Listening to outgoing Gov. Arnold Schwarzenegger and incoming Gov. Jerry Brown, Californians might think the California economy’s salvation lies in so-called “green jobs,” which now account for about 3 percent of the state’s workforce.
What boosters of green jobs don’t usually mention is most of these jobs require substantial taxpayer subsidies and other special government treatment even to exist in a competitive market. It appears now that even a half-billion dollars in government aid is no guarantee of success.
Despite a $535 million loan guarantee from the federal government, Solyndra, a maker of solar panels in the southeast San Francisco Bay Area city of Fremont, will close one of its manufacturing plants, lay off 40 permanent and 150 contract workers, delay expansion plans of a new plant largely financed with the government-guaranteed loan and scale back production capacity more than 50 percent.
Despite the hype and tax money, Solyndra seems unable to compete with Chinese manufacturers, whose prices are lower. This is the latest bad news for the company touted by Mr. Schwarzenegger and President Barack Obama as one of the green industry’s supposed shining lights. President Obama visited Solyndra in May, calling the operation “a testament to American ingenuity and dynamism.”
But, truth be told, Solyndra is more of a testament to taxpayers’ hard-earned money pledged to guarantee 73 percent of the cost of building its new facility. Closure of its older plant, located nearby, is a testament to the reality that, even if massively underwritten by taxpayers, renewable energy operations aren’t certain to find a profitable niche in the open market.
Shortly after the president’s visit, the company announced in June that weak demand in capital markets, high costs and “a prodigious cash burn,” as GreenEnergyReporter.com put it, forced withdrawal of plans for an initial public stock offering. In July, its CEO was replaced. The company found itself “struggling to justify the early hype by bringing down costs from $3 per watt to $2 per watt by 2013,” GreenEnergyReporter.com reported.
“The company is the most prominent of a wave of Silicon Valley solar start-ups that hoped to transform the economics of the industry,” commented TheEnergyCollective.com. But the market is oblivious to hype and government edicts. Solar module prices declined dramatically as low-cost Chinese manufacturers churned out a more conventional product at lower cost. Consequently, Solyndra has scaled back projected production capacity of 610 megawatts by 2013 to between 285 and 300 megawatts.
At the online blog GlobalEnergyMagazine, correspondent Dolores Fernandez wrote that Solyndra’s announced closure “was delayed until after polls closed on congressional elections.”
Many alternative-energy interests that stand to gain from taxpayers artificially propping up their industry and subsidizing their businesses campaigned aggressively to defeat Proposition 23 on last week’s ballot because they said it would prevent expansion of green jobs. The proposition, which was voted down, would have delayed California’s global warming regulations that promote renewable energy and penalize fossil fuel-based energy manufacturers.