Solyndra was a company which made innovative solar photovoltaic systems. Instead of conventional flat cell solar panels they made cylindrical cell panels coated with copper indium gallium selenide (CIGS) (1). A cylindrical cell could capture the direct, diffused and reflected radiation from the sun 360 degrees around it. This resulted in 20% decreased cost of generating power from solar (1). Although CIGS systems were expensive, they were able to compete with conventional silicon based systems because of high silicon prices and better efficiency. The Solyndra systems where lighter, easier to install and more cost effective (at the time when silicon prices were high). As silicon (used by competing technologies) prices dropped by 89% between 2009-2011, the future of cylindrical CIGS systems did not look as promising as it did in the past (2). Soyndra, which had received $535 million in federal loan guarantees in September 2009, filed for bankruptcy on September 1, 2011. There were a number of parties involved the Solyndra controversy which include the executives at Solyndra, the loan apporoval committee and the other government officials which costed tax payer such large sum of money.

It was not just the falling silicon price that took away the tax dollars, it was also bad business practices by Solyndra officials. According to the special report by U.S. Department of energy, Solyndra lied to the government about its sales, revenues and costs to get the federal loan guarantee (3). Solyndra officials assured the government that they had four sales contracts worth 1.4 billion dollars over the next five years. However, Solyndra had offered substantial price concessions to all the four customers which they did not disclose to auditing party (3). Moreover, Solyndra did not disclose that its contract customers would not buy the full volume of solar panels agreed to in the contract. This implied that the future revenue of the company was substantially lower than what was projected. Furthermore, Solyndra indicated that it could charge higher than market price for the panels and still have a lower system cost because its panels had a lower balance of system cost as they were easier to install. But the cost savings reported by Solyndra were on average 25 to 65 percent higher than the actual savings (3). This implied that their profit was less than reported. The decreasing silicon prices, low revenues and high costs made Solyndra financially unstable.

Although the government and the loan approval committees were lied to, it was not the case they they were not at fault. In January 2009, the loan guarantee was turned down by the Bush administration because they were of the opinion that “there was no independent market study addressing long term prospects for the company at that time”. PricewaterhouseCoopers, an auditing firm expressed concerns about Solyndra’s future as a successful business (7). The government was warned by Steve Westly, an Obama fundraiser and investment fund manager, about solvency of the company and that the company would not survive as a business (4). In spite of being warned the administration continued supporting the company. Some White House officials dismissed the concerns about the future of the company by saying that innovative companies come with risk (6). Their reasons for dismissal could be justified if the company did not report false revenue and profits. According to an Office of Management and Budget (OMB) official, OMB was asked to rush the loan reviewing process by the White House because the Vice President wanted to announce the loan approval at a public event. As a result of a hasty reviewing process, a full review of Solyndras financial condition was not possible (4). The company was granted the loan guarantee in September 2009. Moreover, even after the company went bankrupt in 2011, it was granted additional $68 million in government loans. It was the first company which was provided a loan guarantee under the Obama administration and they did not want it to fail. The important fact is that the decision makers considered the political factors to be more important than the economic factors.

The Energy Policy Act of 2005, which provides funding to innovative energy technologies, is the policy under which Solyndra received funding. Solyandra is not the only company which received funding under this act and filed for bankruptcy. Abound, Beacon Power Corporation, Nevada Geothermal, Enerl, and Range Fuels are some of the companies which have received guarantees and filed for bankruptcy (7). Having said that, policies are needed to enhance the growth of new technologies and make them affordable. Without government incentives and funding, it is extremely difficult for new expensive technologies to penetrate into the market. The government must balance their funding between enhancing the supply side and increasing the demand. What the government did with Solyandra was increase the supply of solar panels by funding the company operations for which there was very little demand. Increasing the pre- existing subsides on cost of technology will increase adoption and hence, increase the demand. As the demand increases, providing more funding to the companies will make sense as those funds can be used to expand the company operations to satisfy the demand. Considering the high cost of technology and low demand, policies must consider balancing the demand and supply for an economically stable system.

It was a bit of everything that led to the Solyndra disaster. Bad business practices by Solyndra officials, bad politics by government officials and a weak policy. The government reports blame the company for reporting wrong data. On the other hand, numerous news agencies which have analyzed documents and emails related to the controversy, blame the government and the policy. However, no one person, institution or factor is absolutely wrong and can be blamed for this controversy. The Solyandra officials reporting false data in spite of knowing that the company was not financially stable, the government ignoring warnings about the solvency of the company, decision makers in the government putting political interests before economics and policy which was not strong enough to factor the economic aspects very well jointly caused the disaster.


  1. Melissa L., Solyndra - Illuminating Energy Funding Flaws?, Scientific American, 2011
  2. Ikhlaq S., et al., Solyndra 2011 Case Study, UC Berkely, 2012
  3. Special Report, The Department of Energy’s Loan Guarantee to Solyndra, Inc., U.S. Department of Energy, 2015
  4. Bonnie B., et al., Greenlighting Solyndra, The Washington Post, 2011
  5. Joe S., Lawmakers seek White House documents on Solyndra loan guarantee, The Washington Post, 2011
  6. Alana B., Barack Obama Solyndra Scandal: 8 Facts About Green Energy Company Controversy, Newsmax, 2015
  7. Diana F., Solyndra and The Perils of Green Industrial Policy, Manhattan Institute for Policy Research, 2012