities credit on-site generators with a deduction equal to the energy charge on the user's bill, just as if the user had reduced on-site consumption by using conservation. Such a practice does not credit the other values of distributed generation to the grid, including voltage regulation or deferral of infrastructure upgrades.

References

 

  1. Bailey, John. East Coast Governors Say National Transmission Grid Limits Local Energy. (New Rules Project, ILSR, 6/25/09). Accessed 5/13/11 at http://tinyurl.com/mp6k6n.
  2. Power line upgrade costs would hit Michigan unfairly. (Detroit Free Press, 4/28/11). Accessed 5/10/11 at http://tinyurl.com/6frllwx.
  3. FERC Effort to Override State Transmission Siting Decisions Rejected by Federal Appeals Court. (PULP Network Blog, Public Utility Law Project of New York, 2/19/09). Accessed 01/20/2011 at http://tinyurl.com/655ydv3.
  4. Trabish, Herman K. FERC Decision Boosts Renewables. (Greentechmedia, 10/28/10). Accessed 3/29/11 at http://tinyurl.com/4m7vt5q.
  5. Varela, Robert. Norris urges FERC to reassess policies on transmission incentive rates. (Public Power Weekly, 12/6/10). Accessed 01/20/2011 at http://tinyurl.com/4p7tt9p.
  6. Farrell, John. Broadening Wind Energy Ownership by Changing Federal Incentives. (ILSR, April 2008). Accessed 3/29/11 at http://bit.ly/fZTum5.
  7. Farrell, John. Federal Solar Tax Credits Rule Out Half of Americans. (Energy Self-Reliant States blog, 1/11/11). Accessed 02/01/2011 at http://tinyurl.com/6e8lbmm.
  8. Farrell, John. Why tax credits make lousy renewable energy policy. (Energy Self-Reliant States blog, 11/17/10). Accessed 3/29/11 at http://tinyurl.com/5toavj6.
  9. Mackler, Sasha. Reassessing Renewable Energy Subsidies. (Bipartisan Policy Center, 3/22/11). Accessed 3/29/11 at http://bit.ly/i06tr7.
  10. Farrell, John. Big Banks Inflate Solar Project Value to Boost Tax Credits. (Energy Self-Reliant States blog, 5/13/11). Accessed 5/16/11 at http://tinyurl.com/635gvmj.
  11. DOE Finalizes $1.45 Billion Loan Guarantee for One of the World's Largest Solar Generation Plants. (National Renewable Energy Laboratory, 12/21/10). Accessed 02/01/2011 at http://tinyurl.com/4qwdllj.
  12. Clean Coalition Comments on CPUC’s Rule 21 Interconnection Standard. (Clean Coalition, 5/31/11). Accessed 6/14/11 at http://tinyurl.com/6l6p7tw.
  13. Clean Coalition Protest to PG&E WDT Amendment. (Docket No. ER11-03004, 3/2/11). Accessed 6/14/11 at http://tinyurl.com/65wm9b9.
  14. Farrell, John. Poor Solar Permitting Rules Increase Residential Solar Prices by Up To 20 Percent. (Energy Self-Reliant States blog, 2/10/11). Accessed 3/23/11 at http://tinyurl.com/5ts5b2k.
  15. Colorado Passes "Fair Permit Act." (State and Local Policy Report, 5/11/11). Accessed 5/16/11 at http://tinyurl.com/67z67su.


Rand Paul Tries to Stop EPA’s Ozone Cap and Trade

Posted: 15 Sep 2011 04:01 PM PDT

The Republican Senator Rand Paul of Kentucky introduced S.J. Res 27 on September 8th, a resolution that would force EPA to scrap next January’s EPA implementation of cap and trade under the Cross-State Air Pollution Rule (CSAPR) entirely. Then on September 12th, Republican House member Stephen Fincher of Tennessee introduced H.R. 2891 in the House, that would delay implementation by a decade.

Can Republicans prevent the EPA implementation of cap and trade to cut ozone pollution?

