Friday, September 09, 2011

Innovation, Solyndra, and political nonsense

The sad reality of life is that not all good ideas end up easily implemented, and sometimes ideas you thought were good turn out to be not so good once they reach the light of day. The sad reality is that over 90% of companies started to produce something innovative here in the Silicon Valley fail. That's just how it works, not every idea works out. Even when ideas do work out, it may not be possible to sell the result for enough money to keep you in business -- I have, alas, worked for several companies that had great products but couldn't figure out how to make enough money from them to cover costs thus went out of business.

In the case of Solyndra, they thought they had an innovative way to increase the amount of energy obtained from solar panels. They found a bunch of backers, created product, and sold thousands of their solar modules. Unfortunately two things happened that utterly destroyed their business model: 1) New silicon wafer foundries came online, making flat solar panels ridiculously cheap even when built in America (and most solar panels sold here in America *are* built here in America, for the same reason that most cars sold here in America are built here -- because they're bulky and fragile and breakage on the long overseas voyage would kill you thus it's not cost-effective to ship them from overseas), and 2) scientists figured out ways to make silicon solar panels produce almost as much power as Solyndra's more expensive copper-gallium panels, thus eliminating most of their power advantage. Solyndra tried making their product cheaper and couldn't, the technology they used is inherently labor intensive to produce (unlike silicon wafers, the production of which is largely automated). So in the end, they had a good idea, but it didn't work out in practice, like so many other ideas, and they went out of business.

Just a normal business failure, in other words. Well, except for the fact that the loans they used to build their factory and buy their equipment were government-guaranteed loans, just like the mortgages of many millions of Americans. Solyndra applied for these "green energy" loans during the Bush Administration, and they were awarded early in the Obama administration, long before Obama had any of his appointees in place at the Department of Energy. Which means, of course, that it's all Obama's fault, and the government shouldn't be in the business of encouraging renewable energy anyhow, even though the vast majority of these "green energy" loans have performed well and Obama didn't have anything to do with the "green energy" program, that was a Bush-era program.

All of which is just utter nonsense. This nation's government has been involved in fostering critical industries since its beginning, when the Federalist government of George Washington imposed tariffs on British cloth in order to encourage the development of an American textile industry. And given that we have reached peak oil and will be transitioning to a mostly-electric infrastructure in the future, we need all the energy sources we can get -- and solar is one of the more cost-effective ones in the southern half of the country where solar panel output corresponds with daytime peak usage of electricity. So not every potential technology we look at turns out to be viable. So what. Thomas Edison made dozens of tries at a viable light bulb before he got one that worked, and the "green energy" program has a much better track record than that, indeed, has a much better track record than any private venture fund in the Silicon Valley. Using it as a political football is just playing chicken with the future of the nation, and regardless of your political affiliation should be viewed as utter nonsense.

-- Badtux the Technology Penguin


  1. Even the Washington Post (to which I subscribe from inertia) points out that, if all green energy companies succeed, the agency that's backing them has failed.

  2. if all green energy companies succeed, the agency that's backing them has failed.

    Joe -

    I've red your comment about 7 times now, and cannot find any angle from which it makes sense. Can you help a poor trombonist?


  3. I think, JzB, that what Joe is saying is that if you are trying to advance the state of the art, you must accept risk. If you only fund "safe" companies in order to get 100% success, there will be no advancement of the state of the art. The horse buggy companies, with the exception of Studebaker, refused to accept the risk of manufacturing those newfangled horseless carriage thingies -- after all, most of the horseless carriage companies during the first ten years of the automobile industry went out of business rather swiftly due to the fact that their technology just didn't work very well. We know what happened to the horse buggy companies in the end (except for Studebaker, which managed to do pretty well until the 1950's).

    In short, if there had been an equivalent program in 1895 to fund land technology, it would have been an utter failure if it had a 100% success rate because it only backed horse-drawn buggy companies (all of which did pretty well for the next ten years at that point, it wasn't until after 1910 or so that the automobile became something other than an impractical novelty).

    - Badtux the Technology Advancing Penguin
    (who has been in on plenty of pretty risky technologies that *did* not work out... and a few that did).

  4. Would it not just be easier to invest in nuclear energy, which does not need natural gas fueled backup generators to take up the slack when weather conditions are not in your favor?

  5. This is way off topic, but if you still have the bathtub stain problem, I wonder if you have tried using a thick paste of oxy-clean powder and water, and letting it sit on the stain for a while? I haven't used this on a bathtub, but have had good results, and heard from others of good results, on other stubborn stains.

  6. Would it not just be easier to invest in nuclear energy, which does not need natural gas fueled backup generators to take up the slack when weather conditions are not in your favor?

    Ask someone living near Fukushima, Japan, or near Chernobyl, Ukraine, of around the next nuke plant in the U.S. that melts down. Many probabilities for the location of the latter.

    And P.S. -- U.S. nuke plants receive government backup that's an order of magnitude more than Solyndra got. Not a one of 'em would be operating without that.

  7. But what I really wanted to say before I was seized with the urge to snark is the folks at the econosite ZeroHedge, where I go for news more often than I do the New York Times, have been all over Solyndra with a nit comb. Lots of chortling with glee and sneering at the Hopey Admin. over this. They have some brilliant minds who post over there, great on financial details, but at the same time, there's this "Everything's fucked and everyone is a fucking idiot" attitude that just boils down to a bile-fest.

