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Solar Firm’s Troubles Cast Shadow on Energy Stimulus
A big question mark hangs over global alternative energy markets and U.S. federal stimulus funding in the clean tech space in the wake of Wednesday’s announcement by California-based Solyndra LLC that it was shutting its solar manufacturing operations at a Fremont, CA, plant and seeking Chapter 11 bankruptcy protection.
Despite being the third such U.S. solar firm to take the bankruptcy route in the few weeks, the Solar Energy Industries Association (SEIA) trade group cautioned that there were still plenty of healthy solar companies operating. Last Monday it said U.S. firms were a net exporter of $1.9 billion last year, including a positive trade balance with China.
Nevertheless, one of the main reasons Solyndra cited for having to close immediately was “aggressive solar manufacturing pricing policies” by the Chinese solar equipment makers, according to a report in the Wall Street Journal, which quoted a U.S. Department of Energy (DOE) spokesperson.
Solyndra had been highlighted last year by the Obama administration for the success of its federal stimulus funding in the clean technology sector. President Obama visited the Fremont plant (see Power Market Today, May 27, 2010) and DOE had earlier awarded a $535 million loan guarantee to the company.
Almost all of the DOE loan has been tapped ($527 million) and will have to be accounted for in upcoming bankruptcy proceedings.
In announcing the plant closure and immediate layoff of 1,100 workers, Solyndra said it will use its eventual Chapter 11 filing in a federal district bankruptcy court to “evaluate options,” including the sale of its expertise in cylindrical solar system technology.
“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,” a company spokesperson said. Exacerbating this challenge, he said, is the current global oversupply of solar panels and a “severe compression of prices” that has caused uncertainty in governmental incentive programs in Europe and a decline in the credit markets financing solar products.
“Regulatory and policy uncertainties in recent months created significant near-term excess supply and price erosion,” said Solyndra CEO Brian Harrison. “Raising incremental capital in this environment was not possible.” Harrison called this “an unexpected outcome.”
“The success of the solar industry cannot be viewed through the lens of one company,” SEIA CEO Rhone Resch. “Like all industries, some companies will fare differently than others. While the closure of Solyndra’s operations is disappointing, the solar industry as a whole is a bright spot in the U.S. economy.”
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