The other Solyndra story: Even massive tax rebates failed to drive solar-panel demand
Shortly before now-bankrupt solar company Solyndra received a half-billion dollar loan from the federal government, it also received a sweetheart deal from the IRS: a guarantee of a 30-percent tax credit to customers who installed the company’s solar panels.
As originally reported by investigative news outlet California Watch, Solyndra secured the deal just weeks before its $535 million loan approval from the Energy Department.
The Energy Policy Act of 2005 had already boosted investment tax credits for solar panels from 10 to 30 percent. But the “private letter ruling” obtained by Solyndra from the IRS increased the tax credit for its products by an additional 30 percent.
That last 30 percent, however, only kicked in for solar panels installed on so-called “cool” roofs, painted white to reflect sunlight. And Solyndra was then the only vendor whose solar panels fit the bill.
Consumers who installed $10,000 worth of Solyndra solar panels on their roofs in 2010, then, were eligible to get $6,000 rebated from the government when they filed their income tax returns.
The now-defunct solar company still has a Vimeo video account on the Internet, where viewers can step back in time and see Solyndra’s bright future.
In one such video, Sam Chatterjee, manager of project finance and bankability for Solyndra, gives an interview touting the tax credits available for installing Solyndra solar panels in 2011. (RELATED: Court papers: Solyndra’s CEO quietly resigned Friday)
“There are certain facts that make 2011 the ideal year to carry out these projects both from the economic attractiveness as well as the feasibility point of view,” Chatterjee said.
Chatterjee added that in addition to massive tax credits, consumers could get a large depreciation bonus on their roof if they applied in 2011. In 2012, that bonus dropped by half. Those who applied in 2011 could also opt to receive their tax credit in cash.
The solar company hired prominent tax firm Jones Day to guide customers through the tax credit process.
Solydnra wanted to present an immediate deal to potential buyers. And for good reason.
One of the “certain facts” that didn’t make it into the video — released on June 6 — was Solyndra’s imminent financial collapse. The company declared bankruptcy on Aug. 31.
Part of the problem was intense competition from China, which heavily subsidizes its solar industry. Solyndra was also selling solar panels for less than the cost of production. But perhaps the biggest problem was that demand for solar panels, despite the lure of tax rebates, simply wasn’t there.
When asked in the video if buyers were taking advantage of the tax credits, Chatterjee said, “We have dozens of customers who … have successfully applied for the federal financial incentives.”
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