CSAPR outlaws ozone, nitrogen oxides (NOX) and sulfur dioxide (SO2) indirectly, by making it illegal for it to drift from dirty power plants across state lines into adjoining states. Since air moves across all state lines, the CSAPR rule is an effective curb on coal plant pollution anywhere in the US.

The two states of Kentucky and Tennessee, where these two Republican congressmen hail from, are as dirty as it gets, being over 90% coal-powered. They are two of the 27 states with emission levels that threaten clean air in neighboring downwind states.

This affects the ability of downwind states to attain and maintain compliance with the fine particulate matter national ambient air quality standards (NAAQS) set in 1997 and 2006.

The Obama administration recently raised the ire of environmentalists by not further tightening the current ozone NAAQ standards another 5 parts per billion. The 2006 levels are 75 ppb. But considering the amount of new EPA legislation he is asking Republicans to swallow – this is a cap and trade program, after all – that small concession may have been wise: lose the battle but win the war.

It is almost as if the blowup over the ozone rule was a smokescreen to give Republicans cover for their defeat over the CSAPR cap and trade. They could make approving noises over a few parts per billion of dirty air preserved, and enviros could get outraged, and nobody need mention the elephant in the room. Cap and trade.

By current law, in January of 2012, the EPA will begin to implement the new CSAPR cap and trade program. The EPA has for decades quietly administered a successful cap and trade program that has very effectively reduced the pollutants that caused acid rain in the ’80s. This should be no different.

So, can Republicans actually stop the EPA from implementing the new ozone reduction rule with cap and trade? In some rare good news for most of us, not a chance – at least for now.

Congressional Review Act (CRA) resolutions actually face a very high hurdle to becoming law. The president can (and this one would) simply veto the resolution. To override that veto would take 67 votes in the Senate, and there are fewer than 5 pro “dirty air” Democrats, and only 47 Republicans, in the Senate.

 


Off Train, onto Electric Bike in Tokushima

Posted: 15 Sep 2011 12:00 PM PDT

Tokushima City in Tokushima Prefecture, Japan, is known mainly for its 3-day dance festival in late summer, and is fairly popular with tourists. It would like to be known for its natural beauty and efforts in preserving the environment. To that end, the city is promoting ecologically friendly tourism.

To kick-start its efforts, Tokushima City has received a gift of 20 Yamaha EC-03 electric bikes from Sumitomo Mitsui Auto Service. The bikes can be leased this month after the 20th by tourists or locals from a new company — as yet unnamed — created specifically to handle the e-bikes. In a city of 260,000, 20 bikes might not go far — but it's a promising start.

The city is already promoting initiatives to protect its environment and to reduce energy use in companies and offices (some of the specific pushes are titled things like "basic environmental plan" and "eco office plan"), but sponsoring a business specifically to help the environment is a first. The city hopes to be able to boost its economy by connecting its many tourist locations by e-bike and electrically assisted bikes to offer a clean and fun experience.

The bikes will be available for rental from the JR Tokushima Station reception window – off the train, onto a bike!

Source | Picture: Response.jp

 


Enterprise Rent-A-Car Helps Consumers Get a Feel for the Nissan Leaf

Posted: 15 Sep 2011 11:50 AM PDT

The Nissan Leaf Awaits a Customer at the Four Season in San Francisco
Taking the Nissan Leaf for a spin

Enterprise Holdings, the parent company of Enterprise Rent-a-Car, Alamo, and National, are actively breaking ground for the new Nissan Leaf EV. As part of the company’s ongoing philosophy of being at the forefront of new transportation and alternative fuel technologies, Enterprise now has 500 Nissan Leaf EV’s available for rent nationally, with 30 of those in the San Francisco Bay Area. I was fortunate enough to get a chance to take one of those 30 for a test drive through the streets of San Francisco last week with Enterprise’s Director of Sales, Eric Schwartz, helping inaugurate their partnership with the Four Seasons Hotel hosting a charging station and Nissan Leaf for rent by hotel patrons (Enterprise also has the Leaf available at their Civic Center location in San Francisco).

The dashboard of the Nissan LeafI’ll give my impressions of the Leaf in a moment, but first let’s talk about how I found myself behind the wheel in the first place.

