Solyndra had problems but its federal backing was and is a good idea....

Today's post: Wednesday, 9-14-2010

We need an 80% reduction in fossil fuel use by 2050 to avoid the worst global warming effects.

And, practically speaking, we need to also double our electricity generation and double the useful work done per unit of electricity & other energy sources as well during that same time to have a decent economy.

At some point, the oil that we’ve been using to power much of our economy will begin to run low enough that our world economy will shrink due to lack of supply or excessive costs or both. Kuwaiti scientists recently predicted peak oil in 2014 – just 3 years from now.

And, once the demand for oil picks up again with an economic recovery or supply begins to plateau or drop, the prices will again go back up. That will cause more hard times economically unless we have enough alternative sources of energy to turn to.

Today’s post:

Solyndra had problems but its federal backing was and is a good idea….

We need massive new installation of renewable energy sources including solar and wind and to become much more energy efficient soon to prevent economic collapse when oil prices surge sometime in the next decade or two.

That’s true even if global warming stops by itself. (The recent fires and drought and record temperatures in Texas suggest the reverse! The people there who don’t believe in global warming didn’t notice apparently.)

Solyndra proposed a way to install efficient solar photovoltaic cells quickly and on a large scale.

Had it worked, it would have helped produce the badly needed new solar power in the large amounts we need.

So the federal funding had the correct goal.

Their solution turned out to be overpriced as prices in their market dropped before they became established. Some companies have recovered from that.

But they also got too much funding before they got enough sales and feedback from buyers. They also got too much upfront funding instead of having funding contingent on meeting milestones and did NOT use the safer progress payment funding model.

Many very smart people with money and experienced venture capitalists have made these same mistakes.

But what they people trying to criticize the investment or make political capital of Solyndra’s failure don’t know is that success in backing new companies in growth industries does NOT require they all be successful.

If three of ten survive and one does really well investing in the ten often more than doubles your starting money. And, this can happen in few enough years to be interesting indeed!

Secondly, investing in new industry actually works BETTER if you invest quickly and fail quickly. That way, you learn enough to make more successful investments while that industry is still in high growth mode.

So, the federal government program that backed Solyndra invested in a potential solution for the problem that needed solving.

In this case, they failed quickly. They will be better informed for their next investments.

So even in the next few months, they should make better investments than they would have done had Solyndra not failed.

But there is far, far more to this story.

The government was working to get large scale solutions in place and build momentum for even more growth in these solutions.

Solyndra DID fail.

But the exact same program that gave Solyndra the money they lost also looks very much as if the whole program has ALREADY succeeded.

Tesla Motors has successfully created huge and unstoppable momentum in enabling us to power vehicles and transport without oil or while using dramatically less of it.

Moreover that’s true even if Tesla fails also. And, with Toyota as a partner it is increasingly unlikely Tesla will fail.

But thanks to Tesla and its initial success and genius for publicity, virtually every serious player in car manufacturing is working on plug-in hybrids and all electric cars.

In addition, thousands of charging stations for such cars are already in place and several companies are building more.

Solyndra did fail. But the federal program that lost money on it was doing the right things and has already succeeded in its underlying goal. And there’s more good news coming.