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Why It's Not A Bad Thing For Solar Power That Solyndra Went Bankrupt

The end of the solar company—with $1 billion in investments and hundreds of millions in government loans—is bad for the U.S. economy. But the good news is, it failed because solar power is growing too fast.


Solyndra was a solar startup that was primed to succeed—it raised over $1 billion from investors, and managed to secure a prized $535 million federal loan guarantee in 2009 to build a solar panel factory. The government keeps saying that the clean energy industry and green-collar jobs will be what saves the economy, and Solyndra was a large part of that theory. This week, Solyndra announced that it is bankrupt. While this is bad news for investors—and the DOE loan program—it might not necessarily be a bad thing for the solar industry.

In a statement, Solyndra explained why it went bankrupt:

"Despite strong growth in the first half of 2011 and traction in North America with a number of orders for very large commercial rooftops, Solyndra could not achieve full-scale operations rapidly enough to compete in the near term with the resources of larger foreign manufacturers. This competitive challenge was exacerbated by a global oversupply of solar panels and a severe compression of prices that in part resulted from uncertainty in governmental incentive programs in Europe and the decline in credit markets that finance solar systems.

That price compression is an important point. Solyndra thought it would be successful when photovoltatic modules cost $3.25 per watt. But in the past 24 months, solar prices have fallen 70%, and are now moving close to grid parity (the point when it is just as cheap to generate solar as grid-tied fossil fuel sources). And Solyndra just couldn't compete with foreign (read: Chinese) companies that have overwhelming government resources and ultra-low price points. This isn't a great statement about American manufacturing, but it's not such bad news about where the solar industry is positioned.

"This is a reflection more about the success of the industry than the specific failure of Solyndra," says Arno Harris, CEO of Recurrent Energy. "Costs are dropping rapidly because a number of other companies have lower cost technology. The price wouldn't be where it is if there weren't willing sellers at that price."

Unfortunately for the U.S., Solyndra's failure might lead to more gun-shy solar investors and increased scrutiny of the DOE's loans. It's not a negative thing for solar consumers, who still get the benefit of cheaper Chinese panels, but it will probably strike fear in solar startups who see that millions (or even billions) of dollars can't buy success in a saturated marketplace.

But as Harris says, "The failure of one company isn't a judgment of the entire industry." And indeed, cheap panels are cheap panels, no matter who they come from.

[Image: Flickr user sancho_panza]

Reach Ariel Schwartz via Twitter or email.

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  • John Howley

    "The failure of one company"?  Try four.  Solyndra, Evergreen, and Spectrawatt went out of business last month, and Veeco dropped out of the solar power market last month as well.  This raises serious questions about President Obama's plans to create jobs by investing in sustainable energy.  More important, however, are the answers.  Yes, solar and other forms of sustainable energy are the growth industries of the 21st century.  Yes, these growth industries will create jobs.  But No, those jobs will not be created in the US unless we also create markets for the products here in the US as well.  As long as we continue to subsidize the true costs of coal and oil, solar and other forms of sustainable energy will never succeed here.

    John Howley

  • Gman

    If this is good news, is the oversupply due to Government subsidies? if they take away Government subsidies will they be competitive on there own?

  • lngtrm1

    If this is good news then it raises the question, should we be purchasing Chinese panels?

    If theirs are government subsidized should we allow that product in the US?

    I would be the last one to embrace protections but where should we draw the line if not at solar panels?