Energy Secretary Chu Testifies on Solyndra Loan; Watch Replay of Hearing
Update 11:58 a.m.
KQED Climate Watch’s Craig Miller reports on today’s congressional testimony by Secretary of Energy Stephen Chu regarding the Solyndra affair….
Energy Secretary Stephen Chu stood his ground this morning at a congressional hearing on the ill-fated federal loan guarantee for Solyndra Corporation.
Michigan Republican Fred Upton sought an apology from Chu for approving a loan for the failed Fremont solar company. But Chu said it was market developments that led to the company’s collapse.
“It is extremely unfortunate what has happened to Solyndra but if you go back and look at the time decisions were being made, was there incompetence, was there any undue influence of a political nature, I would have to say ‘no,’ Chu said.
“When the bottom of a market falls out and the price of solar decreases by 70% in two and a half years, that was totally unexpected…Fundamentally, this company and several others got caught in a very bad tsunami, if you will.”
Some Republicans on the committee said they considered the loan approval illegal. Chu says that Energy Department administrators under both the Bush and Obama administrations found the Solyndra loan application worthy and placed it “at the head of the line.” Chu said his department will be watching future loans “like a hawk.”
The Washington Post also live-blogged it.
At the end of August, Fremont-based solar-panel manufacturer Solyndra went belly up, putting 1,100 employees out of work and touching off a scandal — at least according to Republicans — about a $535 million federal loan guarantee from the Department of Energy in 2009, part of a program created under the much-maligned — again, by Republicans — stimulus bill.
Another House hearing on Solyndra is in session now. From CSPAN:
Energy Secretary Steven Chu is being questioned by House Oversight Committee lawmakers today on his role in the federal loan guarantee made to the solar energy company Solyndra.The Subcommittee on Oversight and Investigations has scheduled a hearing entitled The Solyndra Failure: Views from DOE Secretary Chu.
GOP members are investigating a series of emails sent between Chu, the White House and Solyndra. Energy Committee Republicans began looking into the Solyndra loan earlier this year. This summer, the committee subpoenaed documents from the White House’s Office of Management and Budget (OMB), which was responsible for reviewing the risks of providing Solyndra the guarantee, which was part of the president’s economic stimulus.
The company’s failure was a particularly acute embarrassment to the Obama administration, and even to the president himself, who made a high-profile visit to Solyndra in May, 2010, hyping the notion that government should help cultivate clean-energy companies for reasons both economic and environmental. From his remarks that day:
I try to visit places like this about once a week, hear from folks as often as possible who are actually doing the extraordinary work of building up America. And I appreciated the chance to tour your plant and to see the incredible, cutting-edge solar panels that you’re manufacturing, but also the process that goes into the manufacturing of these solar panels. And it is just a testament to American ingenuity and dynamism and the fact that we continue to have the best universities in the world, the best technology in the world, and most importantly the best workers in the world. And you guys all represent that. So thank you very much for that…
So we recognized that we’ve got to go back to basics. We’ve got to go back to making things. We’ve got to go back to exports. We’ve got to go back to innovation. And we recognized that there was only so much government could do. The true engine of economic growth will always be companies like Solyndra, will always be America’s businesses. But that doesn’t mean the government can just sit on the sidelines. Government still has the responsibility to help create the conditions in which students can gain an education so they can work at Solyndra, and entrepreneurs can get financing so they can start a company, and new industries can take hold…
Here at this site, Solyndra expects to make enough solar panels each year to generate 500 megawatts of electricity. And over the lifetime of this expanded facility, that could be like replacing as many as eight coal-fired power plants. It’s also worth noting, to achieve this doubling of our share of solar capacity, we actually need to make four times as many solar panels, because other countries are adding capacity, too. Nobody in this race is standing still.
Since the company went out of business, the GOP has made much political hay out of a series of revelations related to the loan guarantee, including the fact that Solyndra received a favorable IRS ruling weeks before it was granted, and the release of an October 2010 email “from a Solyndra investment adviser to a colleague [that] said Energy Department officials were pushing ‘very hard’ to delay making the layoffs… public until Nov. 3, 2010 — the day after the midterm elections.” That’s from AP.
Republicans have also made much out of the fact that bigtime Obama donor George Kaiser has a connection to a firm that was an investor in Solyndra.
At a House Energy and Commerce Committee hearing on the issue in September, Solyndra CEO Brian Higgins and Chief Financial Officer Bill Stover invoked their Fifth Amendment right to not testify to avoid self-incrimination.
Yesterday, Chu appeared on NPR to discuss the Solyndra controversy. From the interview with Melissa Block:
BLOCK: People now, though, Secretary Chu, are saying that were a lot of red flags through this process, that the loan was not properly vetted, and that there was pressure placed to approve the loan before your visit for that groundbreaking. Do you think that’s a fair critique, that there should have been more due diligence before that loan went through?
CHU: We were very thorough in the application of loan at the time. In the end of 2008, the beginning of 2009, we asked outside people to give us second and third opinions. What was unanticipated was that the market for the prices of solar modules really plummeted. We’re talking about something like over a two- or three-year period, we had more than 60 percent decrease. As we go back and look at what were people predicting as the months rolled on, they were consistently over-projecting what the selling prices would be. And so hindsight in some cases appeared to be better than 20/20.
BLOCK: Hmm. But Secretary Chu, six months after the groundbreaking, the company’s auditor, Price Waterhouse, warned that Solyndra had real financial trouble. They talked about recurring losses, negative cash flows and raised what they called substantial doubt about the company’s ability to continue as a going concern. This was the same month that you said you were confident that Solyndra would be able to repay its loan. Based on what? Were you aware of that audit at the time?
CHU: I was not aware of the audit instantly at that time, became aware of it later. And so what has happened during this period is we have a very good loan people, and they tried to, you know, what are the best projections, going forward, and how do you monitor progress of the loan? Certainly, any new company in the process of constructing a new factory that would be more efficient, more highly roboticized(ph) to be competitive would be burning through cash.
BLOCK: This was a point at which industry analysts, people who follow the solar industry, people at the Office of Management and Budget were raising concerns, were raising red flags. It does seem that the Energy Department was convinced that this was a good bet. Why? What were you basing that on?