Solyndra Bankruptcy: Death Knell for U.S. Solar Industry?
3:44 PM MDT | September 6, 2011 | By REBECCA COONS
Solyndra, a Fremont, -CA based manufacturer of solar panels that received over half a billion in federal stimulus funds in 2009, says it is suspending operations and laying off 1,100 workers, effective immediately, because it can not compete with heavily-subsidized Chinese manufacturers. The company, which owes lenders $783 million, has filed for Chapter 11 protection.
Solyndra received a $535 million loan guarantee from the U.S. Department of Energy (DOE) in March of 2009 under the American Recovery and Reinvestment Act. President Obama visited the facility in May 2010 to tout the benefits of the stimulus package. In his speech, he compared Solyndra to other westerly endeavors for prosperity such as manifest destiny, the Gold Rush, and Silicon Valley.
A month later, the company canceled plans for a $175 million IPO. By the start of 2011, the company's financial troubles became dire. The DOE had to restructure the loan, and by June Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-FL) was calling for an investigation into whether the loan was "diligently vetted."
Following Solyndra's announcement, Stearns and House Energy and Commerce Committee Chairman Fred Upton (R-MI) issued a joint press statement calling Solyndra a "dubious investment" and accusing Committee Democrats of making misleading claims about Solyndra's viability. They add that the company's failure is "emblematic of an economic policy that has not worked and will not work."
Solyndra's demise can also be seen as the sort of casualty that can occur in any fast-growing, technology-driven market. The company's value proposition was largely based on the fact that its panels did not use polysilicon--a material that sold for above $400/kg in 2008 but has since dropped to $60-$70/kg. Cash-strapped governments of major solar markets like Germany have also cut subsidies for solar panel installations.
The nail in the coffin for Solyndra, and at least two other U.S. solar panel makers for that matter, has been the surge in Chinese solar panel manufacturing capacity and subsequent 42% drop in prices.
According to a joint report from the United Nations Environment Programme and Bloomberg New Energy Finance, the Chinese government extended $32.5 billion in loan guarantees to ten solar panel manufacturers last year. In many cases, the loans are practically interest-free. An average of $3.4 billion per firm eclipses U.S. support for Solyndra.
Solyndra is not the only U.S. casualty. Evergreen Solar (Marlboro, MA) filed for Chapter 11 last month, eight months after closing a Devens, MA production facility it received $58 million in state aid to build in 2007. Company president and CEO Michael El-Hillow cited downward pressure on selling prices due to "considerable" government and financial support given to Chinese manufacturers.
Despite the setback, the DOE is standing behind continued investment in clean energy development. "The alternative is simply walking off the field and letting the rest of the world pass us by," says Dan Leistikow, DOE director of public affairs.
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