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Solyndra bankruptcy could signal gray skies ahead for solar power

Ben Bierman (left) and Chris Gronet (right) explain solar technology to U.S. President Barack Obama on a tour of the Solyndra solar panel company May 26, 2010 in Fremont, Calif.

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Two top executives of the solar energy company Solyndra are expected in Washington next week. But it will be far from a sight-seeing trip. They're being called to the carpet in front of a House committee to explain why Solyndra went bankrupt late last month.

Companies go under all the time, but Solyndra was the recipient of a $535 million government loan. It was supposed to usher in a new era of green energy jobs. The failure of Solyndra is touching off a heated debate about whether the Obama administration fast-tracked the loan in order to score political points.

Katie Fehrenbacher covers green technology for GigaOM. She says Solyndra was offering a new approach to solar but the numbers didn't add up.

Solyndra is "a thin film solar company," she says, "and there's actually a bunch of them that were developed in Silicon Valley around the same timeframe, 2005 to 2006, and a lot of venture capitalists put a lot of money into these firms. Solyndra was different than a lot of the other ones in that they designed their panels to be tube shaped. So instead of the flat, heavy panels of traditional solar rooftop panels, Solyndra panels are a long series of thin tubes. The overall cost of installing the system is supposed to be a lot lower than installing the traditional panels."

As to why it failed, Fehrenbacher says, "Solyndra's manufacturing costs were way too high. From the beginning, everyone knew this, that Solyndra's costs were a lot higher than their competitors and a lot higher than traditional solar panel makers. But the company's idea was through economy of scale, through building these huge factories, that the cost of manufacturing would go down. And also at the same time, that the overall cost of installing the system would be lower. So say you can hire lower-cost workers to put these on roofs without the more capital intensive systems that would need to put a traditional solar system on a roof. But clearly that didn't happen and the company ran out of money."

It's not the only one that did. Two other solar power companies went bankrupt last month as well. Marketplace's Steve Henn says, "Solar panels, photovoltaic cells from China have gotten much much cheaper. Prices have fallen between 20 to 30 percent in the last year. Even with the price reductions in solar power, it's not price-competitive technology compared with things like natural gas or nuclear power in most of the country. So it relies on subsidies and the biggest backers of solar power have been in Europe: Germany and Italy. Those economies are in turmoil now with the debt crisis and there's a real fear in the industry that their support of solar power will falter because of the financial crisis and that will lead to even more oversupply."

"I think the longer term future for solar power is bright. The Holy Grail here is that solar power gets to the point where it's competitive on price with all the other energy technology out there. It's getting much much closer, but it's not there yet, so crossing that final bridge will be tough."

Also in this program, Wilco needs your help. Not making music, they got that covered. But Wilco is running a contest online where your video can be their new background when they play in your city.

About the author

John Moe is the host of Marketplace Tech Report, where he provides an insightful overview of the latest tech news.
Susan Leal's picture
Susan Leal - Sep 24, 2011

Elon Musk's Solar City just blew out of the DOE Loan program because they cooked the books and bought influence just like Tesla. Steve Spinner, Matt Rogers and Lachlan Seward at DOE manipulated the process to ignored Tesla's fake financials because Tesla bought their loan from the White House, the investigations will prove this and Tesla will be history.

James Moore's picture
James Moore - Sep 16, 2011

On the ropes?

In just the last two months, about 7,000 megawatts of new solar projects were added to the U.S. pipeline. That’s the equivalent of seven nuclear reactors, which is seven more than we’ve built in the last three decades.

Wind is now a bigger employer than coal. Solar is finally scaling up, which is why its costs are falling down.

http://swampland.time.com/2011/09/14/dont-be-fooled-by-the-solyndra-bank...

Rajiv Agrawala's picture
Rajiv Agrawala - Sep 15, 2011

"IT'S A SERIES OF TUBES !!!"

Dietrich Seaman's picture
Dietrich Seaman - Sep 15, 2011

In his comments about the competitiveness of PV solar panels, reporter Steve Henn said that "solar...[is] not price competitive technology compared to...nuclear power...So it relies on subsidies..." Steve neglected to mention how heavily subsidized nuclear power is. If taxpayers stopped footing the bill for the nuclear industry's insurance and loan guarantees, the industry would disappear. Not to mention the enormous back-end costs of waste storage and plant decomissioning. The fact is that the price per watt of solar is rapidly declining and the price of nuclear is going up. We should bet on winners, not losers.