For several years we’ve followed Enterprise’s culture of corporate responsibility, reflected in the services they offer their customers and business partners and as part of the global community. Enterprise also actively supports and funds alternative fuel research through the Enterprise Institute for Renewable Fuels at the Danforth Plant Science Center, in St. Louis, Missouri.

Now, I don’t want to sound like a shill for anybody. When the rubber meets the road (if you’ll pardon the pun), Enterprise is a car-rental and transportation company, firmly planted in the fossil fuel world. But that’s the point. Driving new technology (enough with these puns!) requires big movers like Enterprise to “blaze the trail,” helping to build the market for first adopters and smaller players to follow. Enterprise has consistently demonstrated its commitment to push emerging technologies onto the market, build consumer confidence and help expand needed infrastructure (in the case of the EV, charging stations).

Taking the Nissan Leaf for a spin on a sunny San Francisco afternoon“We’re making the Leaf available here so people can try it out,” Schwartz told me as we pulled out of the Four Seasons garage on to busy Market Street, taking my opportunity to “try it out” on a warm and sunny San Francisco afternoon.

My first impression of the car is its apparent simplicity. Pushing the “on” button lights up the dashboard, but there is absolutely no engine noise (even a Prius has some engine noise). Of course, with the car at a standstill, why would there be? There’s no gas-guzzling internal combustion going on. A slight shift of a small shifter knob on the center console and the car is ready to go, but even moving down the street the only sound from the car is the smooth whir of the wheels.

Acceleration is responsive and the ride is as smooth as the gentle swish from the undercarriage. But this is San Francisco, where a real test of a car’s power and stability are the famed hills. If you’re not careful, in some cars, you just might drift backwards into the bay in the time it takes to move your foot from the brake to the accelerator while waiting for the light to change at the top of a particularly vertical hill. Not so with the Leaf I am happy to report. While I certainly wouldn’t advise any foot-pedal-dallying, the car navigated the steep inclines easily, with no lack of power or acceleration, even with the car pointed nearly skyward.

The Leaf's Level 2 Charger at the Four Seasons in San FranciscoThe level-two charging station installed at the Four Season can fully charge the Leaf’s battery pack in about 6 to 8 hours, providing an average 100-mile range, suited for shorter trips and commuting (the average commuter drives about 40 miles per day). The range of any vehicle depends on it’s “refueling” infrastructure, a primary limiting factor for all-electric vehicles. This will change as EV’s gain market penetration, and companies like Enterprise focus on helping the marketplace adapt to this emerging technology. In time, the effective range of EV’s will become far less limiting.

The Leaf rents for $90 per day, not exactly the “economy” rate, but as Schwartz explained, there are obviously no fuel costs, and as the EV market begins to take hold, prices will come down. All new technologies enter the market at a premium.

Charging the Nissan LeafBut if you’re curious about the Leaf, or EV’s in general, spending a day with one is a great way to get familiar with the car and gain confidence in the technology.

Now that I’ve got my “feet wet” with the Leaf, I just might rent one for a ride out to Muir Woods in Marin county, a perfect day-trip for both car and driver!

 


Tiny, Adorable, Inexpensive — New Nissan Quick-Charge System

Posted: 15 Sep 2011 11:10 AM PDT

Austrians Have a Superpower — Charging EVs at Parking Meters with Renewable Energy

Posted: 15 Sep 2011 11:06 AM PDT

Energy Efficiency and Management Software Might Save Dollars

Posted: 15 Sep 2011 10:20 AM PDT

Charts and graphs help in taking on energy management tasks

For all champions of renewable energy or smart energy conservation, understanding the mathematical details is a fundamental part of the formula.

All of those bothersome details that accompany the monthly utility bill, if properly managed, can save consumers more than a few bucks. A UK company of interest is BizEE Software, which offers a free trial so an inquisitive type can find out how well it works. After that, the Windows-based software sells for $495 (USD) – not inexpensive, but worth it if the free trial shows that significant savings might be in store from using the software.

"We believe that business energy-efficiency needs to become simpler and more cost-effective before it can become more popular," the company states on its website.

