Bankruptcy of solar firm: ominous sign for industry
Bankruptcy of Solyndra, once touted by President Obama, is third failure of a US solar firm this month. Bankruptcy will serve as fuel for critics of government stimulus.
A California solar-panel manufacturer once touted by President Barack Obama as a beneficiary of his administration's economic policies — as well as a half-billion-dollar federal loan — is laying off 1,100 workers and filing for bankruptcy.
Solyndra LLC of Fremont, Calif., had become the poster child for government investment in green technology. The president visited the company in May 2010 and noted that Solyndra expected to hire 1,000 workers to manufacture solar panels. Other state and federal officials such as former Gov. Arnold Schwarzenegger and Energy Secretary Steven Chu also visited the company's facilities.
But hard times have hit the nation's solar industry. Solyndra is the third solar company to seek bankruptcy protection this month. Officials said Wednesday that the global economy as well as unfavorable conditions in the solar industry combined to force the company to suspend its manufacturing operations.
The price for solar panels has tanked in part because of heavy competition from Chinese companies, dropping by about 42 percent this year.
Republicans have been looking into the Solyndra loan for months. The House Energy and Commerce Committee subpoenaed documents relating to the loan from the White House Office of Management and Budget. GOP Reps. Fred Upton of Michigan and Cliff Stearns of Florida issued a joint statement on Wednesday saying it was clear that Solyndra was a dubious investment.
"We smelled a rat from the onset," the two lawmakers said.
Shortly after the company's announcement, it became clear that the bankruptcy would serve as further ammunition to criticize an economic stimulus bill that provided seed money for solar startups — even though officials said interest in providing Solyndra with guaranteed government loans was first sought under the Bush administration.
Upton and Stearns said they would continue to seek documents that would provide more details about the Solyndra loan.
"Unfortunately, Solyndra is just the latest casualty of the Obama administration's failed stimulus, emblematic of an economic policy that has not worked and will not work. We hope this informs the president ahead of his address to Congress next week," the GOP lawmakers said.
When Obama, who is seeking to address Congress to unveil a new jobs plan, toured the company's facilities, he said the investment was important because more clean energy would benefit the environment, the economy and national security.
"The future is here," Obama said during his visit. "We're poised to transform the ways we power our homes and our cars and our businesses. ... And we are poised to generate countless new jobs, good-paying, middle-class jobs, right here in the United States of America."
In a blog posting, Energy Department spokesman Dan Leistikow said Solyndra was a once promising company that had increased sales revenue by 2,000 percent in the past three years. The $535 million loan guarantee was sought by both the Bush and Obama administrations, he said, and private investors also put more than $1 billion into Solyndra.
"We have always recognized that not every one of the innovative companies supported by our loans and loan guarantees would succeed, but we can't stop investing in game-changing technologies that are key to America's leadership in the global economy," Leistikow said.
Solyndra was heralded as one of the nation's bright spots of green technology innovation, creating a solar tube of sorts that could soak up sunlight from many different angles, producing energy more efficiently and using less space. The company's panels were also light and easy to install, which was meant to save up front costs.
But over the past few years, other companies caught up and provided similar products at a lower cost.
Brian Harrison, Solynda's president and CEO, said that raising capital became impossible.
"This was an unexpected outcome and is most unfortunate," Harrison said in a statement.
Another solar company, Spectrawatt Inc. of Hopewell Junction, N.Y., filed for Chapter 11 bankruptcy on Aug. 19. Its CEO said in the filing that it could not compete with solar manufacturers in China, which receive "considerable government and financial support."
Solar industry advocates said the failure of these three companies is not indicative of the health of the U.S. solar industry as a whole and that overall the Energy Department's loan guarantee program has been a success.
"In the last 18 months, solar companies have either added or expanded almost 60 factories in the U.S. and driven the installed cost of solar down by 30 percent," said Rhone Resch, president and CEO of the Solar Energy Industries Association.
"To date, solar projects that have received loan guarantees will help to deploy enough clean solar energy to power nearly 1 million homes and create tens of thousands of jobs across 28 states," he said.
Jesse Pichel, a clean energy analyst with New York-based investment firm Jefferies & Co. said Solyndra's products used unique technology that was more expensive to install, "and the improvement was marginal at best."