US Taxpayers could Buy world’s largest Solar Panel Company for $184 million instead of Loaning $197 million to a Startup

USA’s loan grant schemes to green companies have proven to be a massive disaster as proved by the failure of a numerous companies that have been recipients of these loans. While Solyndra has been the media poster boy, there have been others like Abound Solar, A123 Systems and Beacon Power. Now there is a proposal to give $197 million to Thin Film Startup SoloPower for building a $350 million solar factory. Note thin film solar panels have been decimated by the advances in technology made by crystalline silicon panel technology. Most of the thin panel companies have already gone bankrupt and even the biggest company First Solar is finding it unprofitable to sell its thin film solar panels at current prices. General Electric which is one of the world’s biggest industrial conglomerates has also put on hold its thin film solar manufacturing plans.

Solyndra Fiasco

In my previous missive I had opined that the US Solar Energy Policies were misguided as President Obama visited a Solyndra Factory and the US Department of Energy gave a huge $535 million loan guarantee to Solyndra without any substantial due diligence or competition. Note that established solar companies like Evergreen Solar are literally crying for government support without getting any. Now Evergreen Solar has planned to shutter US factories to open a solar plant in Wuhan, China with Chinese government support. Same thing is happening with other solar companies like Energy Conversion Devices, Sunpower and others. US Loan Guarantees to Abound Solar and Abengoa also seem to be a waste while massive US Treasury Grants and Aid are creating Solar Thermal White Elephants in California. Note the billions of  dollars in discretionary aid would be spent much better on R&D and subsidies to existing US solar companies which are losing out to Asian competition.

US Taxpayers could buy world’s largest solar panel company for $184 million instead of loaning $197 million to a startup

In the face of these developments, it boggles the mind how Solopower will succeed despite its claims of differentiation. Note Ascent Solar which makes the same kind of flexible CIGs solar panels was sold for a pittance to TFG Radiant as it could not compete in the current environment. Solar panel companies have been brutalized in the last couple of years and the world’s biggest solar panel supplier Suntech has a market capitalization of just $184 million. This is smaller than the $197 million that the US Government intends to give as a loan to Solopower. Like the Solyndra predication that proved to be true, I think that Solopower loan will also end up as a waste of taxpayer’s money.

Solar Thin Film Companies Dying like Flies

While the solar bankruptcies that are going on for the last year or so are nothing new, the pace has accelerated in recent times. With even the biggest thin film manufacturers, First Solar finding its products noncompetitive in the face of cheap Chinese c-Si solar modules, the smaller start ups are facing extinction. Even the older established companies are now declaring bankruptcy as they see no prospects even in the future. Odersun and Konarka are the two thin film companies who have gone down in recent times. In an earlier post, prediction of a second wave of thin film bankruptcies had been given with Suntech exiting the thin film game. That prediction is coming true with thin film companies giving up with no prospects of their ever being able to match the Chinese crystalline solar panel costs which are going down by a dramatic 15-20% each year. Coupled with low efficiency and low scale, these smaller companies despite their innovative technologies have no hope. Even consumers of Oerlikon’s a-Si technology have started closing their factories even as Oerlikon has sold its thin film division to Japanese semiconductor equipment heavyweight Tokyo Electron. Note Applied Materials has closed it’s a-Si division during the first wave of thin film bankruptcies in 2009 and 2010.

GigaOm

Getting that first line up and running will be important for giving SoloPower access to a $197 million federal loan guarantee to help build the remaining 300 MW at the same site. The goal is to complete the entire 400 MW factory in 2014. The total cost of building the entire 400MW factory will be about $350 million. SoloPower appears to have signed more stringent terms for securing the loan guarantee than Solyndra. Harris said his company likely underwent a lot more scrutiny because it cinched the loan guarantee much later than Solyndra did.

Solyndra obtained the loan guarantee agreement in September 2009 while SoloPower finalized its deal in August 2011. If SoloPower is able to complete the factory project and hit its sales and profit goals, then it will  become a role model and will have achieved something that Solyndra couldn’t pull off.