Following up on last week's "Solyndra, The Scams Just Keep On Coming: "IRS says ‘tax avoidance’ at heart of Solyndra bankruptcy plan"".
Solyndra has decided to try and sue several of the Chinese solar panel makers over the bankruptcy of the firm. This is entirely stuff and nonsense: Solyndra’s bankruptcy came as a result of a technological choice they made, not as a result of any subsidies to any other manufacturers.Or, as I reprised in last November's "Ex-Solyndra Staff Eligible For TAA Federal Aid; Packages Worth Average $13,000 Each":
Solyndra LLC, the bankrupt solar- panel maker that received a $535 million U.S. government loan guarantee, accused Suntech Power Holdings Co. (STP) and other Chinese panel makers of driving it out of business by running an illegal cartel.It’s possible that there was such scheming. It’s also possible that Chinese panel and cell makers were subsidised by hyte Chinese Government. As was Solyndra subsidised by the US one. But even if these things did occur they were not the cause of Solyndra’s bankruptcy. That was caused by the technological option they had taken.
Solyndra, which filed for bankruptcy protection in August 2011, is seeking compensation “for the loss of the $1.5 billion value of its business and more which defendants destroyed,” according to a complaint filed yesterday in federal court in San Francisco.
The defendants schemed with each other, raw material suppliers and certain lenders to flood the U.S. market with solar panels at below-cost prices, the Fremont, California-based company said in the complaint. Panel prices for Wuxi, China- based Suntech, the biggest solar-panel maker, and two other companies moved in tandem, falling 75 percent in four years in the U.S. market, Solyndra said.
Please do note, I’m not about to claim that Solyndra were wrong to make the choice that they did, nor that they made a mistake. Not in the sense that it was obviously wrong or a mistake when that choice was made. Rather that circumstances out of their control meant, over time, that it became a mistake. Prediction, especially about the future, is after all quite famously difficult.
The basic design choice people faced with solar cells a few years back was quite simple. Silicon, the basic raw material from which the cells are made, was expensive. $450 per kg is a reasonable enough estimate of the price back then. There are therefore two possible routes you can take. One is to either make such silicon more efficient in use or to economise on the amount of silicon used. These two are really the same option: using less to get the same power output is the same as making the silicon more efficient. The other is to look at ways of lowering the cost of the silicon.
Solyndra used the first of those two possible technological paths. Their tubular design was aimed at optimising the efficiency of the silicon that was being used. A reasonable enough choice at one time. Except for the fact that others decided to pursue the other route. Silicon ingot, from which you can slice off the wafers to make solar cells, has become much cheaper. New fabrication methods were developed and the supply shortage vanished. Essentially, the solar industry used to exist on the cast offs from the computer industry. Then people started making the ingot in the purity and quantities that solar required. As a result prices fell through the floor: to perhaps in the $30 to $40 a kg range today....MORE
Just so we're clear on the numbers, From our Dec. 2009 post "What is Solyndra’s Cost Per Watt? (SOLY; FSLR; TSL)" (with heavy lifting by Greentech):
...That works out to:Got that?
Note that in Solyndra's case, there is not an exact clear comparison with other flat panel modules - because what Solyndra considers a "module" includes some mounting equipment. Anup Jacob, a Solyndra investor at Virgin Green Fund, told us in August that the company's install costs come to around 50 cents a watt, lower than the $2 to $4 a watt install costs for other thin film companies. Arguably, the lower installations cost could drop Solyndra's cost per watt to anywhere from $4.79 to $2.79 ($6.29 minus $1.50 to $3.50 for the lower installation costs.) With a $3.42 sale price, that means Solyndra might be able to coax some profit from their billion dollar investment. Attention Wall Street: trying to figure this out with a straight face is why you pay high prices for hardworking, replaceable associates.
- A sale price of $3.42 per Watt
- A cost of $6.29 per Watt
Compare this to First Solar. First Solar's average manufacturing cost per watt declined by $0.23 per watt, or 21.3%, from $1.08 in the three months ended September 27, 2008 to $0.85 in the three months ended September 26, 2009....MORE
Make it at $6.00, sell it at $3.00, try to compete with folks who are at $1.50 down to 85 cents.
So don't give me that "It was China wot done 'em in" b.s., look at the numbers.
Solyndra was a bankruptcy the day it was born.
And they wanted loan guarantees because their billionaire backers, uh...uh... are smarter than the idiots who grant said loan guarantees.
This thing should have been strangled in the crib....