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Solar Company That Received $535 Million Stimulus Loan Guarantee Files Chapter 11

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By Doug Powers  •  August 31, 2011 01:58 PM

**Written by Doug Powers

During President Obama’s upcoming job speech, if you do a shot whenever you hear the words “invest in clean energy” you’ll be asleep before the teleprompter’s internal cooling fan kicks into action.

Not that it was necessary, but here’s yet another reason to be extremely wary of that repeated green clarion call:

A California-based solar company that received a $535 million loan guarantee from the Obama administration announced Wednesday that it will shut down.

The company, Solyndra Inc., said Wednesday it would suspend its manufacturing operations and lay off 1,100 employees effective immediately. The company said it intends to file a petition for Chapter 11 bankruptcy protection.

“Regulatory and policy uncertainties in recent months created significant near-term excess supply and price erosion,” Solyndra CEO Brian Harrison said in a statement. “Raising incremental capital in this environment was not possible. This was an unexpected outcome and is most unfortunate.”

The announcement comes at a tough time for the solar industry, which has faced free-falling solar panel prices.

But the Obama administration has doubled-down on its investments in the industry. The Energy Department finalized last week an $852 million loan guarantee for a separate California solar project sponsored by NextEra Energy. Earlier in August, DOE finalized a $197 million loan guarantee for solar manufacturing facilities in Oregon and California.

In July of this year, smelling a carbon-neutral rat, Republicans subpoenaed documents associated with the Energy Department’s loan guarantee to Solyndra:

The Oversight and Investigations subcommittee voted 14-8 along party lines to subpoena the White House Office of Management and Budget for documents related to DOE’s 2009 $535 million loan guarantee to Solyndra Inc. The loan guarantee helped finance the construction of a new plant to manufacture solar panels.

Republicans on the subcommittee launched an investigation into the loan guarantee after Solyndra canceled plans to go public and closed down an existing plant.
[...]
Solyndra said Thursday that its financial outlook is strong. CEO Brian Harrison, in a statement, said the company is “growing rapidly.”

The Republicans were right to be suspicious.

Last year, the company had the additional burden of direct exposure to the “Reverse Midas Touch”:

During a visit to the Fremont facility in spring of 2010, the President said the factory “is just a testament to American ingenuity and dynamism and the fact that we continue to have the best universities in the world, the best technology in the world, and most importantly the best workers in the world.”

Not long ago, Evergreen Solar, the recipient of a $58 million financial aid package from the state of Massachusetts, filed for bankruptcy.

Maybe if the administration would have followed through with the promise to install solar panels on the White House these companies would have had a little more business.

Update:

Solyndra is the third U.S. solar manufacturer to file for bankruptcy in a month as falling panel prices and weak global demand is driving a wave of industry consolidation.

**Written by Doug Powers

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