"The current technology has come down in cost by 20 percent with every doubling of output," said Ken Zweibel, director of the George Washington University Solar Institute. "That cost reduction curve goes back 30 years, and it is going to continue. The question is how fast, and whether we will do it with U.S. companies."
Federal loan guarantees, tax credits and direct payments to solar developers totaled $2.5 billion last year, more than four times the figure in 2009, according to analysis by Book at ClearView Energy Partners.
A 'titanic' battle with Chinese companies
Arun Majumdar, head of DOE's Advanced Research Projects Agency-Energy, says DOE isn't trying to pick winners. "We are looking at a portfolio of approaches to reach the target and we want to create the competition between these approaches. And we don't know which ones are going to win but one of these approaches will likely get there. There is a chance that none of them will, but it's worth taking a shot."
One of those gambles involves DOE's award of a $535 million loan guarantee to Solyndra Inc. in 2009 to help finance construction of a new plant in Fremont, Calif., to produce the company's cylindrical solar modules that employ thin-film chemical layers to generate electricity. President Obama toured the plant in May 2010, hailing it as "a testimonial to American ingenuity and dynamism."
But a month after Obama's visit, Solyndra canceled a planned initial public stock offering because the market response wasn't favorable. The new plant backed by DOE is ready to open, but the company has had to scale back its goals sharply because of stepped-up competition from silicon-based solar module makers.
The White House used the presidential visit to highlight job creation from clean energy projects like Solyndra's -- a key political selling point. Instead, the project spotlights the risks of government intervention in a dynamic market.
Solyndra will operate only one manufacturing plant as this year begins -- the new one -- idling its original plant, which it had planned to keep running, too. Instead of doubling employment, it has trimmed its work force. Revenue in 2010 was about $140 million, double that of the year before, but it is still not profitable, says spokesman David Miller. The company hopes to double production again this year, taking advantage of automation in the new plant, but it must bring down its sales price, which last summer was two-thirds higher than silicon module makers' prices, according to analysts.
Ric O'Connell, a renewable energy consultant at Black & Veatch -- Solyndra is a client -- said the negative media coverage of Solyndra's outlook is overdone. "I'm not saying they don't have challenges, but -- what's the famous phrase? -- 'The reports of my death are greatly exaggerated.'"
Rooney, whose company has installed Solyndra systems, called it "an interesting technology. But it's in a titanic battle with some incredibly well-funded Chinese manufacturers, which in many ways have more money to invest than we do."
"A bank isn't going to finance a module technology if it thinks there is financial instability or technology risk," said Shyam Mehta, a senior analyst at GTM Research. Solyndra must prove itself on both fronts, he said. "They have a technology that is potentially promising. ... But they have a lot of work ahead in catching up with industry leaders. Solyndra is not alone in that respect," Mehta added. "I'm not singling them out. This is one of the stumbling blocks -- we may see many competitors fall."
U.S. has launched winners in the past
Failures of high-profile government investments in clean energy technologies could give more weight to critics of federal intervention in the economy and Republican pressures to reduce federal spending.