The high-profile collapse of Fremont company Solyndra has been parsed to great detail, co-opted by campaigning politicians, and exploited as a way to question America's future as a leader in renewable energy. But what if it were much simpler than that? What if the solar-module manufacturer's sudden demise last month were simply a sign of a healthy and maturing industry? Considerable evidence, including the success of two Bay Area companies, both of whom have benefitted from the same dip in solar prices that appears to have killed Solyndra, suggests that despite all the rhetoric, the US solar industry is stronger than ever.
"The fact that market forces work and some companies fail is not evidence that the industry is failing," said Danny Kennedy, founder of rapidly expanding Oakland-based solar installer Sungevity.
Solyndra's problem was that it gambled on an innovative tubular solar module that cost nearly twice as much as traditional silicon panels. It didn't pay off, and the company failed. Not even the Obama administration's controversial $535 million federal loan could save it.
Of course, Solyndra wasn't alone: Its bankruptcy followed similar filings from Massachusetts' Evergreen Solar, which also pushed a unique — and expensive — photovoltaic technology, and New York' SpectraWatt, which made traditional solar cells yet, due to operational issues, disputes with vendors, and market conditions, couldn't survive in a highly competitive environment. Industry-wide, the rapid decline in prices — the cost of solar cells has dipped 42 percent this year alone — has led to a wave of consolidation, with many weaker companies forced to either team with competitors or close.
To some, the news suggests that American manufacturers will have to cede dominance to Chinese companies that receive big subsidies from their government and enjoy cheaper labor costs. But Kennedy and others view the collapse of Solyndra and similar companies as proof that the solar industry is entering a new phase where innovation in basic hardware design is no longer vital. Instead, there should be an increased emphasis on improving the efficiency and cost of making traditional solar panels, Kennedy said.
At the same time, cheaper panels are bringing down the price of home-solar installation in the Bay Area and across the country. As a result, more people and companies are putting solar panels on their rooftops. In other words, the same market forces that appear to have put Solyndra out of business — less expensive solar panels — are prompting a solar boom.
It's a trend in which installers and service providers appear to be benefitting the most — as are homeowners, who can now finally afford to go solar. "A universe of opportunity is being created by solar components becoming easier and more affordable," Kennedy noted.
Cases in point: Sungevity and its cross-bay competitor SolarCity, based in San Mateo. The two companies specialize in the installation of residential rooftop solar systems across the country. The decline in hardware costs has been a boon to business. Sungevity has more than doubled in size since January and now employs more than three hundred workers. SolarCity has hired five hundred people in the last twelve months at two dozen offices nationwide, including two in Berkeley.
Both Sungevity and SolarCity buy materials from American as well as overseas companies, noting that many domestic manufacturers remain cost-competitive with Chinese operations. "The United States is a net exporter of solar, and there are more than five thousand solar companies in the United States," said SolarCity spokesman Jonathan Bass, citing a recent finding by the Solar Energy Industry Association that in 2010, US solar-goods exports exceeded imports by $1.88 billion. "I think many are reading too much into the recent failure of one company with an expensive technology."
Despite the recent string of bankruptcies of some solar manufacturers, Sungevity and SolarCity are in the majority among domestic solar companies, not the minority. According to a recent census by nonprofit advocacy group The Solar Foundation, the US solar industry added 6,735 jobs in the last year for a total of more than 100,000, surpassing even the steel industry. Solar grew 6.8 percent between August 2010 and August 2011, compared to less than 1 percent economy-wide, the study found.
While the manufacturing sector remains active — new plants continue to open, including a Milpitas facility opened by San Jose's SunPower in April — most of the expansion has taken place beyond factory doors. Installing, servicing, marketing, and financing represents the vanguard of the US solar industry, said Sungevity's Kennedy: "For every job in the factory, there's three or more downstream from there."
He likens the emerging opportunity to the business models represented by US companies including Dell, Apple, and Microsoft, which have harnessed cheap commodities to develop valuable products and services for the American market, stimulating the national economy and providing an array of local jobs in the process. The same opportunities exist within the solar industry, Kennedy said.
SolarCity, which offers design services, financing, monitoring, repairs, and insurance in addition to basic installation, operates under a similar assumption. "Our full-service approach has created some new categories of solar jobs: site auditors, permit specialists, energy efficiency auditors and consultants, designers and engineers, electric vehicle infrastructure specialists, utility coordination administrators, and many more," said Bass.
In the end, the Obama administration appears to have bet a lot of public money on the wrong horse in the right race. Solyndra's loss, and those of Evergreen Solar and SpectraWatt, can still be construed as a win for the solar industry: Tough competition means lower prices, better products, more customers, and steady jobs to replace those lost at shaky start-ups.
If the goal is the establishment of a robust clean-energy commodity, Solyndra's demise may be a sign of progress.
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