Solyndra Files For Bankruptcy Despite $535M DOE Guarantee

Solyndra, a California-based thin-film solar company that received a $535 million loan guarantee from the US Department of Energy, has halted operations and plans to file for bankruptcy.

Solyndra is the third US solar manufacturer to close its doors in less than a month, and like Evergreen Solar and SpectraWatt before it, Solyndra says it can’t compete with larger rivals in Asia as the price of solar panels continues to drop.

President Obama visited Solyndra’s DOE-supported facility in May 2010 to promote the agency’s investments in renewable energy. The company’s failure will undoubtedly fuel the fires of the administration’s critics. 

For several months Republicans have been calling for an investigation into how Solyndra was chosen to receive a loan guarantee.

The company makes unique, cylindrically shaped CIGS solar modules designed for large commercial rooftop installations. But the panels are more expensive to produce than flat, conventional panels, and it’s not clear that the cylindrical design increases power output enough to offset the increased costs. 

In addition, some installers have complained that the cylindrical tubes are more fragile than conventional panels. 

Dan Leistikow, Director of the DOE’s Office of Public Affairs, defended the loan guarantee decision in a blog posting yesterday, noting that Solyndra increased sales revenue by 2000% in three years and sold more than 1000 installations in 20 countries.

In addition, he says the Bush administration pursued the loan guarantee before the Obama administration, and private investors believed in the company’s future enough to chip in $1 billion dollars of their own. 

Lestikow says the DOE doesn’t expect all the companies it invests in to succeed, but that investment remains crucial in helping the US to regain a competitive advantage on the global market.

A Solyndra spokesperson told Bloomberg the company will likely file for bankruptcy in Delaware next Wednesday. The company did not say how much it owes creditors.

In March, the company announced the closing of a $75 million secured credit facility underwritten by existing investors. Solyndra was forced to raise additional funds after withdrawing plans for an IPO in 2010.

Solyndra dismissed about 1,100 full-time and temporary employees this week. 

Private investors in the company include Argonaut Private Equity, CMEA Ventures, Rockport Capital Partners LLC, US Venture Partners, and Virgin Green Fund.

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