Dan Reicher of Stanford University in an interview we will publish later this week said.
"Capital flows for cleantech in China are not well understood."
But is that really true?
A few weeks ago, I published a chart that sought to put the magnitude of the Solyndra loan money into perspective. Based on that chart, it would appear that China is providing tens of billions of dollars in low-cost loans to Chinese solar companies. The table that follows (from Mercom Capital) would seem to confirm this.
Chart by Ryan Cunningham using Reuters and Bloomberg sources
Mercom Capital asserts that the loans to solar companies total over $40 billion over the last two years.
Reuters, Bloomberg, and Mercom would seem like reliable outlets.
But according to Suntech and other sources in the know -- they are flat-out wrong.
And those sources might want to read PVNews for a little more accuracy in their solar news. Here's the PVNews take on Chinese bank debt:
According to a spokesperson from Suntech, of the total $7 billion China Development Bank credit facility received by Suntech, less than 10 percent was actually drawn down. According to Suntech,
"In addition, last year, Suntech paid an average of 4 percent to 5 percent interest on our loans, much higher than the 1 percent given to U.S. companies under the DOE loan guarantee program. As most of our loans are at variable rates, this year we are paying closer to 6 percent as China has raised interest rates to combat inflation. The China Development Bank made higher profits last year than Morgan Stanley and you don’t do that by giving away free money."
Here is an image from Suntech's form 20F (annual and transition report of foreign private issuers) that cites the interest rates of the loans from the Bank of China at between 4.8 and 5.4 percent.
A U.S.-based senior executive at a global solar company with operations in China told Greentech Media that "any chart suggesting that Chinese banks have actually lent “tens of billions” is not accurate. They have offered to lend, but much, much less of this money has actually been lent since the companies first have to go through a rigorous lending approval cycle. Just look at their balance sheets to see how much is really being lent."
Perhaps capital flows for cleantech in China can be understood.
COMMENTARY: If the numbers being reported concerning the billions of dollars being poured into Chinese solar companies by Chinese banks are correct, then the U.S. definitely has a lot of catching up to do.
According to Bloomberg, the U.S. knew Solyndra was violating its loan terms with the DOE before guarantees. Here's what Bloomberg says.
"The Energy Department knew Solyndra LLC was violating terms of its U.S. loan by December and agreed to keep providing taxpayer support for the solar-panel maker that filed for court protection nine months later.
Damien LaVera, a spokesman for the Department of Energy, said officials were aware that Solyndra had failed to set aside $5 million, due in December, as the first of six payments under the loan-guarantee agreement.
In the fall of 2010, Solyndra informed DoE that it was having major cash flow problems and would face bankruptcy in early 2011 if new capital could not be raised, LaVera said in an e-mail today.
Solyndra executives and the Energy Department negotiated new terms for the $535 million loan guarantee in January, more than a year after the U.S awarded the company the first loan package funded with economic stimulus money. The revised agreement didn't require the $5 million payments, LaVera said.
'Based on the information we had available to us at the time, we concluded that this restructuring gave us the best chance to protect the government's investment by putting the company in a better position to repay the loan', LaVera said.
Documents released this month showed the company was a month away from running out of cash in December 2010, before the loan agreement was restructured.
The new terms placed government debt in a subordinate position to $75 million from investors in the event of a default. Solyndra filed forbankruptcy protection on Sept. 6. Two days later, its offices were raided by FBI agents.
A House subcommittee is investigating the restructuring as part of a broader investigation into the guarantee. An official at the White House Office of Management and Budget wrote in a Jan. 31 e-mail that while the company “may avoid default with a restructuring, there is also a good chance it will not.” The e- mail was released by the subcommittee.
'The restructuring gave the company a fighting chance to survive', Jonathan Silver, executive director of the Energy Department's loan programs office, said at a House Energy and Commerce Committee hearing this month.
Solyndra had received $460 million in government loans by the time of the restructuring. It would get another $67 million before closing on Aug. 31, according to the Energy Department.
The details were reported earlier today by the Washington Post."
It was a huge mistake by the DOE to approve the guaranteed loan to Solyndra loan back in 2010, renegotiate the terms of the loan in in January 2011, then advance the remaining $67 million. What a massive screwup. For Solyndra's founders to claim that the reason the company failed was because of those Chinese loans is total bullshit. Solyndra's tubular solar panels were too costly to produce and made it impossible for it to compete against flat PV solar panels. It was losing a $1.00 on every two dollar of sales.
Courtesy of an article dated September 29, 2011 appearing in GreenTechSolar
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