California solar panel manufacturer ceases operations
The California solar panel manufacturer that received a high profile $535 million Energy Department loan guarantee announced today that it was ceasing operations, laying off 1,100 workers and will file for bankruptcy in the coming days.
Fremont-based Solyndra said that it had been rocked by stifling global economic conditions and a slow recovery from the great recession. It had also faced heavy competition from Chinese firms that were undercutting it on costs.
The company's website had not been updated to reflect the development. A terse voice mail announcement on one of Solyndra's contact information telephones said only the following: "Solyndra announced today in a press release that it has ceased operations and intends to file for chapter 11 bankruptcy protection," advising customers on how to contact the company for further information.
It was quite a fall from late May 2010, when the company hosted the president on a factory tour. Company officials announced then that they expected to be adding new employees. But in July of this year, the company was being grilled on Capitol Hill by House Republicans who said that there were indications that the company was in a weak financial condition and wasn't a good choice for the loan program.
Solyndra would become the third such company to file for bankruptcy in recent days. Spectrawatt Inc. of Hopewell Junction, N.Y., filed for Chapter 11 bankruptcy on Aug. 19. Evergreen Solar Inc. of Marlboro, Mass., filed for Chapter 11 bankruptcy on Aug. 15.
Experts said that solar energy was still among the most promising of all of the alternative energy sources, but they added that due diligence was necessary to pick the best companies. Other experts said that a brutal and wholesale consolidation of the industry was inevitable.
Bill Bathe, chief executive of U.S. Energy Services, a Minneapolis company that offers a portfolio of energy management services, said "there are a lot of companies competing for that space. There used to be 50 car companies in this country, but very few survived. For consumers, this is an exciting time, but for investors, this is still a very high-risk stage. You may hit a home run or be part of the experiment that delivers no pay out."
Another expert said that he was not familiar with the company, but added that it was an example of how the federal government will have to be far more careful in the future.
"There has to be a more efficient and effective way of making these kinds of decisions on loan subsidies," said Bruce Bullock, executive director of the Maguire Energy Institute at Southern Methodist University.
Tyson Slocum, director of the energy program at Public Citizen, said that there were lessons to be learned in the way that other nations, particularly Germany and Japan, have funded their renewable energy projects.
"You can't end loan subsidies for renewable energy. That would be a disaster. What we need to do is make better decisions about the subsidies we do deploy. In countries like Germany and Japan, which have a much larger footprint in this area, subsidies have been remarkably successful," Slocum said. "We can do the same here, if we are more careful."
Photo: Ben Bierman, left, and Chris Gronet take President Obama on a tour of the Solyndra solar panel company in Fremont, Calif. Credit: Paul Chinn/Pool photo
-- Ronald D. White