Epic Fail: Solyndra files for bankruptcy

While you were at lunch, the nascent cleantech manufacturing industry in the U.S. collapsed.

Actually, that’s not quite true, but it is true that Solyndra will file for bankruptcy. This is a big deal – Google News lists 85 news outlets covering the story. Solyndra is famous for its stylish, glass tubular, CIGS-powered, solar rooftop modules. And for raising vast amounts of venture capital. And for getting a $535 million Department of Energy loan guarantee. And for filing for, and later cancelling, a planned IPO in late 2009.

Solyndra’s success in raising money was an early indicator that venture capitalists had turned to so-called cleantech industries, taking some of the shine off of internet and technology-based start-ups. It was the first company to benefit from the DOE’s loan program, part of the 2005 Energy Act.

But cleantech — particularly solar — has been looking a bit less shiny lately. Earlier this month, Evergreen Solar filed for bankruptcy protection, and its filing shows that the firm does not plan to emerge in anything like its current form. Evergreen also received government largess, getting more than $50 million in support from the state of Massachusetts.

Both Solyndra and Evergreen had proven technologies and they had the financial resources to scale up their manufacturing. Compared to many segments of cleantech, this sounded like a pretty good risk for investors. However, both technologies were based, at least in part, on solar module designs that minimized the use of polysilicon. That was smart at the time, because polysilicon supplies were very tight, and shortages threatened to choke the life out of (traditional) solar manufacturing. That was back in 2007-8. But by the end of 2008, chemical makers made plans to ramp up their manufacturing of polysilicon. The stuff was fetching record prices, after all, and it’s made from sand.

Beginning in 2009, polysilicon manufacturers like Hemlock Semiconductor (owned in part by Dow Corning) and Wacker Chemie began doubling, tripling, quadrupling etc their polysilicon capacity. Billion dollar plus-sized polysilicon plants in the US also won government support. By late 2009 there was an overabundance of polysilicon and an oversupplyof modules in inventory, crushing prices.

Firms like Solyndra and Evergreen had raised money and started scaling up manufacturing right as solar modules became a commodity. Chinese manufacturers at that point had their eye on making solar modules for close to $2 per watt. It was not a good time to have a technologically distinct – and more expensive – solar product.

In 2010-2011, European countries – especially Spain – cut back on solar subsidies. Germany has trimmed them as well. All solar makers were busy cutting costs amid strong competition, especially from China, and selling into a market with constrained demand.

Looking at the subject from a distance, it seems that polysilicon makers and their ambitious and steep increases in capacity are what doomed the non-polysilicon players. Materials suppliers, not just of polysilicon, but of also of polymer backing sheets, UV protecting films, and metal pastes, are doing very well selling into the photovoltaic market.

But government bets on cell manufacturing technology have not paid off. It is not clear yet how much of the loan gurantee Solyndra leveraged into actual financing. Still, Congress will likely have a great deal to say about lessons learned from Solyndra.

Author: Melody Bomgardner

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3 Comments

  1. Intel’s SpectraWatt filed for bankrkuptcy within the past week as well.

  2. I am dismayed by today’s announcement regarding the military’s use of Solar City to install solar panels on military housing.

    I see nothing specified that would ensure that US made solar panels are used. We can manufacture these competitively in this country if we are willing to nurture companies like Solyndra and Evergreen until they are able to achieve economies of scale.

    Solar City is not a manufacturer. Their website only says that they will use the “best available” panels. Our national security depends on our ability as a country to maintain technical leadership and a strong industrial base. Our economy depends on our ability to create and retain well paying jobs. China understands this, and has national policies in place to encourage solar panel manufacture. It makes sense for the military in particular to work to insure that our country is not technologically dependent on China.

    Chemists, especially, should realize that it is a series of short term oriented decisions like this one that have led to the continuing difficulties with employment. We need to fight for national policies that focus on building our technological and industrial strength.

  3. in the UK, the solar feed in tariff has helped many people for their own solar panel system.
    But as the top rate of tariff is being reduced, people will see they cannot make as much money, so interest levels may fall.
    This will have a massive knock-on effect to the rest of the industry as they have been heavily reliant on the tariff for the last two years.
    Basically, government schemes are needed to keep the interest levels up and drive prices down ultimately.