Solyndra failure puts solar industry on defensive

LOS ANGELES Fri Sep 23, 2011 8:51am EDT

The headquarters of bankrupt Solyndra LLC is shown in Fremont, California September 20, 2011. REUTERS/Robert Galbraith

The headquarters of bankrupt Solyndra LLC is shown in Fremont, California September 20, 2011.

Credit: Reuters/Robert Galbraith

LOS ANGELES (Reuters) - The U.S. solar industry, eager to shake off the shadow cast by Solyndra's high-profile collapse, has launched a full-scale public relations campaign as scrutiny of government support programs for renewable energy intensifies.

Solar industry officials are aiming to portray Solyndra's failure as an isolated incident in an industry that is otherwise thriving, thanks in part to support from Washington.

"A big part of what we're trying to do is correcting the record," said Rhone Resch, president of solar trade group the Solar Energy Industries Association, said in an interview. "You can't judge an industry by the bankruptcy of one company."

Resch and others point to fresh figures showing that the U.S. solar industry now employs more than 100,000 people at more than 5,000 companies.

In addition, installations of photovoltaic solar panels grew 17 percent in the second quarter from the first quarter, according to SEIA data, largely because the price of solar power is down 30 percent from a year ago, making it increasingly competitive with natural gas, coal and other fossil fuels.

"The cost of solar has dropped ferociously," Dan Shugar, chief executive of Fremont, California-based solar start-up Solaria Corp, said on a conference call with reporters in which he outlined the benefits of solar power versus nuclear, natural gas and coal.

Also on that call, the CEO of solar project developer Recurrent Energy, Arno Harris, blamed that price drop for Solyndra's failure, saying the company's technology couldn't keep up with a rapidly changing market.

"This is the way things work in innovative technology markets," Harris said. Recurrent is owned by Japan's Sharp Corp.

FALLOUT FROM CONGRESSIONAL PROBE

Republican lawmakers in Washington are investigating not just Solyndra's $535 million loan guarantee from the U.S. Department of Energy, but all the remaining projects awaiting funding under that same program, which expires on September 30.

Fallout from that probe may already be hitting the industry. One of the projects that received a conditional loan guarantee, a California solar power plant being built by industry heavyweight First Solar Inc, said on Thursday it will not meet that deadline.

In a client note, UBS analyst Stephen Chin said Solyndra's bankruptcy earlier this month was one reason First Solar's Topaz project was unable to secure the loan guarantee. The company had no comment on Chin's statement.

A holdup in approval of outstanding loan guarantees would threaten several major U.S. solar projects, though the industry as a whole leans more heavily on a cash grant program that the industry's trade group is hoping Congress will extend beyond the end of this year.

Under that program, which is administered by the Treasury Department, solar and other renewable energy project owners can receive cash grants for up to 30 percent of the cost of a project in lieu of a tax credit. The program, which was created under the federal stimulus, has supported 45,000 jobs in more than 3,000 grants, according to SEIA's Resch.

"That is the single most important factor for why the solar industry has doubled in the last year and has doubled our employment over the past two years," Resch said, adding that getting Congress to extend the program into 2012 in the next three months is more challenging in the wake Solyndra's bankruptcy.

"It certainly prevents us from having a constructive dialogue about how to grow the economy and how to create jobs in the energy sector," Resch said. "We are caught in partisan gridlock that is going to make it very difficult to pass any legislation, let alone solar specific legislation," he said.

(Editing by Steve Orlofsky)