Shining a light on the Solyndra failure



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With the stir surrounding Solyndra, the Chevy Volt firestorm and escalating oil prices, renewable energy is again at the forefront. Not long ago, I did a consulting gig for a solar energy company, and it was enlightening with respect to the realities of renewables.Given the current climate, I thought some of what I learned might be interesting. Today, we'll tackle the Solyndra debacle because there is more to the story than it being another example of government dysfunction. At the heart of the company's failure was a flawed product strategy.The first thing to note is that there are various disparate approaches to solar energy. The most prominent and familiar is photovoltaic, or PV -- PV solar panels atop commercial and residential building roofs have become somewhat commonplace.PV converts sunlight into DC electricity which, through the use of an inverter, is then converted to AC. There are two basic system configurations: grid-connected and stand-alone. Grid-connected systems allow owners to sell excess power back to the utility company, but the downside is that power outages extend to your solar system. Stand-alone systems are independent of the grid and are often designed to supply power to specific devices.One other thing to note: For solar systems to provide power at night or on cloudy days, battery-based storage is required. Having storage seems like a no-brainer, except that it significantly increases both cost and maintenance.Remember these on/off grid and storage issues because they are critical to the entire renewables discussion.PV's major advantage is that it works well at very small scales. A major disadvantage is that it's inefficient. PV panels convert only 12 to 20 percent of the light into energy. More problematic is that the power generated is directly proportional to a panel's surface area. To date, a means to reduce a panel's size without reducing its energy output has not been discovered.A major messThe efficiency challenge is at the center of Solyndra's strategy. If cost savings can't be gleaned by reducing panel size, three other possibilities exist: reduce other material costs, increase manufacturing efficiencies or lower installation and maintenance costs. Solyndra concentrated on reducing other material costs and jumped on the thin film bandwagon.The primary material used to manufacture 80 percent of PV panels is polysilicon. In 2008 -- during the heyday of PV -- polysilicon sold for $450 a kilogram and prices were expected to remain elevated. As the name implies, thin film offers a cost advantage by using less material.And Solyndra took it one step further by employing a cylindrical design from which the company's name was derived. This unique approach promised increased light conversion efficiency. It also promised to create real estate efficiencies and reduced installation costs by eliminating the need for heavy mounting racks. Sound too good to be true? It was.It turns out that the materials Solyndra used are temperamental and require a precise application process at high speed. That, combined with a cylindrical shape that was hard to manufacture and transport, made what appeared to be a major advancement an iffy proposition with the potential to morph into a major mess.Was Solyndra's cylindrical design its downfall? Could the government have foreseen the company's collapse? And what role did Goldman Sachs play in this fiasco? The answers to those questions next issue.Author, professor, entrepreneur, radio and TV commentator, Tony Paradiso of Wilton is a marketing, management and macroeconomic expert. His website is at tonyparadiso.com.

 

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