Solyndra – Illuminating Energy Funding Flaws? | Plugged In, Scientific American Blog Network

Solyndra – Illuminating Energy Funding Flaws? | Plugged In, Scientific American Blog Network

Government funding of new energy innovation, is often a good idea, but funding an energy business is not. Japan tried this to get out of there financial crisis, much like ours. It really started with a housing price bubble, but then Japan tried to buy their way out. Part of buying there way out was to first invest in High Definition TV innovation. Then like our Solyndra problem, they financed the promotion and factories for High Definition TV. They spend billions, just to find that the free market chose another version of High Definition TV. Virtually all the Government money went down the tube (as they say).

The key is financing new innovation is great, in fact most of what NASA actually did was test and try new technology, but when it was time to go to market, NASA have a technology transfer program, as does DOD, and other Government programs. This is where the idea is often given or licensed to private industry for them to go out and get financing , based mainly on the business plan of the company. If it looks like a profit center, then venture capitalists put up their money for manufacture, and go to market. Some times it works sometimes it does not, but it is not government money. The risk is all on the companies involved, which means they keep a critical eye on the business, and cut losses if it does not look like it will work. There was very little risk in the Solyndra deal, in fact virtually none, if it had worked those same people taking the 5th would be multi millionaires, if fact it is still to be seen if they are millionaires anyhow since they used the Government money to pay their salaries for the time the company was running.

Risk, makes people pay a lot more attention to what the company is doing, venture capitalists do a lot of study on how much risk they are taking for the investment. They still make mistakes, but that is part of the risk, which is part of why the tax rate in lower on them, since they are taking risks. In fact if you want to add jobs reduce the tax rate these folks pay, and let them invest more.

It is coming out that a lot of people knew this company had problems, even before the money was given to them, just the fact they could not get non government funding tells you it was flawed. If it was a good business plan, investors would have been all over it, trying to get a part of the company to make money. Parts of the problem, had nothing to do with the development of the factory, even thou it looks like even this was not done with risk of profit in mind, it was the market. Someone else could make it cheaper, and so much cheaper that even if this process was better, it could not compete in the market.

But this is not the first time, we are spending a fortune on some bio fuel process, that never will be profitable, in some cases it takes more energy to make the fuel than it will provide.

I think we will go green, and it will happen faster and faster, but not because the government funded in, it will be because it is where the market will take it. I think any reasonable engineer will tell you combustion engines have almost reached the end of there capabilities. Any device that uses one type of movement like the up and down of a piston then coverts it to another movement like rotation driving gears and wheels in inefficient. Electric motors develop only one type of movement, rotation, and can even use rotation to conserve energy as well. It has to win in the end, how it get the electricity is the only question. The market knows this and will take care of it in its own way.

Rich