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Solyndra Fallout Continues

Travis Hoium
September 27, 2011

It's the rule of unintended consequences. You do something with the best of intentions in one area, and it screws things up elsewhere.

That's exactly what appears to be happening with the Department of Energy's (DOE) loan guarantee program and the projects that are now being affected by Solyndra's demise. As executives and DOE officials are marched in front of members of Congress, less risky projects that could provide jobs at relatively little risk to the government are put in jeopardy.

Last week it was First Solar's (Nasdaq: FSLR  ) 550 MW Topaz PV Farm, which missed a deadline with the DOE because there wasn't enough time to complete the paperwork. Now word has come down that SolarCity's $275 million loan guarantee to install 371 MW of solar on 160,000 rooftops won't be approved in time because of the Solyndra investigation.

Even though the risks of Solyndra's guarantee and the First Solar and SolarCity guarantees are very different, the powers that be don't seem to care.

Risk vs. reward
It's important to make a distinction between high-risk guarantees like Solyndra (which this Fool thinks are a terrible idea) and low-risk guarantees of solar developments. Guar