As the company points out, Energy Lens converts the tedious energy-consumption data into useful charts and figures tat can be used to track energy performance and savings, whether using renewable energy like wind or solar or standard fossil fuels energy.

  • When and where you’re wasting energy
  • How much energy you’re wasting
  • How much progress you’ve made at reducing consumption

"Analyzing your energy-consumption data can help you to figure out where to start with your energy-saving efforts, where to go next, and how well you’re doing as you go along," writes the team at Energy Lens.

This video shows how the software can be used.

For individuals or businesses interested in taking energy management seriously, this BizEE and Energy Lens software is worth the investigative time.

Chart photos: Energy Lens

 


24 Hours of Climate Reality Live Streaming

Posted: 15 Sep 2011 06:12 AM PDT

Live streaming via our sister site Planetsave and some quick facts on Al Gore’s Climate Reality project:


Solyndra: Advanced by Bush for 2 Years (Solyndra Timeline)

Posted: 15 Sep 2011 04:13 AM PDT

bush flags

by Stephen Lacey and Richard Caperton

It's often claimed that the Solyndra loan guarantee was "rushed through" by the Obama Administration for political reasons. In fact, the Solyndra loan guarantee was a multi-year process that the Bush Administration launched in 2007.

You'd never know from the media coverage that:

  1. The Bush team tried to conditionally approve the Solyndra loan just before President Obama took office.
  2. The company's backers included private investors who had diverse political interests.
  3. The loan comprises just 1.3% of DOE's overall loan portfolio. To date, Solyndra is the only loan that's known to be troubled.

Because one of the Solyndra investors, Argonaut Venture Capital, is funded by George Kaiser — a man who donated money to the Obama campaign — the loan guarantee has been attacked as being political in nature. What critics don't mention is that one of the earliest and largest investors, Madrone Capital Partners, is funded by the family that started Wal-Mart, the Waltons. The Waltons have donated millions of dollars to Republican candidates over the years.

With a stagnant job market and Obama sinking in the polls, the media has decided on a narrative that matches right-wing talking points but not the facts.  For instance, Bloomberg had this incredibly misleading headline yesterday, "Obama Team Backed $535 Million Solyndra Aid as Auditor Warned on Finances."  If you replace "backed" with "touted," that would be accurate.  But the headline makes it seem like the White House had decided to give $535 million to a company after an auditor had said it was financially troubled.

You have to read half the story to learn that the loan guarantee was made in 2009 and the audit was done in 2010 after market conditions had sharply worsened! And the Bloomberg story never explains that the company itself raised $250 million from private investors after the supposedly devastating audit!

To set the record straight, Climate Progress is publishing this timeline — verified by Department of Energy officials — that shows how the loan guarantee came together under both administrations. In fact, rather than rushing the loan for Solyndra through, the Obama Administration restructured the original Bush-era deal to further protect the taxpayers' investment:

 

May 2005: Just as a global silicon shortage begins driving up prices of solar photovoltaics, Solyndra is founded to provide a cost-competitive alternative to silicon-based panels.

July 2005: The Bush Administration signs the Energy Policy Act of 2005 into law, creating the 1703 loan guarantee program.

February 2006 – October 2006: In February, Solyndra raises its first round of venture financing worth $10.6 million from CMEA Capital, Redpoint Ventures, and U.S. Venture Partners. In October, Argonaut Venture Capital, an investment arm of George Kaiser, invests $17 million into Solyndra. Madrone Capital Partners, an investment arm of the Walton family, invests $7 million. Those investments are part of a $78.2 million fund.

December 2006: Solyndra Applies for a Loan Guarantee under the 1703 program.

Late 2007: Loan guarantee program is funded. Solyndra was one of 16 clean-tech companies deemed ready to move forward in the due diligence process. The Bush Administration DOE moves forward to develop a conditional commitment.

October 2008: Then Solyndra CEO Chris Gronet touted reasons for building in Silicon Valley and noted that the "company's second factory also will be built in Fremont, since a Department of Energy loan guarantee mandates a U.S. location."

