1 September 2011

Solyndra suspends operations and files for Chapter 11 bankruptcy

Solyndra LLC of Fremont, CA, USA, a manufacturer of cylindrical copper indium gallium diselenide (CIGS) photovoltaic (PV) systems consisting of panels and mounting hardware for commercial rooftops, says that global economic and solar industry market conditions have forced it to suspend its manufacturing operations.

Solyndra intends to file a petition for relief under Chapter 11 of the US Bankruptcy Code while it evaluates options, including a sale of the business and licensing of its CIGS technology and manufacturing expertise. As a result of the suspension of operations, about 1100 full-time and temporary staff have been laid off with immediate effect.

Solyndra’s proprietary tubular thin-film solar panels have a ‘self-tracking’ design — with a 360º photovoltaic surface capable of absorbing direct, diffuse and reflected sunlight (from below) — that, it is claimed, capture more sunlight from low-slope rooftops at a lower installed cost than conventional flat-surfaced solar panels, which need tilted mounting devices to improve the capture of direct light from the sun, offer poor collection of diffuse light, and fail to collect reflected light. Also, gaps between the tubes and their frame let wind pass through, reducing the need for heavy, roof-penetrating fastenings or anchoring; their lighter weight also allows installation on scantier roofs. Simple horizontal mounting hardware also allows fast and economical installation, claims the firm. Solyndra began commercial shipments of its PV modules from its 110MW plant in summer 2008.

In March 2009, the US Department of Energy (DOE) awarded Solyndra a $535m loan guarantee, funded through the American Recovery and Reinvestment Act. That September, Solyndra started construction on its second solar panel manufacturing plant in nearby Milpitas (with an annual capacity of 500MW).

However, despite previously raising about $1bn in equity financing, in June 2010 Solyndra withdrew its registration statement with the US Securities and Exchange Commission (SEC) for an initial public offering of shares of its common stock, which had aimed to raise up to $300m, due to "adverse market conditions and the availability of alternative funding from existing investors".

Solyndra now says that, despite strong growth in first-half 2011 and traction in North America with a number of orders for very large commercial rooftops, it could not achieve full-scale operations rapidly enough to compete in the near term with the resources of larger foreign manufacturers. This competitive challenge was exacerbated by a global oversupply of solar panels and a severe compression of prices that resulted partly from uncertainty in governmental incentive programs in Europe and the decline in credit markets that finance solar systems.

“Despite Solyndra operating its 110MW facility close to full capacity in recent months, we estimate that its manufacturing costs still far exceeded the price at which it had to sell its modules at in order to make an investment case for its customers,” comments Sam Wilkinson, senior analyst at IMS Research.

The analyst firm says that Chinese module suppliers have strengthened their position in the market, that the market is showing signs of consolidation, and that competition is only going to get more intense. The PV module industry has recently suffered from a huge oversupply, which has led to fierce price competition, with average prices dropping by around 20% in a single quarter, IMS adds.

“It was losing money fast,” notes Wilkinson about Solyndra. “Whether further capacity expansion, increased production and a few more years of technical advancements could have changed the situation is debatable,” he adds.

Solyndra’s failure is a warning to the many other thin-film startups that have recently emerged. “Whilst Solyndra’s product was different so that it cannot be simply considered alongside other CIGS modules, it demonstrates the need for smaller companies to reach scale and volume quickly in order to compete,” says Wilkinson. “All PV module manufacturing, and CIGS in particular, relies on scale to reach attractive cost levels, and any supplier currently producing in relatively small volumes is at an instant disadvantage compared to the GW-scale manufacturers that are currently dominating the market,” he adds.

“We would like to thank our investors, channel partners, customers and suppliers, for the years of support that allowed us to bring our innovative technology to market,” says Solyndra’s president & CEO Brian Harrison. “Distributed rooftop solar power makes sense, and our customers clearly recognize the advantages of Solyndra systems,” he claims. “Regulatory and policy uncertainties in recent months created significant near-term excess supply and price erosion. Raising incremental capital in this environment was not possible,” Harrison continues. “This was an unexpected outcome and is most unfortunate.”

Solyndra assures customers that have implemented its solutions that their systems will generate economical solar power for decades.

See related items:

Solyndra closes $75m credit facility

Solyndra targets $175m private placement to fund Fab 2 as it withdraws from IPO

CIGS PV maker Solyndra files for $300m IPO

Solyndra secures $535m DoE loan guarantee

Tags: Solyndra CIGS

Visit: www.solyndra.com

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