Solyndra – A Solar Industry Side Show

Solyndra, the high profile bankruptcy in the solar energy industry, continues to generate media attention as a result of the $520M US government loan guarantee. While the attention is driven by political competition to portray the Obama administration as inept and the green jobs program a failure,  and Solyndra claiming it could not compete with highly subsidized Chinese manufacturers, the media misses the main reason for the failure.

Solyndra was an outlier. It was a completely non-mainstream, highly risky technology commercialization play which had no technology history to support a reasonably quick, low-cost commercialization ramp.

An Automotive Outlier

The Solyndra technology and design was highly suspect from the moment it came out of stealth mode. Basic issues included round CIGS thin-film solar cells, which when deployed, had half the solar cell facing away from the incoming solar radiation. CIGS is still a developing story with many challenges on traditional flat plate modules, let alone a round tube. Optical experts found that the reflective claims (that sunlight hitting the white roof membrane underneath would reflect back at high intensity to the underside of the tubes) were highly suspect because of the loss of photon intensity during reflection. The high maintenance cycle for keeping the white membrane clean was another issue.

Of course manufacturing this type of completely new technology was expensive and Solyndra was selling at loss even before the recent crater in crystalline module prices. With scale of manufacturing always being the holy grail for reducing cost, it was hard to see how this would be accomplished without more investment capital in a company that already had $1B in investment capital. Raising additional capital with that cap table size would be more than difficult.

A PV Technology Outlier

The main issue for Solyndra and other new solar technologies that are not highly disruptive (through high exponential cost and performance advantages), is that it is extremely difficult to compete with the crystalline PV industry’s  40-year history and over $50B in cumulative R&D investment.  A complete explanation of this history and advantage can be found here.

The Solyndra event would seem to be another good example of herd mentality investing. Most people in the PV industry never took the concept seriously and mar veled at money as it poured in to Solyndra compared to far more worthwhile PV technology commercialization companies.

The one positive lesson that Solyndra taught was that different form factors and smart installation design can have a significant impact in desirability. Many downstream installers

Form Factor Lessons To Learn

and EPC companies were somewhat dubious of the technology performance.  With Solyndra’s pricing lowered to make projects viable (especially on roofs with weight limitations), they had the opportunity to work with the product and understand these advantages, and had significant enthusiasm for these features.  It’s a good, real-life product engineering test for the PV industry to take notice. Flat plate solar modules are not the only form factor in the future.

The PV industry has an incredible history in the last 7 years with average year over year growth of 60% through 2010. The industry is near $100B in revenues globally and employs millions of people throughout the supply chain both directly and in residual economic activity. The kWh cost of electricity from a PV system is now at or nearing grid parity in vast swaths of the developed world’s economies with minimal or no government support. (And doing so while competing highly subsidized fossil fuel, nuclear and hydro power) Solyndra is a mere blip in evolution of the PV industry and a complete sideshow in an industry that has been the fastest growing throughout the global recession. Unfortunately for the PV industry, the Solyndra story will continue to be a major political story as the 2012 election cycle ramps up and obfuscate this great history.

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