A four-hour grilling of Energy Secretary Steven Chu by House Republicans yesterday appeared to end in a standoff, with Chu emphatically denying that politics played any role in the Energy Department's approval of a $535 million loan guarantee to the now-bankrupt solar firm Solyndra Inc.

"I want to be clear: Over the course of Solyndra's loan guarantee, I did not make any decision based on political considerations," Chu said. He also said that at the time he approved the loan guarantee in 2009, he was not aware that George Kaiser, one of President Obama's major political fundraisers, was an investor in Solyndra, and did not know Kaiser.

Republicans on the House Energy and Commerce Oversight and Investigations Subcommittee pressed Chu about administration emails detailing a push in the spring and summer of 2009 to approve the guarantee for Solyndra's California fabricating plant. They appeared to accept Chu's declaration that he hadn't been swayed by political factors.

But GOP members still challenged Chu's decisionmaking about the guarantee, led by subcommittee Chairman Cliff Stearns (R-Fla.). Stearns said Chu should have been aware of warning signals about Solyndra's vulnerability that began in 2009 within DOE and other government departments and grew until the firm's collapse in August. "It shows a high degree of mismanagement and ineptitude," Stearns said at the hearing's conclusion.

Chu said his department's decision to back Solyndra's path-breaking "thin film" solar technology was supported by the best judgments of his staff, and was justified at the time. "Based on thorough internal and external analysis of both the market and the technology, and extensive review of information provided by Solyndra and others, the [Energy] Department concluded that Solyndra was poised to compete in the marketplace and had a good prospect of repaying the government's loan," Chu said.

The solar company was felled by a precipitous drop in prices for competing silicon-based photovoltaic modules that began in the last quarter of 2008 and has continued downward, forcing Solyndra to sell its units at a loss. The 2008 recession chilled loans for commercial solar projects, and European countries scaled back solar subsidies. "Fundamentally, this company and several others got caught in a bad tsunami," Chu said.

The China factor

The Energy Department released a chart comparing actual prices for silicon-based PV modules with leading analysts' forecasts, beginning in mid-2008, showing that the analysts misjudged how fast China's government-backed solar power campaign would drive prices down. By the time Solyndra filed for bankruptcy protection, silicon PV prices had plummeted from $4 per watt in the first quarter of 2008 to a little over $1.

But there were warnings of the threat in print at the start of the Obama administration. The quarterly Silicon and Wafer Price Index published by New Energy Finance in December 2008 predicted that silicon contract prices would drop by more than 30 percent in 2009.

Approval of the Solyndra project had been held up in January in part because an independent analysis of the company's market outlook was needed. The consulting firm R.W. Beck delivered a draft of the report to DOE on March 6, 2009, prior to crucial reviews that led to a conditional approval of the project on March 17. The report could show whether the risks of Chinese competition and falling prices had been highlighted at that early date, but DOE says it is not permitted to release it because it contains proprietary information, and the committee has not released it, either.

An email between Office of Management and Budget staff members in August 2009, just before the conditional guarantee to Solyndra was made final, flagged the pricing and competitive threats. The staff members were not identified in the email copy released by House Republicans.

The writer said that "Solyndra claims to have a pricing advantage based on performance and lower costs of installation. ... Recent developments in the solar market, in particular, pricing pressures from China from silicon wafer plants ... raise concerns about how strong Solyndra's position will be in the face of rising competition." OMB decided to raise the assessment of the risk the project posed.

Another email indicated pressure within the administration to wrap up the issue before a scheduled appearance by Vice President Biden at the plant site to announce final approval of the guarantee. The approval was "pretty much a given," the second email's writer said. Whether that meant the guarantee was pushed ahead of OMB's final word, to match Biden's timetable, or whether the remaining issues were not considered material was not clear.

In any case, Chu told the subcommittee that he was not aware of that OMB email correspondence when he signed off on the final approval.

The dramatic change in silicon prices was not the only upheaval in energy and climate policy fronts since the first months of 2009, when the Obama administration began its campaign for clean energy technologies with nearly $35 billion in federal loan guarantees and $4.5 billion in smart grid grants.

In March 2009, the administration was accelerating the dormant federal energy loan guarantee program for renewable and new nuclear power reactors, and House Democrats were preparing a drive to enact cap-and-trade climate legislation. There were bipartisan supporters for a federally backed "green bank" that would make additional loan support available to clean energy projects, and for a national renewable energy standard. Solyndra's executives, in fact, were counting on Congress to pass climate legislation putting a price on fossil fuel power plant carbon emissions, to help their competitive position.

The shale gas factor

Since then, the boom in exploration for shale gas has sent projections of U.S. natural gas production surging upward and pushed gas prices so low that new nuclear projects are frozen outside the Southeast, with or without loan guarantees.

The administration is not backing away from a commitment to help American solar and wind developers compete in a rapidly expanding global market. "When it comes to the clean energy race, America faces a simple choice: Compete or accept defeat. I believe we can and must compete," Chu said.

The largest block of new grants for solar power projects got loan guarantees in September, just before a congressionally set deadline expired -- $4.7 billion in all on the very last day, according to Rep. Steve Scalise (R-La.).

Chu told Scalise that DOE's review process for loan guarantee projects had also changed to make it stronger and more exacting. "We believe the majority of the portfolio seems to be in good shape -- a large majority," Chu said. "Under no circumstances were we rushing."

But the future of renewable projects now rests with Congress, which must decide whether to extend a federal investment tax credit for solar projects that expires in December 2016 and a production tax credit for wind farms that ends in December 2012. The uncertainty about the future of the wind credit is already affecting the pipeline for new projects, industry representatives say. How the Solyndra controversy will affect those congressional decisions outcome remains to be seen.