Before President Joe Biden disburses the roughly $1.2 trillion in spending under the Infrastructure Investment and Jobs Act, he may want to pause and do some reading up on what happened the last time around.
"Biden lauds Toledo solar work" was the headline over a June 2009 article in the Toledo Blade about the then-vice president's visit to Perrysburg, Ohio. A White House press release announced that "the Vice President, who was joined by Ohio Governor Ted Strickland, Secretary of Commerce Gary Locke and Director of Recovery for Auto Communities and Workers Ed Montgomery, discussed new initiatives to prepare the manufacturing economy for the 21st century at Willard & Kelsey Solar Group in Perrysburg."
What happened to the Willard & Kelsey Solar Group? It closed.
Greentech Media reported in 2013: "The firm seemed to specialize more in extracting tax breaks from the locals and paying its executives lavish salaries than in building solar panels ... The firm officially closes today after ramping down over the last several years and burning through more than $60 million in investor and taxpayer money."
The Willard & Kelsey story was a common one around solar startups backed by politicians — and public funds — from both political parties. A Chapter 7 bankruptcy filing by another Ohio solar energy company, Xunlight, was the topic of a column I wrote back in 2014.
The Xunlight story was the focus of a presentation delivered in 2019 to a regional conference of the Turnaround Management Association by Bob Cohen, who was a financial adviser to the bankruptcy trustee in the case. The title of the presentation, "Transfer of Intellectual Property in Chapter 8 The Story of Xunlight, Toledo, OH," foreshadows the evidence, based on seized emails and other company documents, that the firm's "ultimate strategy" was "transfer technology to China."
I emailed Xunlight's founder, Xunming Deng, who is a professor at the University of Toledo, and asked him, "What would you say to American taxpayers who put money into the company in the U.S. that went bankrupt only to see the technology transferred to China?"
He replied, "Xunlight China's operation stopped years ago." I asked him how he reconciled that with the existence of a Twitter account with the handle "Xunlight China" promoting flexible solar film or panels for sale at Amazon with sellers identified as "Ships from Xunlightchina Sold by Xunlightchina."
After I inquired, the Twitter account was deleted and the Amazon seller profile was changed to a new name. Deng said he had "no idea" who was behind the Twitter account and commented, "Strange! Strange! Strange!"
There's a case that the public should be less troubled by solar-firm failures than you might think. Such failures are common in the private sector, as Sebastian Mallaby explains in his forthcoming book "The Power Law: Venture Capital and the Making of the New Future."
As the promotional material for the book explains, "It is the nature of the venture-capital game that most attempts at discovery fail, but a very few succeed at such a scale that they more than make up for everything else. That extreme ratio of success and failure is the power law that drives the VC business, all of Silicon Valley, the wider tech sector, and, by extension, the world."
But as the Biden administration gets ready to push huge amounts of money out the door for projects like high-speed rail, "new fleets of electric vehicle, school buses, a national network of charging stations," high-speed internet, and "manufacturing solar panels, wind farms, batteries, and electric vehicles to grow clean energy supply chains we can export to the world," as the White House and the Democratic National Committee are describing it, it's worth remembering that some millions, tens of millions, maybe even hundreds of millions of those taxpayer dollars are going to wind up being spent on firms that fail.
Biden may hope that those failures happen after he or some other Democrat gets reelected president in 2024, and that, as in successful private venture capital, the winning companies will outweigh the losses. But voters being sold the solar stimulus promise may remember that we tried this before already and the results weren't all sunshine.
Ira Stoll is editor of FutureOfCapitalism.com and author of "JFK, Conservative." Read Ira Stoll's Reports — More Here.
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