Solar Panel Company Declares Bankruptcy
MELISSA BLOCK, host: In May of last year, President Obama went to Silicon Valley to visit Solyndra, a solar panel maker. It was part of the president's push for green jobs.
President BARACK OBAMA: The future is here. We're poised to transform the ways we power our homes and our cars and our businesses.
BLOCK: Solyndra got $535 million in federal loans. It got another billion dollars in private investment, much of that from a key Democratic fundraiser. But yesterday, suddenly, the clean energy company shut down. More than a thousand workers were dismissed without severance.
George Avalos is a business reporter with the Bay Area Newsgroup and he's been covering the Solyndra story. George, welcome to the program.
GEORGE AVALOS: Thanks for having me on. I appreciate it.
BLOCK: Now, Solyndra says it will be seeking Chapter 11 bankruptcy protection. Walk us through what happened here. Why did this company go under?
AVALOS: The bottom-line appears to be that the company, although it had innovative technology and has innovative technology - these cylindrical solar tubes that can convert sunlight into electricity - they were never able to get their manufacturing costs low enough to be competitive with solar panel manufacturers in China, as well as solar manufacturer companies here in the United States.
When Solyndra initially began to ramp up manufacturing, costs were approximately five times as great as competitors. Even within recent months, analysts estimated that at best, Solyndra was still twice to three times more expensive for their modules than competitors in China and the United States.
BLOCK: The $535 million in loan guarantees came from the Energy Department. That had drawn scrutiny before, both from Republicans in Congress, and also from auditors with the Government Accountability Office. They said this deal wasn't properly vetted.
AVALOS: Right. There are a lot of concerns and a lot of controversy related to this. And there have been investigations. There have been complaints that there wasn't enough cooperation with the two House panels that have been the primary investigators of all this. In a lot of ways, this was really the first of these sorts of loan guarantees for these cutting-edge solar companies by the DOE. It was their first major swing at providing this financing under the Obama administration.
And now it's caused sort of a negative sort of outlook for the industry, but as well as for just how financially sound was it to provide so much money to a company that had never made money. There was never a point where it looked like they were going to make money, at least in the near future.
BLOCK: A spokesman for the Energy Department said, after this news came out: We can't stop investing in game changing technologies. You do wonder if Solyndra's failure illustrates a broader problem for the solar industry. Or is it really unique to this one company?
AVALOS: Well, that's one of the big questions that a lot of people are pondering today. Because, you know, on the one hand you can argue that, okay, they never really figured out a good way to produce these products. Other companies are being more successful. In Oakland, you have a company called Sungevity that's hiring hundreds of people.
So there's some success stories but there are also other companies that have recently gone bankrupt. So, there is some real questions as to just how wise these investments are.
BLOCK: George Avalos, a business reporter with the Bay Area Newsgroup. George, thanks very much.
AVALOS: Thank you for having me on. I appreciate it
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