Shining spotlight on solar panel bankruptcy

The White House’s half-billion-dollar loan to a now-bankrupt solar-energy firm is just the first act in an emerging scandal of insider political influence over a deeply flawed clean energy program.

What has come to light so far as part of a congressional investigation is the administration’s willful order to approve a bad loan, despite dire warnings from a number of federal officials that the Solyndra Corp., a California-based solar panel maker, was in deep financial trouble.

A steady stream of government emails released by a House Energy and Commerce subcommittee tells a sordid tale of a company that President Obama turned into an energy showcase for his $40 billion loan program - until it went bankrupt in August, putting 1,100 employees out of work.

One of the people who promoted Solyndra’s $535 million loan, which now will be paid by federal taxpayers, was Steven J. Spinner, a senior Energy Department adviser, a major fundraiser for Mr. Obama and a Silicon Valley investor who was given the job of guiding the government’s clean-technology investments.

He not only was the one of Solyndra’s unabashedly inside defenders, his wife worked for the California law firm that represented the solar company and helped it file for the government loan her husband was promoting.

While internal concerns were raised about Solyndra’s shaky finances as early as the summer of 2009, Mr. Spinner emailed a top aide to then-White House Chief of Staff Rahm Emanuel that Solyndra was a financially solvent company that fully deserved the administration’s support.

“I haven’t heard anything negative on my side,” he told Mr. Emanuel’s aide in an email about the warnings. “I … have no idea what they’re referring [to].”

As the loan deal stalled after internal criticism of the firm’s looming insolvency, Mr. Spinner grew more impatient. “How [expletive] hard is this?” he wrote to a career Energy Department staffer Aug. 28, 2009, about its delayed clearance from an Office of Management and Budget official. “What is he waiting for? Will we have it by the end of the day?”

But internal complaints from OMB and Treasury about Solyndra’s dubious finances as well as the favorable terms of its loan persisted. That sparked further internal debate about the legality of the loan’s revision, though to no avail.

Dismissing warnings that the government’s restructuring of the loan was illegal and should be reviewed by Justice Department attorneys, Energy officials moved ahead with changes in February that required Solyndra’s investors be repaid before taxpayers if the company defaulted on its debt.

Other emails released by the House panel last month reveal a politically pressured program that was heavily influenced by powerful special interests that had a stake in its outcome.

“In an administration that said it would curtail lobbyists’ influence, the documents show ardent lobbying by political appointees inside the agencies and significant White House access given to venture capitalists with a major stake in the $40 billion stimulus investment program for clean energy,” The Washington Post reported last month.

One of these venture investors was David Prend, whose company, Rockport Capital, was a Solyndra backer. He met with White House officials about the deal in March of 2009.

“It was great to meet you with [then-White House climate adviser] Carol Browner last week,” Mr. Prend wrote. “I look forward to working with you to get the message out and to effect real change in the Energy Industry. I will follow up shortly on 2 of the companies we discussed,” he said. One of them was Solyndra.

But emails from government officials to Energy officials, who were responsible for reviewing the deal, were growing increasingly critical of Solyndra’s rising debts and declining revenues.

Using radio waves for more efficient solar power

Using radio waves to efficiently convert solar power — that’s the idea behind startup Array Converter, which spoke for one of the first times this week at the AlwaysOn GoingGreen conference in San Francisco. Array Converter has developed solar power conversion electronics — which are used to convert the solar power made from the panels (direct current) into power that can flow on the grid (alternating current) — using a radio wave technology called amplitude modulation.

Array Converter CEO Wendy Arienzo said at the conference: “Marconi came up with radio and called it amplitude modulation. We are taking a well established technology and applying it to solar.”

Asked about Array Converter’s technology after her panel, Arienzo declined to say more about the company’s research, but said the company plans to make an announcement at the Solar Power International conference next month.

Amplitude modulation involves using radio wave to send information — the technology adjusts the amplitude of the radio wave rather than the frequency (FM) — and Array Converter’s work seems to focus on using pulse amplitude modulation. Pulse amplitude modulation is used in Ethernet equipment and for controlling LED lighting. Eric Wesoff at Greentech Media wrote about the company earlier this year, and patent attorney Eric Lane wrote about the startup’s patents in a blog post.

Array Converter is setting out to develop power electronics that are indeed different than the ones commonly used today to convert DC from solar panels to AC in order to be used on site or feed the grid. Solar systems today use inverters to do the power conversion; the inverter gets its name because its design reverses a conversion process to turn AC to DC (this device is called rectifier).

Although Array Converter hasn’t announced products, its website indicates that the company is working on a modulator and controller. And, yes, the startup promises to deliver power electronics that can reduce the overall equipment and installation costs.

Inverters have been used in solar energy systems for decades. Each inverter is typically responsible for about a dozen solar panels. In recent years, some inverter developers have come up with what’s called a microinverter that is paired with each panel.

The use of microinverter has led to the name “AC panel,” because the DC-to-AC conversion now takes place at the panel rather than at a central inverter that sits in a stand-alone box next to the solar array. Array Converter, incidentally, also calls solar panels that use its devices “AC panels.”

All of these technologies are working on improving the efficiency of converting the electric current – power losses are typical during power conversion. A Google-backed startup, Transphorm, is working on reducing that power loss by using a novel material called gallium nitride.

China dominates solar power

China's solar power firms are emerging as the industry's dominant force after the collapse of foreign competitors, but the new market leaders are already struggling with low prices and overcapacity.