November 2008: Silicon prices remain very high on the spot market, making non-silicon based thin film technologies like Solyndra's very attractive to investors. Solyndra also benefits from having very low installation costs. The company raises $144 million from ten different venture investors, including the Walton-family run Madrone Capital Partners. This brings total private investment to more than $450 million to date.

January 2009: In an effort to show it has done something to support renewable energy, the Bush Administration tries to take Solyndra before a DOE credit review committee before President Obama is inaugurated. The committee, consisting of career civil servants with financial expertise, remands the loan back to DOE "without prejudice" because it wasn't ready for conditional commitment.

March 2009: The same credit committee approves the strengthened loan application. The deal passes on to DOE's credit review board. Career staff (not political appointees) within the DOE issue a conditional commitment setting out terms for a guarantee.

June 2009: As more silicon production facilities come online while demand for PV wavers due to the economic slowdown, silicon prices start to drop. Meanwhile, the Chinese begin rapidly scaling domestic manufacturing and set a path toward dramatic, unforeseen cost reductions in PV. Between June of 2009 and August of 2011, PV prices drop more than 50%.

September 2009: Solyndra raises an additional $219 million. Shortly after, the DOE closes a $535 million loan guarantee after six months of due diligence. This is the first loan guarantee issued under the 1703 program. From application to closing, the process took three years – not the 41 days that is sometimes reported.  OMB did raise some concerns in August not about the loan itself but how the loan should be "scored."  OMB testified Wednesday that they were comfortable with the final scoring.

January – June 2010: As the price of conventional silicon-based PV continues to fall due to low silicon prices and a glut of solar modules, investors and analysts start questioning Solyndra's ability to compete in the marketplace. Despite pulling its IPO (as dozens of companies did in 2010), Solyndra raises an additional $175 million from investors.

November 2010: Solyndra closes an older manufacturing facility and concentrates operations at Fab 2, the plant funded by the $535 million loan guarantee. The Fab 2 plant is completed that same month — on time and on budget — employing around 3,000 construction workers during the build-out, just as the DOE projected.

February 2011: Due to a liquidity crisis, investors provide $75 million to help restructure the loan guarantee. The DOE rightly assumed it was better to give Solyndra a fighting chance rather than liquidate the company – which was a going concern – for market value, which would have guaranteed significant losses.

March 2011: Republican Representatives complain that DOE funds are not being spent quickly enough.

House Energy and Commerce Committee Chairman Fred Upton (R-MI): "despite the Administration's urgency and haste to pass the bill [the American Recovery and Reinvestment Act] … billions of dollars have yet to be spent."

And House Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-FL): "The whole point of the Democrat's stimulus bill was to spend billions of dollars … most of the money still hasn't been spent."

June 2011: Average selling prices for solar modules drop to $1.50 a watt and continue on a pathway to $1 a watt. Solyndra says it has cut costs by 50%, but analysts worry how the company will compete with the dramatic changes in conventional PV.

August 2011: DOE refuses to restructure the loan a second time.

September 2011: Solyndra closes its manufacturing facility, lays off 1,100 workers and files for bankruptcy. The news is touted as a failure of the Obama Administration and the loan guarantee office. However, as of September 12, the DOE loan programs office closed or issued conditional commitments of $37.8 billion to projects around the country. The $535 million loan is only 1.3% of DOE's loan portfolio. To date, Solyndra is the only loan that's known to be troubled.

Meanwhile, after complaining about stimulus funds moving too quickly, Congressmen Fred Upton and Cliff Stearns are now claiming that the Administration was pushing funds out the door too quickly: "In the rush to get stimulus cash out the door, despite repeated claims by the Administration to the contrary, some bets were bad from the beginning."

What critics fail to mention is that the Solyndra deal is more than three years old, started under the Bush Administration, which tried to conditionally approve the loan right before Obama took office. Rather than "pushing funds out the door too quickly," the Obama Administration restructured the original loan when it came into office to further protect the taxpayers' investment.

Stephen Lacey is a reporter/blogger with Climate Progress and Richard Caperton is a senior policy analyst with the energy team at the Center for American Progress.

This story was originally published at ClimateProgress.org and was cross-posted with permission.

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