Sept. 1 (Bloomberg) -- President Barack Obama is standing by his support for renewable energy after Solyndra Inc., a maker of solar panels that received a $535 million U.S. loan guarantee, shut its doors, a White House spokesman said.
Solyndra suspended operations and plans to file for bankruptcy reorganization because it couldn’t compete with larger rivals, the closely held company said in a statement yesterday.
Obama had touted Solyndra as part of the U.S. effort to aid development of alternative energy sources, and its failure was cited by Republican lawmakers who say the subsidies are misguided. It’s the third U.S. solar company to go under in a month, as plunging panel prices and weak global demand drive a wave of industry consolidation.
“While we are disappointed by this particular outcome, we continue to believe the clean-energy jobs race is one that America can, must and will win,” White House spokesman Eric Schultz said today in an e-mailed statement. Obama visited the Fremont, California-based company in May 2010, and said the U.S. was in competition with China and Germany for supremacy in renewable energy.
The Energy Department’s portfolio of dozens of other government-backed investments “continues to perform well and is on pace to create thousands of jobs.”
Solyndra is likely to file for Chapter 11 protection in Delaware on Sept. 7, as it evaluates options including selling itself or licensing its technology, David Miller, a spokesman for the Fremont, California-based company, said in an e-mail. About 1,100 full-time and temporary employees have been dismissed. The company didn’t say how much it owes creditors.
“Solyndra could not achieve full-scale operations rapidly enough to compete in the near term with the resources of larger foreign manufacturers,” the company said in the statement. Its problems were exacerbated by a global glut of solar panels and slowing demand “that in part resulted from uncertainty in governmental incentive programs in Europe.”
The company may have trouble finding a buyer, said Adam Krop, an analyst at Ardour Capital Partners in New York.
“I don’t see anyone swooping in,” he said in an interview. “I don’t see this technology as very viable in the long-term. I see someone maybe buying the facility.”
Solyndra produces cylindrical panels that convert sunlight into electricity using copper-indium-gallium-diselenide thin-film technology. Standard solar panels are flat.
“Manufacturing and assembly costs associated with a Solyndra module aren’t particularly scalable,” Krop said.
The company has borrowed $527 million of the $535 million covered by the Energy Department loan guarantee, Damien LaVera, a department spokesman, said in an e-mail.
Solyndra plans to include the Energy Department loan guarantee in its bankruptcy filing.
Solyndra’s failure calls into question Obama’s renewable energy policies, according to two Republican House members.
“It is clear that Solyndra was a dubious investment,” Representatives Fred Upton of Michigan and Cliff Stearns, of Florida, said in a joint statement yesterday. The company “is just the latest casualty of the Obama administration’s failed stimulus.”
Investments in start-up companies inevitably involve some risk, Dan Leistikow, director of the Energy Department’s Office of Public Affairs, said in an article on the agency’s website. “The changing economics have affected a number of solar manufacturers in recent months, including unfortunately, Solyndra,” he said. “We have always recognized that not every one of the innovative companies supported by our loans and loan guarantees would succeed.”
Ceding to China
Representative Henry Waxman, a California Democrat, said the U.S. must continue to support renewable energy. Recent bankruptcies of U.S. solar companies are a warning and “we should be doing everything possible to ensure the United States does not cede the renewable energy market to China and other countries,” he said in an e-mailed statement.
SpectraWatt Inc., a solar company backed by units of Intel Corp. and Goldman Sachs Group Inc., filed for bankruptcy protection Aug. 19, and Evergreen Solar Inc. did so Aug. 15.
SpectraWatt of Hopewell Junction, New York, received a $150,000 grant in June 2010 from the National Science Foundation, and a grant of $500,000 in June 2009 from the Energy Department’s National Renewable Energy Laboratory.
Solyndra canceled in June 2010 plans to raise as much as $300 million in an initial public offering.
Solyndra’s backers include Argonaut Private Equity, GKFF Investment, CMEA Ventures, Redpoint Ventures, Rockport Capital Partners LLC, US Venture Partners, Virgin Green Fund, and Artis Capital Management LP, according to the company’s December 2009 IPO filing.
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