  8. Neurovore, nuclear power plants are good baseline power but need peaking power from some other source to take up the slack during periods of unusual power usage -- such as, say, a period of extremely hot and sunny days in the South. What's that you say? That's exactly the time that solar panels put out the most energy? Exactly! So both, ideally, are part of a solution to the problem of, "how are we going to go to an all-electric transportation infrastructure?"

    Bukko: As I keep pointing out, energy density. Solar and wind power lack sufficient energy density and reliability to power an industrial infrastructure. There's a *reason* why China starts one new nuclear power plant per month. They intend to be the industrial superpower of the post-oil era, and given the environmental consequences of coal (plus the fact that coal isn't exactly inexhaustible either), China has decided that nuclear power is the only thing that's going to keep them from sliding back into 3rd world status once the oil runs out.

    You might like 3rd world living. I don't. I've been there, done that, I *like* having hot water on tap when I turn on the hot water faucet so I can take nice warm showers, I *like* having some semblance of climate control so I'm not miserably cold in the winter and miserably hot in the summer. Once people start shivering or baking in the dark like they did down in San Diego yesterday on a regular basis, we're going to start building nuclear power plants whether you like it or not. So it behooves us to figure out safe ways of doing so -- which, BTW, the Department of Energy is hard at work at doing too, as well as hard at work at pushing state of the art in solar panel design.

    Finally, regarding Solyndra and the financial shenanigans happening, I recall a similar debtor-in-possession situation around a Silicon Valley company. These sorts of shenanigans are, alas, common in these situations where the technology proved to just not be cost-effective. Sometimes it works out for the consumer though... remember the Iridium satellite phone network? The one where Motorola needed ten million subscribers to break even and never had more than 100,000? It got sold off for roughly one penny on the dollar to a last-minute debtor-in-possession bidder roughly a week before the satellites were to be de-orbited, and is happily serving a few hundred thousand subscribers world-wide who need phones in areas where there are no cell towers or landlines -- and doing so profitably. If you have a technology with a huge sunk up-front investment then low continuing costs (it costs very little to have a few dozen employees managing the satellite monitoring and switchboard system for Iridium), sometimes bankruptcy is the only possibility it'll *ever* be profitable.

    Which, I might add, isn't a new thing. The AT&SF Railroad, which was the third trans-continental railroad (after the UP and the SP), was the result of buying up for pennies on the dollars a shell company that had been created solely to sucker investors into building the railroad. The shell company had no hope of ever repaying the loans needed to finance the railroad with the skimpy profits available given the highly competitive marketplace, so bankruptcy was inevitable. When it happened, AT&SF bought up the assets for pennies on the dollar, then was profitable with that line for the next fifty years, until the Interstate Highway System blew the guts out of the rail transportation system.

    - Badtux the Technology Penguin

  9. Oh boy do I remember Iridium. That was back when I used to "invest" in the stock market. I bought a chunk of Motorola shares, because I had read about that satphone technology and thought it was the greatest damn thing. This was before there were cell phone towers everywhere and average people could carry the equivalent to Dick Tracy's wrist radio. Too bad teh Internets tubez were not around in those days, so I could have learned about the flip side of that network, which is everything you alluded to. IIRC, I held onto the Motorola stock, which was subject to wide fluctuations over the years as its technology ideas changed, and eventually unloaded it at a profit.

    As far as nuclear power goes, I do not share your rosy vision. Not just for environmental reasons, either, although the water wastage and contaminated tailings piles from digging up the ore are part of it. There's a tremendous energy cost to get a nuke plant operating. Mining, refining and crucially, centrifuging the uranium to get it concentrated enough to generate power takes tons of energy. Ditto with building the plant itself, although you'd need to do that with any electricity generating facility. Then there's the decommissioning costs. Aside from Hanford, Wash., which is still a radioactive wasteland, has there ever been a nuclear facility that's been taken out of service?

    My vision of the future is that we will inevitably be in for an "energy descent." There's not going to be enough power to go around. That does not necessarily mean living Third World. We will have to live with less, but that does not have to equal nasty and brutish, sport. We can live smarter, albeit less comfortably, if we manage it right. Things being what they are, I doubt we'll do it smart. So some people will live like gods, while the other 99% will be saying "We are all Third Worlders now."

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  11. (yeah, I don't post that often, so I found my zip code up there rather disturbing/assumed it would go away...
    Google NEVER goes away....)

    Thank you for some cogent analysis of the Solyndra situation; it has left me scratching my head, wondering even louder: WTF is up with the DOJ?
    More DOJ shenagins: "In America The Rule Of Law Is Vacated:"

  12. Bukko, coal isn't exactly environmentally friendly either. In any event, it isn't up to either of us whether we'll build more nuclear power plants in the future. They'll get built whether or not we want it done, because people are remarkably short-sighted when they're freezing or baking in the dark due to lack of energy.

    DrFaustroll , the shenanigans being done around the Solyndra bankruptcy aren't at all unusual, it's only barely disguised looting of the remains at the expense of the stockholders (who are the contributors to VC funds) as has been done thousands of times over the past hundred years without a peep from the Feds. The FBI raiding Solyndra HQ sounds an awful lot like politics. Just sayin'.

    - Badtux the High-tech Penguin


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