Steven Chu

Statement to the USHOR Oversight and Reform Subcommittee on Energy Dept Loan to Solyndra

delivered 17 November 2011, Washington, D.C.

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[AUTHENTICITY CERTIFIED: Text version below transcribed directly from audio]

Thank you Chairman Stearns, and thank you Ranking Member DeGette, and members of the Subcommittee for the opportunity to speak with you today.

Investments in clean energy reached a record 243 billion dollars last year. Solar photovoltaic systems alone represent a global market worth more than 80 billion dollars a year today. In the coming decades, the clean energy sector is expected to grow by hundreds of billions of dollars. We're in a fierce global race to capture this market.

In the past year and a half, the China Development Bank has offered more than 34 billion dollars in credit lines to China’s solar companies. China is not alone: To strengthen their countries’ competitiveness, governments around the world are providing strong support to their clean energy industries. Germany and Canada operate government-backed clean energy lending programs, and more than 50 countries offer some type of public financing for clean energy projects.

In the United States, Congress established the Section 1703 and 1705 loan guarantee programs as well as the Advanced Technology Vehicles Manufacturing Program -- all of which provide support to cutting-edge clean energy industries that involve technology and market risks. In doing so, Congress appropriated nearly 10 billion dollars to cover potential losses in our total loan portfolio, thereby acknowledging the inherent risks of funding new and innovative technologies, and also insuring that those risks are properly accounted for in the budget. We appreciate the support of the loan programs received from many members of Congress who have urged us to accelerate our efforts and to fund worthy projects in their states. In total, the Department received nearly 500 congressional letters about the load programs.

Through the loan programs, the Department of Energy is supporting 38 clean energy projects that are expected to employ more than 60,000 Americans, generate enough clean electricity to power three million homes and displace more than 300 million gallons of gasoline annually. These important investments are helping to make America more competitive in the global clean energy economy.

Today, we are here to specifically discuss the Solyndra loan guarantee. The Department takes our obligation to the taxpayer seriously, and welcomes the opportunity to discuss this matter.

As you know, the Department has consistently cooperated with the Committee’s investigation, providing more than 186,000 pages of documents, appearing at hearings, and briefing or being interviewed by Committee staff eight times.

As this extensive record has made clear, the loan guarantee to Solyndra was subject to proper, rigorous scrutiny and healthy debate during every phase of the process. As the Secretary of Energy, the final decisions on Solyndra were mine, and I made them with the best interest of the taxpayer in mind. And I want to be clear: Over the course of Solyndra’s loan guarantee, I did not make any decision based on political considerations.

My decision to guarantee a loan to Solyndra was based on the analysis of professional -- experienced professionals and on the strength of the information they had available to them at the time.

Solyndra’s potential was widely recognized outside the Department. Highly sophisticated, professional private investors, after conducting their own reviews, had collectively invested nearly a billion dollars in the company, which was named as one of the world’s (quote) “50 Most Innovative Companies” by MIT’s Technology Review in February of 2010. In March of 2010 the Wall Street Journal included Solyndra in -- in its ranking The Next Big Thing -- The Top 50 Venture-Backed Companies.

It's common to take -- It's common for it to take some time for start-up companies, especially manufacturing companies, to turn a profit. And in the two years since the Department issued the loan guarantee, Solyndra faced deteriorating market conditions.

Solar PV production has expanded at the same time [that] the demand has softened due to the global economic downturn and the decline in subsidies in countries including Spain, Italy, and Germany. The result has been an acute drop in the price of solar cells, which has taken a toll on many solar companies in Europe, Asia, and the United States. Meanwhile, countries like China are playing to win in the solar industry. China has invested aggressively to support its companies, and in recent years, China's market share in solar cell and solar module production has grown significantly, to roughly half the market today.

While we're disappointed in the outcome of this particular loan, we support Congress’s mandate to finance the deployment of innovative technologies, and believe that our portfolio of loans does so responsibly. The President asked for a review of the Department’s loan portfolio. We support that review, and I look forward to the results. The Energy Department is committed to continually improving and applying lessons learned in everything we do, because the stakes could not be higher for our country.

When it comes to the clean energy race, America faces a simple choice: compete or accept defeat. I believe we can and must compete.

I thank you, and welcome your questions.

Book/CDs by Michael E. Eidenmuller, Published by McGraw-Hill (2008)

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