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  • 09.01.11

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.

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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.

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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.

About the author

Ariel Schwartz is a Senior Editor at Co.Exist. She has contributed to SF Weekly, Popular Science, Inhabitat, Greenbiz, NBC Bay Area, GOOD Magazine and more.

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