Thursday, November 17, 2011

Not political favoritism. Just idiots.

As some of you know - Steven Chu is not one of my favorite people. If anyone deserves to be thrown under the bus - it is this guy. As I've outlined here, he was on the board of directors of a semiconductor company. A sector of the economy that operates on razor thin margins and has to spin on a dime to compete with changing market forces.

Having said that - I don't believe political influence had much, if anything, to do with Solyndra. And I will tell you why.

Everyone in Silicon Valley bet on Solar. Everyone. It is a viable technology. Expensive as it may be. Just wildly overpriced for the benefit it provides.

Even I had become complacent of the relationship between government and tech companies. Many companies probably would not exist if it weren't for the government buying goods or services. Like Irobot for example. However, somewhere we went from buying goods and services - to just trying to create a whole industry. Shoving money out the door hand over fist to everyone imaginable.

Political influence is awesome. It's also really awesome to send money back to your homeys in the form of extra business. Steven Chu is just not savvy enough to be a political insider. If you look at his background, you can see that he is bathed in the misguided, pervasive, Berkeley douchebaggery/ideology of Eco-Capitalism. Well before he even met President Money Bags.

He just got lucky and fell into a match made in heaven with PMB. And it all would have worked - if it weren't for the recession. They could have hidden the ramifications of market forces that didn't agree with their delusions of grandeur.

Sadly, the only way we get to see how much money was being shoved out, is by the wreckage of the industry collapsing. You aren't going to track every company that has a stake in solar. But when they start failing or taking losses - that is really easy to track.

Take for example Applied Materials stunner of a presser today.

Applied Materials suffering from steep decline in orders and revenue from solar sector

"After a record revenue financial year, Applied Materials is experiencing a significant reduction in equipment orders and revenue from PV manufacturing customers. Though cancellations were minimal, backlog decreased by 26% to US$2.4 billion, of which 14% is within its EES division, which includes PV equipment. Management expects PV related global CapEx to at fall by at least 50% in 2012 as manufacturers combat massive overcapacity and focus on cell efficiency improvements and technology buys"

Analyst: bills rising due to overpriced renewables

"SAN FRANCISCO—Dozens of renewable energy plants being built to meet California's tough global warming laws, including a major Spanish-owned solar plant in the Mojave Desert, are so overpriced they will increase consumers' energy bills for decades, according to the independent watchdog arm of the state's utility regulator. "

The article goes on to say:

"Earlier this year, the watchdog unit estimated that 59 percent of the renewable energy contracts that the commission approved in recent years were above market value, according to the commission's own pricing benchmark for when the contracts were signed. The contracts involved a variety of utilities and developers."

This is what happens when the government circumvents market feedback. And anyone that even bothered to look would have seen this. But they just didn't want to because of their ideology.

Did you know a lot of these large companies that have solar installations on the top of their roofs can't even sell power back to the grid? I was taking to someone I've known for a long time who is a buyer at Costco in my city. They have 10% overcapacity at night. They can't sell any of it back to the grid.

Rather than adopt a conspiracy theory, I am guessing there is actually a logical explanation. Probably load capabilities. But still! Every single school I hear talk about these solar installations boasts about selling power back to the grid. Yet, it sounds like most large companies are not able to.

It makes no difference because as you can see, day after day, more and more companies show the strain of the government not shoveling boatloads of cash at them.

LDK Solar trims earnings outlook as prices fall.

Jinkosolar cuts year revenue and shipment estimate.

Day4 Energy’s CEO quits, 28 laid off.


  1. If they do keep handing out money, then inflation will be through the roof. Already oil is starting to retest it's strength and consumers will feel this tax even more heavily as more and more silly expenditures keep getting through. At some price solar really will become more attractive, but not until it hurts much worse at the pump. Between the fracking and the large domestic supply, I think the only way for a consumer to protect oneself is with natural gas. CNG startups have had their own failures too, but right now I'm getting close to 60 mpgs in a huge van.

  2. There will be a point. I agree. However, inflation hits everything. And solar is more of a commodity play. IMO. If oil goes up, so does poly-silicon. So trying to find where the attractiveness level will be - might take much longer than any of us think.

    And honestly, I think once gas goes over 4 bucks, you can almost see the contraction. Which tips us back into deflation. We bounce back and forth. At some point things will change towards inflation. But predicting it is like studying tea leaves.

    I am curious about those natgas cars/trucks though. Everything seems great about them, but there must be a reason people aren't adopting them more.