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With just 1.4% of its Recovery Act clean tech investments in "losers", it looks like the Obama administration is batting a much better average in "picking winners and losers" than the private Venture Capital (VC) market itself. The US government guarantee of a private loan to Solyndra, at $535 million, represented a minuscule 1.4% of the Department of Energy investment in all renewable technologies. By contrast - VCs (who were out $1 billion to Solyndra, for example) expect much higher failure rates. Richard Stuebi, who advises VCs on expected green energy failure rates, says that just 3 in 10 successes represents a successful VC investment strategy. That is 70% losers - not 1.4%.

Policy & Politics

Obama DOE Picked More Energy Winners Than Silicon Valley VCs

With just 1.4% of its Recovery Act clean tech investments in “losers”, it looks like the Obama administration is batting a much better average in “picking winners and losers” than the private Venture Capital (VC) market itself.

The US government guarantee of a private loan to Solyndra, at $535 million, represented a minuscule 1.4% of the Department of Energy investment in all renewable technologies. By contrast – VCs (who were out $1 billion to Solyndra, for example) expect much higher failure rates. Richard Stuebi, who advises VCs on expected green energy failure rates, says that just 3 in 10 successes represents a successful VC investment strategy. That is 70% losers – not 1.4%.

Obama-Solyndra-Republicans-picking-winners-and-losers

With just 1.4% of its Recovery Act clean tech investments in “losers”, it looks like the Obama administration is batting a much better average in “picking winners and losers” than the private Venture Capital (VC) market itself.

The US government guarantee of a private loan to Solyndra, at $535 million, represented a minuscule 1.4% of the Department of Energy investment in all renewable technologies. By contrast – VCs (who were out $1 billion to Solyndra, for example) expect much higher failure rates. Richard Stuebi, who advises VCs on expected green energy failure rates, says that just 3 in 10 successes represents a successful VC investment strategy. That is 70% losers – not 1.4%.

The argument against “picking winners and losers” that Republicans in congress have long cited to avoid clean energy investment got a poster boy in Solyndra, and they are flogging it to death. They have pounced on one startup bankruptcy as yet another excuse to shut down all clean energy investment by the Democrats.

Republicans argue that “government should not pick winners and losers” because “the invisible hand of the marketplace” should be allowed to (continue to) decide the winners and losers in energy supplies. It is no coincidence that the invisible hand favors the dirty energy lobby that funds their seats in congress.

The market will pick dirty energy because it is cheaper (for now) since it is already in place, and the capital costs have been absorbed, and it did not pay a dime for the pollution it caused. All the market knew was that it was cheap. But the market did not know that in fact there will be a much larger payment due for that cheap dirty energy.

The market thus conspires with their dirty energy benefactors. Dirty energy has been successful in avoiding paying for the pollution it has already caused, because it made us pay for it instead, at the emergency room, every year: For example, the “230,000 premature deaths, 200,000 cases of heart attacks, 2.4 million cases of asthma attacks, 120,000 emergency room visits, and 5.4 million lost school days” is just the portion prevented annually by the Clean Air Act. And dirty energy will similarly not pay for the future costs that we will bear, with the effects of climate change.

The Department of Energy had hired a clean tech VC to help with picking winners, while the Recovery Act had Department of Energy investment dollars for investing in getting clean energy costs down. He has just left, as there will be no more need for expertise in picking winners. The program ended on September 30th.

The renewable energy loan guarantee program that invested in Solyndra, as part of a historic investment resulting in 16,000 megawatts of clean energy coming online under the Democrats’ brief Recovery Act, could have been renewed when it expired at the end of September. But this Republican congress needs all the energy it can put together just to keep its lights on for each ensuing month.

Now Republicans have shut down the Democrats’ pick – a historic investment in clean energy – rivaling the Manhattan Project, and we will stick with their pick: dirty energy.

Susan Kraemer
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writes at CleanTechnica, CSP-Today and Renewable Energy World.  She has also been published at Wind Energy Update, Solar Plaza, Earthtechling PV-Insider , and GreenProphet, Ecoseed, NRDC OnEarth, MatterNetwork, Celsius, EnergyNow, and Scientific American. As a former serial entrepreneur in product design, Susan brings an innovator's perspective on inventing a carbon-constrained civilization: If necessity is the mother of invention, solving climate change is the mother of all necessities! As a lover of history and sci-fi, she enjoys chronicling the strange future we are creating in these interesting times.    Follow Susan on Twitter @dotcommodity.

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