On Thursday, Secretary of Energy Steven Chu had the unenviable task of testifying before a House subcommittee about Solyndra and explaining why that company’s bankruptcy will cause the government to take a $500 million loss. The subcommittee’s response to Secretary Chu’s testimony was in large part predictably hostile, with some lawmakers demanding that he be fired. Several business writers, notably Kimberley Strassel in today’s Wall Street Journal, kept up the pressure, accusing the Secretary of being a “green Gordon Gekko”, taking huge risks in private companies with other people’s money.
Victory, as the saying goes, has a 100 fathers but defeat is an orphan. And so it fell to Secretary Chu to play the orphan on Thursday. The problem is that, though Solyndra as a company has failed, it is far from clear that the technology in which the Department of Energy invested by way of its loans has failed. The final verdict on the success of the DOE’s investment in solar energy technology, as well as its investments in advanced battery technology, is still out. But there are plenty of indications that the ultimate outcome may be more positive than many in the Congress and the media imagine.
Properly understood the DOE’s loans and grants are investments in technology, not in individual companies. Individual companies may come and go. Ownership of the financed technologies may change. Whether the stockholders of Solyndra make a return on their investment or are wiped out in a bankruptcy matters little to the DOE or to U.S. taxpayers. What is important is that the technology that was financed continues to develop, that the domestic know-how with respect to that technology continues to build, and that a market for the technology begins to develop. Those are the measures of success for a government technology investment, not the success or failure of a private business that happened at one time to own the technology.
By the measures of success that should matter, it is far from clear that the investments made by the DOE in Solyndra and in hundreds of other technology projects over the past three years have failed. Notwithstanding the bankruptcy of Solyndra, the efficiency of solar cells continue to rise, their costs continue to fall, and new technologies keep entering the marketplace to fight for a piece of a market that barely existed three years ago. The same is true in advanced batteries.
The bottom line is that the DOE appears to be winning most of its technology bets, not losing them. Gordon Gekko might see things differently, but the country should not.