Fremont, Ca.-based solar manufacturer Solyndra, a company praised for its innovativeness by President Obama and backed by a $535 million federal loan guarantee, declared bankruptcy yesterday, saying fierce competition by foreign solar manufacturers was a main factor in its downfall.
But the CEO of a competing solar company that is doing well says that simply wasn’t the case.
Barry Cinnamon, CEO of decade-old Westinghouse Solar in Campbell, Ca., posted an op-ed on the company’s corporate website lamenting the exit of rival Solyndra from the marketplace but also not pulling any punches when it came to describing who and what was to blame: Two big bets Solyndra made that didn’t pan out.
The first, he says, was that the main ingredient in solar panels, polysilicon, would remain expensive. Instead the global price has fallen 20 percent in the first half of 2011 alone.
As Cinnamon explains: “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.”
The second fatal error Solyndra made, according to Cinnamon, was that Solyndra could make up for the cost of producing more expensive solar panels by achieving savings in installation. Solyndra touted its flat panels as being easier to install and rotate. As the company’s website description reads:
The ease of installation and simpler mounting hardware of the Solyndra system enables customers to significantly reduce labor, hardware, design and other BOS costs, which account for a substantial portion of the total installed cost of a conventional PV system. Fast installations mean less business disruption for the end customer as the rooftop work is completed quickly. For installers, being able to complete more jobs quickly means more revenue during the best installation seasons.
But Cinnamon notes: “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.”
Cinnamon bluntly states: “It’s a mistake to blame Solyndra’s problems on our lack of manufacturing commitment or relatively higher labor costs compared to China.”
That’s contrary to what Solyndra said yesterday in a press statement outlining why the company was filing for Chapter 11.
“Solyndra could not achieve full-scale operations rapidly enough to compete in the near term with the resources of larger foreign manufacturers,” the release said.
Though not mentioned by name in Solyndra’s post, China is obviously the main market to watch out for when it comes to American solar manufacturing.
For its part, the Department of Energy, which granted Solyndra a $535 million-loan guarantee in 2009 (the company also raised $1 billion in venture capital financing), openly blamed the more heavily-subsidized Chinese solar manufacturers for the Solyndra bankruptcy, writing in a blog post: “Solar panel manufacturing is a growing international market, with increasingly intense competition from Chinese manufacturers who are supported in many cases by interest-free government financing that is much more generous than what the U.S. provides.”
The blog post went on to note the 42 percent global price decline in solar panels this year and said that ” The changing economics have affected a number of solar manufacturers in recent months, including unfortunately, Solyndra, a once very promising company that has increased its sales revenue by 2000 percent in three years and sold more than 1000 installations in 20 countries. As a result, Solyndra now plans to suspend its manufacturing operations and file for bankruptcy protection.”
Meanwhile, the Solar Energy Industries Association, a trade group, yesterday released a response to the Solyndra bankruptcy by also drawing comparisons between the U.S. solar industry and China. But the SEIA thinks that the future is bright for American solar and have produced a report to back it up.
“In fact, in 2010 the U.S. was a net exporter of $1.9 billion worth of solar energy products. We are even a net exporter to China,” SEIA President and CEO Rhone Resch said in a statement.
Today, when asked about the failure of Solyndra at a press conference, White House Press Secretary Jay Carney responded saying that “You cannot measure the success of a program by the success or failure of one company.”
While that may be true, Solyndra’s collapse, along with the bankruptcy of two other American solar companies in the span of less then a month, and continued (but narrowing) net losses at Westinghouse Solar, all suggest that the American solar industry is going through a significant crunch period and should focus on short-term cost savings rather than long-term innovations.
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