President Obama's token green energy start-up Solyndra announced plans to file for Chapter 11 bankruptcy and lay off 1,100 workers on Wednesday. The Department of Energy gave the company a $535 million loan guarantee in 2009 as a part of a broader plan to invest in America's future as a pioneer in green energy. But with China manufacturing cheaper solar panels and the supply of solar panels outpacing the demand, the investment seems to be failing. Solyndra is the third solar manufacturer to declare bankruptcy in the past month, and politicians are starting to get very worried about the future of green energy in the United States.
Until recently, Solyndra was one of the the hottest green start-ups in Silicon Valley. Venture capitalists invested over $1 billion in the company, and with the help of the Obama administration's loan guarantee, Solyndra invested a huge, cutting edge factory in Fremont, California that President Obama visited in May 2010. According to Todd Woody in The New York Times, however, they didn't build it fast enough:
"The true engine of economic growth will always be companies like Solyndra," President Obama said in May during an appearance at the then-unfinished factory. But during the year that Solyndra’s plant was under construction, competition from the Chinese helped drive the price of solar modules down 40 percent. Solyndra rushed to start cranking out panels on Sept. 13, two months ahead of schedule, and it has increased marketing efforts to make the case to customers that Solyndra’s more expensive panels are cost-effective when installation charges are factored in.
That quote from Obama looks silly in light of Solyndra's failure. Republicans and government auditors have questioned the president's decision to invest in Solyndra from the beginning, wondering whether the young company could weather the new and unpredictable green energy space. In a matter of speaking, the U.S. government was just playing by the rules. The solar panel industry has historically been heavily subsidized in the top two markets, China and Italy. However, when the Italian government cut their funding last year, the world ended up with an oversupply of the panels, a situation that Solyndra's president and CEO Brian Harrison referred to as "regulatory and policy uncertainties" in a statement announcing his company's bankruptcy filing.