Last week’s much-publicized
bankruptcy of solar panel maker Solyndra led some folks to see that as evidence that the alternative-energy industry is in trouble, and that, since Solyndra was given
a $535 million loan guarantee by the Obama Administration back in 2009, solar is nothing but a pricey boondoggle. That Solyndra is the
third solar company filing for Chapter 11 in recent months doesn’t help matters either.
Solyndra itself blamed its problems, at least in part, on fierce competition from foreign manufacturers—and if that is the problem, then it belies the fact that solar is a moribund industry. In fact, a rival of Solyndra’s points to other factors.
Writes Barry Cinnamon, CEO of Westinghouse Solar on his company’s Web site:
Chinese solar panels are 10-20 percent less expensive than U.S.-made panels; but by some estimates, Solyndra's panels were 100 percent more. It's a mistake to blame Solyndra's problems on our lack of manufacturing commitment or relatively higher labor costs compared to China. Solar panels are commodities being sold on the worldwide market on a $/watt basis much as aluminum is sold on a $/kg basis. It is crystal clear that cheap and easy-to-install solar panels are exactly what the U.S. needs to reduce our energy costs and create installation jobs.
He goes on to identify a few “bad bets” on the part of Solyndra:
The first bad bet was that refined silicon, the feedstock for the solar panel industry, would stay expensive. Solyndra invented a solar panel that didn't use expensive silicon. Unfortunately for Solyndra, and fortunately for all the silicon solar panel manufacturers and customers, silicon has gotten very cheap over the past few years. So, the problem that Solyndra solved: expensive silicon disappeared.
The second bad bet was that Solyndra's flat roof installation technology would make up for their relatively expensive panels. Solyndra did indeed see big savings on flat roof installations, but the rest of the industry did not stand still. Other commercial flat roof products are on the market (full disclosure, Westinghouse Solar has an inexpensive and easy to install flat roof solar panel product) with similar benefits at much lower costs to Solyndra.
As for the “foreign competition” issue, according to a
report commissioned by the Solar Energy Industries Association (SEIA), in 2010, the U.S. solar industry was a net global exporter of solar equipment—to the tune of $1.9 billion. And the U.S. is even a net exporter to China, which is usually what people mean when they say “foreign competition.”
The failure of a company is often due to a complex mix of factors, a mélange of bad decisions and bad luck and of course prevailing macroeconomic conditions (which have been decidedly unrosy), that isn’t
necessarily reflective of the overall market for what that company produces. Sure, the solar industry is in a bit of a crunch period right now, but then who isn’t? Prices will continue to drop, and hopefully many of the folks who have been “waiting and seeing” will finally get on board. Of course, the economy will need to recover a bit first...
