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Solyndra Collapse Sparks K Street Rush

The renewable energy industry is facing a watershed moment, and many firms are taking the traditional route to safety — by calling on K Street for help.

The collapse of the solar company Solyndra — which announced it would file for bankruptcy at the end of August after receiving a visit from President Barack Obama and a $535 million loan guarantee from the federal government — is under investigation by the oversight arm of the House Energy and Commerce Committee. The FBI raided its offices in September at the beginning of a criminal probe. A separate inquiry is under way at the Treasury Department.

Solyndra’s implosion has become a talking point for Congressional Republicans, who are busy subpoenaing White House correspondence to search for signs that the administration continued to push for government incentives for the company after its weak financial state was known. Solyndra’s failure has been cited as a reason to kill government-loan guarantee programs in order to offset the cost of disaster relief. It is now the poster child for “How Obama’s Green Energy Agenda Is Killing Jobs,” according to the title of a Sept. 22 House Oversight and Government Reform Committee meeting.

As the government’s energy initiatives come under attack, stakeholders are making sure their priorities in Washington are known — more than 40 companies and other groups have hired lobbyists to work on energy issues since the beginning of August.

“Solyndra is unfortunate,” said Kara Saul Rinaldi, founder and president of the AnnDyl Policy Group, an energy and environmental policy strategy firm. “Unfortunately, right now, we’re faced with a Congress that is hesitant to spend money on clean energy — or on anything. My clients are asking, ‘Will Congress act? Can we get investment in real green jobs? Can we put forward tax credits?’ We are in a political situation that is just so difficult.”

The implications of the Solyndra situation were not lost on the Solar Energy Industries Association, which on Sept. 19 added a fact sheet to its website titled “Behind the Solyndra Headlines” to accompany others on the trade association’s history and facts about the solar industry.

“Despite the Solyndra bankruptcy, the Department of Energy’s Loan Guarantee Program helps make solar power cheaper and more affordable for businesses and homeowners. Throughout our history, every energy resource in America has enjoyed federal support including oil, nuclear, natural gas, coal, and, just recently, renewables,” it said in making the case for continued loan guarantees.

The association said the industry’s focus will now be on ensuring the extension of a Treasury Department program started in 2009 that allows energy developers to receive a federal grant in lieu of claiming a tax credit.

“At a time when President Obama and Congress are looking for solutions for America’s jobs crisis, it would be unconscionable to allow this proven job-creating program to expire,” Rhone Resch, the SEIA president and CEO, said in a statement. “Killing the 1603 Program amounts to a tax increase on the thousands of small businesses that are creating jobs in solar.”

The association is releasing a report today that estimates a one-year extension of the program that would result in the creation of more than 37,000 jobs in 2012.

The Department of Energy’s loan office administers three different programs that were designed to support alternative energy efforts directly or to encourage private investors to fund new green technology by promising to assume the company’s debt in the event of default. The first is an incentive program authorized in 2007 that provides loans to companies that develop advanced technology vehicles and components. The second is a loan guarantee program authorized by the Energy Policy Act of 2005 that supports clean energy companies that would otherwise find it difficult to obtain private financing. The third was a temporary program that expired at the end of last month administered through the American Recovery and Reinvestment Act of 2009 that authorized loan guarantees for renewable energy companies, biofuel projects and other energy-efficiency efforts. It was this program through which the now-bankrupt Solyndra obtained its $535 million loan guarantee. In its last days, this program approved nearly
$5 billion in loan guarantees, raising more concerns from Congressional Republicans about whether the selection process is sufficiently careful.

During the past couple of years, shepherding clients through the steps of participating in the $16 billion loan guarantee program has kept K Street busy.

Since the inception of the guarantee program in 2009, dozens of companies, including established utilities and startups, have turned to lobbying shops that include Brownstein Hyatt Farber Schreck, ML Strategies, SC Partners, Liebman & Associates and others in hopes of winning a slice of the multibillion-dollar pie. The push has spawned the hiring of energy specialists and has prompted Energy Department officials to open their own shops. McBee Strategic Consulting reports that during the past three years, it alone has landed more than $2.6 billion in Energy Department awards for clients. McBee worked with Solyndra early in the process.

Though the Recovery Act loan guarantee program has ended and Solyndra’s bankruptcy has likely imperiled the amount of funding that will be directed to the department’s remaining alternative energy programs in the future, the renewables industry has continued to hire influencers to head to the Hill. Solyndra itself brought on the Glover Park Group to “introduce” the company to Energy and Commerce Committee members in early August.

The treasurer of a new political action committee focused on energy efficiency said the Solyndra debacle could even boost its fundraising efforts.

Energy efficiency advocate O.L. O’Neal notified the Federal Election Commission at the beginning of August that he was organizing the Efficient America PAC, which will have two separate bank accounts to raise money for candidates — mainly incumbents with a proven track record — and independent expenditures. O’Neal originally estimated the group would raise a quarter-million dollars during this election cycle and says the Solyndra fallout has not changed that goal. Efficient America will begin fundraising in earnest now that the FEC has issued legal guidance on hybrid PACs.

“It may help,” O’Neal said of the Solyndra headlines. “We have some things scheduled for the next few weeks. We’re going to start contacting some stakeholders we feel would be interested.”

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