As the workshop of the world, China has used cheap labour and state support to build a solar industry from scratch in just over a decade as part of a broader strategy to move up the manufacturing value chain from cheap toys and clothes.

China is the world's second biggest oil consumer, and polluting fossil fuels account for 90% of its total energy use, but the country is making large strides forward in clean energy.

Analysts say Chinese firms now have 70% of the growing global market in solar panels, thanks to aggressive pricing and the collapse of three US competitors in the last two months.

"The position of Chinese players has certainly been enhanced this year," said Tang Xiaodong, a Shanghai-based analyst at independent investment advisory firm CEBM.

"Lower costs are the direction of the industry and the advantages of Chinese firms on this front have been manifested more clearly."

China's solar panel prices have fallen to around $1.2 per watt of generation, down from about $1.7 in 2010 and much lower than the global average of about $2.0 last year.

But the downward price spiral has hurt revenues across the industry, and Chinese companies are themselves feeling the pain.

"Everyone is facing falling prices, increasing inventories and dire straits," said an official at Yingli Green Energy, one of China's biggest solar companies, speaking on condition of anonymity.

Critics argue that Chinese companies have unfair advantages in the form of access to cheap capital from China's state-run banks.

However, they are not alone in receiving government assistance - the latest US solar firm to file for bankruptcy was Solyndra, which had a $535m loan guarantee from US President Barack Obama's administration.

It joined Evergreen Solar, once listed on the Nasdaq exchange, and high-profile Intel spin-off SpectraWatt.

But even before the collapse of those three US companies, China was already home to the world's largest producer of solar panels, Suntech.

"There is a periodic murmur from industry, trade groups and elements in the US government that unfair subsidies in other countries put the US at a distinct disadvantage in the solar industry," said US-based analysis firm GTM Research in a recent report.

China's Suntech, which is listed on the New York Stock Exchange, counters such criticism by saying consolidation of the emerging industry was natural.

"The recent high-profile bankruptcies of innovative solar enterprises are unfortunate," Suntech said in a statement.

"However, competition among aggressive and innovative companies is critical to driving efficiency, productivity, and industry growth."

Chinese companies are almost solely focused on exports, with as much as 95% of production sold overseas according to some estimates, and they have responded to falling prices for solar panels by ramping up shipments.

But analysts expect domestic demand for solar products to rise with the introduction of a new national "feed-in" tariff - a price the government guarantees to pay to producers of solar power feeding into the grid.

"The days of China's PV production being purely for export are coming to an end," GTM Research said, referring to solar power technology.

Sparks Fly Over Solar Panels at School Board Meeting

Tuesday night's meeting of the Culver City Unified School District Board of Education was

mostly routine until a presentation of upcoming capital projects sparked a lot of questions

about the time-sensitive issue of installing solar panels on three CCUSD schools.

After several presentations honoring students with American Citizenship Awards, and

recognition of Culver City High School's Academy of Visual and Performing Arts as part of

Arts Education Month, the board was given a presentation of several capital improvement

projects by Ali Delawalla, the district's Assistant Superintendent for Business Services.

Included in the presentation was an update on plans for renovating the athletic fields at

Culver City High School. However, what sparked the most interest was the update on the

potential installation of solar panels on the rooves of Culver City High School, Middle

School and Farragut Elementary School.

The project, approved by the board at the February 14 meeting, involves applying to the

California Solar Initiative for rebates that will make the panels affordable, plus add

revenue to the district's general fund and create significant cost savings by generating the

electricity for the three schools involved.

Because the rebates funds are limited, the application to the CSI must be made before the

funds are allocated elsewhere, making the issue somewhat time-sensitive. Board member

Katherine Paspalis asked Delawalla why the delay?

"This is the third or fourth meeting [since the board directed the district to make the

application]," Paspalis said. "Why isn't it completed?"

Delawalla said that according to his conversations with Southern California Edison, the

vendor for the panels makes the application for the rebates through Edison, rather than

directly to the CSI, and that to get a vendor, the district had to assemble a complete

Request For Proposals.

Several board members then questioned Delawalla about the process, citing earlier information

from Todd Johnson, head of the board's environmental sustainability committee, that the

application could be made directly to the CSI without an RFP to lock in the rebates.

Neither Johnson, who was present, nor Delawalla explained why there was the discrepancy about

the process, even though several board members pressed Delawalla on the issue.

"It's a legal document," Delawalla told the board about the RFP. "We wanted to make sure the

document is complete and addressed every possible scenario."

After board member Karlo Silberger expressed his frustration and asked why there was a

difference between Johnson's and Delawalla's information, Interim Superintendent Patricia

Jaffe broke in.

"Ali Delawalla works on this every single day," she said in Delawalla's defense. "This is a

project we are all interested in. So, it's not like he's saying we don't want solar. It might

be we don't want to buy these panels."

Delawalla said that he would have the RFP ready by "the end of next week." He mentioned an

upcoming meeting with Southern California Edison and was urged by the board to have Johnson

accompany him to that meeting to iron out the procedural questions.

In other business, the board heard from Silberger about a sub-committee meeting in which

members of the public were invited to suggest ideas to help the district in the face of a

potential 10 percent cut in funding. Silberger and fellow board member Patricia Siever said

that the meeting was helpful and that the next step would be to look at what ideas will

realize what savings.