Why do green energy companies keep failing? … and why does the government keep throwing millions at them?

Question by Pat: Why do green energy companies keep failing? … and why does the government keep throwing millions at them?
Solyndra, Beacon Power, Evergreen Solar, SpectraWatt, Eastern Energy, Nevada Geothermal, and First Solar are all GREEN ENERGY companies that have failed and recieved billions (and some keep receiving) of stimulus money. Are we that inept?
In other words ….. why did the chicken get stopped crossing the busy highway?

Best answer:

Answer by Timber
Everyone is content with using fossil fuels. Green energy is, for the most part, unneeded. Whenever anything containing oil is decomposed, it reverts back to oil eventually (plus whatever else was in it). Also, solar energy is very precise with its customers. It can only be used for energy purposes, whereas almost 90% of all things made have oil in them. There will just never be anything that can compare to crude oil. Also, Penn State came up with a machine that you can put an item into and, through a process that takes a couple days, can convert it back into crude oil. It’s not much yet, but in a couple of years or so, this machine will be so improved that solar energy will be practically obsolete.

What do you think? Answer below!

5 Responses to “Why do green energy companies keep failing? … and why does the government keep throwing millions at them?”

  1. At this time the cost of running these companies and their products are expensive and people find it hard to switch from what they have been using.

  2. Thomas Edison “wasted” a lot of money experimenting with failed lightbulbs before he found one with potential.

    Investing in green energy in the U.S. is so that WE develop technologies that will allow us to be independent of other nations, as well as develop marketable technologies for export. As global demand for energy will continue to grow very rapidly, costs for non-renewable energy will get much more expensive. If we do not become more energy independent, we will lose some of our ability to make our own choices… in other words, if we keep on an oil dependent path, oil producing countries will have more and more influence on us.

    Competition to buy oil is increasing as other nations develop. If we can develop more businesses that sell alternative energy, many of those countries will be interested in our renewable energy products to offset their oil dependence. This is actually a race… the sooner we can develop the technoloies and produce them in scale, the better off we’ll be in the global economy! Fortunately, as a leader in manufacturing, we are in a better position than many countries to do this, but only IF we as voters support assisting the development of these new green energy products.

  3. Any time you give something to someone without stringent guidelines, they will abuse it. Bailouts.

    Green, renewable energy is still the way to go.

  4. First you have to understand risks. Managing a business is about managing risk, you spend money on equipment, materials and people to build something or provide a service in hopes of selling that something or service at a profit. There is a risk of not being able to sell all of whatever you’ve made or the service your people can give so you must manage how much resources you use in equipment, materials and people given the chance that you may not sell all of it. A baker makes money off each cake he sells but he would quickly go out of business if he baked a billion cakes on a day when only 12 could be sold.

    Now toss in government subsidies, this lowers the price such that many more people will buy the product but government subsidies are dependent on political will and are in fact a luxury if the economy does poorly. A company who spends the resources on the equipment, materials and people to take advantage of the increased demand due to subsidies may find that they have taken on too much risk if the government should change their subsidies.

    With the solar companies, the subsidies in Germany, Spain and the UK generated the excess demand. The company borrowed money from the US government in order to build factories, buy material and hire people to meet the demand and then Germany, Spain and the UK pulled or reduced their subsidies in light of Europe’s impending economic troubles. The companies having spent the money they borrowed are facing a much lower market and they can’t afford the money they’ve borrowed.

    Companies often take on too much risk despite of having good business prospects. Back in the 80’s there was a chain of restaurants in Canada called Mothers which was very popular, business was going well, they borrowed heavily to expand their franchise but spent too much and folded despite how well their business was doing. GM failed because of risks they could no longer sustain when the credit crunch from the banks occurred. Some companies like Apple, refrained from paying their investors dividends in order to maintain a vast pool of resources in order that they could be opportunistic with anything that came their way, of course you can only do that so long as you can convince the investors that you have leadership that will result in success otherwise investors want a return as soon as possible.

    Government subsidies, makes it far more difficult to assess the risks and often makes it impossible to select a position that benefits from the subsidy without risking the company’s survival.

    This is not a matter of abuse of the subsidies or of competence of the company, this is simply a matter of subsidies making the probability of company survival dependent on the subsidies themselves. There’s no doubt that people will believe that it was abuse or incompetence but that that’s only to further their political beliefs and demonstrates their ignorance.

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