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Solar Company Saves Taxpayers $330 Million By Declaring Bankruptcy

Sometimes declaring bankruptcy is a good thing. In the case of Abound Solar Inc., a U.S. solar manufacturer that had American taxpayers on the hook for $400 million, the good thing is they closed the doors after only losing us $70 million in Department of Energy funds.

Chump change, I know, since we have committed $72 billion on alternative energy in the last few years, but $330 million here and $330 million there, and pretty soon we are talking about real money.

Is anyone surprised?  No, when Energy Secretary Stephen Chu spoke of his desire for $9 gasoline, we knew he was not thinking rationally about how countries work – but he was a harmless academic when he said that, he couldn’t actually hurt the economy.  $9 gasoline was the same ‘we want European gas prices’ fetish Presidential candidate John Kerry had in 2004 so it wasn’t even original.  Like most progressives, they are invincible when it comes to hypotheses, it’s when real money becomes involved they run into problems. So while $9 a gallon was the cost needed for his pet ideas to be worthwhile financially, actual people who know what they are talking about recognize that even $4 a gallon gas is bad for Americans.

Cliff Stearns, the chairman of the House Energy and Commerce Committee’s oversight panel, was not surprised by this latest bankruptcy either. “We know why they went bankrupt. We warned them they would go bankrupt,” Stearns told reporters. By all means, do a Google search, see the R after his name and declare him anti-science for thinking subsidizing terrible ideas in an irrational trade war with China is a bad idea.

Abound’s plan to defeat China in solar panels – where they have cheap labor and no environmental standards – was to build American plants for cadmium telluride (CdTe) solar panels.  Why are we subsidizing 1950s technology like CdTe? Because Stephen Chu knows nothing at all about economics. He was convinced that as silicon solar panels got more popular the price of silicon would surge and a bunch of other technologies, like CdTe, would become cheaper by comparison. This is the recurring Fantasy Island of progressives when it comes to science; if they can simply mandate and subsidize something they like, international competitors and the free market will do the dumbest thing possible to make sure the flawed plan works – because the flawed plan is American.  “The West Wing” was a TV show, people.

In reality what would happen if prices spiked is that the solar market would evaporate – not that CdTE would become attractive.  China is making money producing silicon panels because they can do it cheaply and dopey Western countries subsidize the purchase and installation, not because anyone at all is clamoring for solar power.

CdTe wasn’t viable for General Electric or Matsushita 40 years ago and there was a big reason why; cadmium is highly toxic, one of the most toxic materials we produce. What would environmentalists in the US think about solar power when that stuff is killing everyone?  BP Solar dropped cadmium 10 years ago for that reason.  But the thinking was if government threw money at it, it would become cheaper and politicians would succeed where GE, Matsushita and BP could not.

I have argued in the past that energy need not be profitable; it is a strategic resource, like food and the military. If China can make cheap panels and the price keeps dropping, by all means buy them for solar generation facilities, if we can ever overcome the environmental lawsuits that each solar plant brings. However, subsidizing solar manufacturing companies remains as dumb an idea as it was in 2009 and 2010 and 2011.   The money lost would have been far better spent on basic research.