Financial Press Articles on Solyndra Bankruptcy Reflect Economic and Engineering Incompetence

[vets74]

The simple basic fact of the Solyndra bankruptcy is that the worldwide market price for commercial solar panels fell by more than 50% from 2007 to 2011.

Solyndra's plant was designed and financed to meet market conditions for 2007/2008. Like the Evergreen Solar plant that was closed in January, 2011, subsidized competition from China drove them out of business.

Here is what you get from the basically misinformed, engineering-uneducated financial sector:

Solyndra didn't fail because solar energy is just a "cute" diversion from real solutions, but because it made the wrong business decisions and pursued the wrong ideas. Instead of the typical flat panels you're used to seeing on your hippie neighbor's roof, Solyndra made cylindrical solar tubes. This strategy fell apart for a few reasons, all of which boil down to the unprofitability of its manufacturing process. The company booked a loss on their cost of goods sold, so they were already in the red before accounting for other expenses. In 2009, Solyndra's estimated cost to manufacture one watt of solar capture was $6.29. First Solar's is well under a dollar now.

Researchers recognized the same early struggles in the auto industry nearly five decades ago. They found that automobile production increased nearly 50,000% from 1899 to 1919, but that the number of automakers declined by 77% in the same period. Many lesser companies were shaken out with such speed that the average automaker's life expectancy during this time was less than six years. To keep things in perspective, Solyndra was founded six years ago.

-- Alex Panes at The Motley Fool

First, this claim of $6.29/watt is flat-out wrong. Careless. The fossil fuel people might want it, but there is no connection to the facts. Solyndra's plant floor could certainly have been improved. all of these plant floors get improved and that is exactly where the Chinese have gone with their efforts.

Even before a 2011 fall-off to bulk silicon prices, Solyndra calculated $4.00/watt referring to the 4th Quarter of 2009. This was for on-going production -- which was expected to be halved with economies of scale and the normal IE/OR improvements to industrial production techniques as they matured plant operations. Here's what Solyndra were trying to achieve:



The horizontal axis shows projected-lifespans for solar panels. The $2 solar PV breaks even with coal if it can last 45 years producing electricity.

There is no reason to believe that Solyndra could not have made $2/watt photovoltaic panels that last 50 to 100 years with the current basic design. Obama's people believed in 2009 that pumping in $535-million to get down to $2/watt solar energy was a fine investment.

Here's the market price for INSTALLED solar PV systems in the U.S.:



Thing is, China at the same time dumped in more than $30-billion to upgrade their solar PV production facilities. Free market, hell. This competition for solar power and the "green jobs" is driven by state-vs.-state nationalist competition. The likes of Solyndra and Evergreen were up against direct low-interest subsidies on a grand scale:



Chinese Development Bank loans to these organizations are done at less than the inflation rate. So this is also a classic example of ZIRP Zero Interest Rate Policy technological stimulus. In contrast the U.S. has spread out $10-billion over the last 20 years -- mainly to drive new technologies and not much concerned with industrial manufacturing process. for 2010-2011-2012 this is failing because the Chinese have focused on shop-floor efficiency using their old-style crystalline-sheet PV design. Manufacturing plants in China are fully automated and capable of turning out 100% quality-measured product.

The Chinese $30-billion has been spent to automate production. They are looking to get to $1.25/watt solar PV panels in 2012-2013-2014.

Obviously the U.S. can do the same things where they work, implementing its investment strategy:

1. Pick two or three designs that combine high efficiency with long in-service lifetimes. Take advantage of U.S. expertise. For example, we have very advanced technology available with microcomputer manufacturing "sputtering" systems -- an improvement over the Chinese crystalline-sheet units that rings all the right bells.

2. Throw in $1-billion each to build fully-automated, super-efficiency, super-quality-output plants. A big part of that investment goes to supply chain investment to secure the the CIGS (copper, indium, gallium, selenium) metals to make the things. A second big part of it is to upgrade features that cut installation costs. These need to be pre-fabs -- not 'easily installed" but real pre-fabs that need nothing more than to be sited and plugged in.

3. Beg/borrow/steal every piece of experience/fact/OMG we can learn from what works at doing this scale-up in China. (He who goes last, wins !)

4. Act like the craven debtors that we are. Run scared for a while.

Here is what a commercial "sputtering" machine looks like. Our physicists and engineers use this technology to do microcomputers -- not part of Chinese crystalline-sheet technology -- the same processes can be made to work for doing thin-film solar PV panels:



There are two American companies that are doing "sputter" based end runs on the Chinese. These are First Solar and MiaSole. They project full production at $ 0.85/watt to $1/watt for the panels. Add a buck or two to that for installation -- if it's going to cost $2/watt to install a Solyndra or Chinese panel than it's going to cost the same $2/watt to install one from First Solar or MiaSole.

MiaSole has a solar PV shingle system. Installation cost for a new roof using these thingies could go off in the $0.40/watt to $0.75/watt range. How's that for kicking economic butt ???

Sure, Solyndra failed. They got womped with $30-billion in fresh Chinese competition. They had no way to fully-automate their plant. The powers that be wanted labor intensive "green job" plants, so that's where Solyndra went. They got womped from both sides.

That doesn't mean the Solyndra "round collector" idea is bad. The surface of that collector could be created with a thin-film "sputtered" technology. More sunlight hits the surface... it has to be in the running for long-term tech competition. A mix of these First Solar and MiaSole and Solyndra technologies is just about guaranteed to beat up on the relatively low-tech Chinese approach.

For the first time, as well, we will be seeing solar PV as a successful alternative to coal-fired electricity production. The economic point is also reached where installation costs will be higher than the PV panel costs.

These two crossover points comes in 2012 for First Solar and MiaSole.

Spending $1-billion to get plants that turns out 100% pre-fab units -- including pre-fab for the MiaSole shingles installation system -- that's one helluvan investment. We're probably talking a lot less than spending $1-billion to get there, too.

Puts the Chinese $30-billion at risk. Sorry about that.

Blowing $535-million on Solyndra ??? Not what you want to happen. But also inevitable when you bet try-this-and-try-that to get a new technology. There is no other way to defeat an establish approach such as China's crystalline-sheet PV.

This is starting to look like Jobs and Woz cooking up their phonejackers in the garage, then hopping the technology over to start up Apple. Maybe it will happen that First Solar and MiaSole will need loan guarantees to make it happen quickly -- let's hope they get it.

The fossil fuel people won't like that a bit. They hate solar as much as they hate nuclear. Expect to hear their media shills and their Republicans lying 24/7/365 that every new solar project is another boondoggle just like like Solyndra.

[tosh]

1. K & invisible R.

Nice post, vets74. Great information you've brought to us.

[vets74]

7. Thank you. There's a comment downthread with a price graph.

China's $30-billion dropped solar PV costs significantly in 2010-2011.

But the next round looks to be going our way.

[Vincardog]

2. Basically US Solar suffered the same fate as Mexican corn, you can't compete with subsidized imports

[walerosco]

3. So who are we in the corn analogy?

China or mexico?

[Vincardog]

4. WE are China

[walerosco]

6. so true

We both devalue our currency but for some reason China comes out on top. Obviously theres more to it than mere subsidies

[vets74]

5. Except that ulike corn farming, $$-cost/watt with U.S. technology is falling rapidly

Chinese technology is not matching this result:



They are sticking with the old technology. The money is spent to improve in-plant manufacturing efficiency.

MiaSole's shingles should knock this down another large step.