Second Romney-Backed Solar Company Files For Bankruptcy

[kpete]

Source: Think Progress

Second Romney-Backed Solar Company Files For Bankruptcy
By Igor Volsky on Jun 2, 2012 at 4:15 pm

On Thursday, Mitt Romney campaigned at the headquarters of Solyndra — the first renewable energy company to receive a federal loan under the stimulus — and reiterated his debunked claims that its bankruptcy symbolized the corruption and cronyism of the Obama administration. But just one day later, a solar panel developer “that landed a state loan from Mitt Romney when he was Massachusetts governor” went belly up, the Boston Herald reports, creating an inconvenient storyline for the GOP presidential nominee.

The company, Konarka Technologies, “filed for Chapter 7 bankruptcy protection and will cease operations, lay off its 85 workers and liquidate”:



“Konarka has been unable to obtain additional financing, and given its current financial condition, it is unable to continue operations,” CEO Howard Berke said in a statement. “This is a tragedy for Konarka’s shareholders and employees and for the development of alternative energy in the United States.”

The demise of Konarka could become a hot topic on the campaign trail because Romney personally doled out a $1.5 million renewable energy subsidy to the Lowell startup in 2003, shortly after taking office on Beacon Hill.
Konarka is the second Massachusetts solar company, along with Evergreen Solar and Beacon Power, to receive taxpayer dollars under Romney’s tenure and subsequently declare bankruptcy.

Read more: http://thinkprogress.org/politics/2012/06/02/494111/romney-solyndra-konarka/

[Fearless]

1. Whoops!

[freshwest]

8. You beat me to it!

[Iliyah]

2. The corporate media will probably

overlook that cause they want a TIGHT race any means necessary. Pounding and bashing and the Ninth Commandment "Thou Shalt Not Bear False Witness" is what the conservative media does against Pres O without fear from their GAWD'S wrath.

Mittens downright lied. I guess his Gawd permits that.

[FarCenter]

3. It would seem to have a couple of "drawbacks"

However, the technology has several drawbacks that will initially limit its applications. The solar cells only last a couple of years, unlike the decades that conventional solar cells last. What's more, the solar cells are relatively inefficient. Conventional solar cells can easily convert 15 percent of the energy in sunlight into electricity; Konarka's cells only convert 3 to 5 percent. As a result, they require much more area to generate electricity, so they're not as attractive as ordinary solar cells for generating electricity on rooftops, where space is limited and the technology's light weight and flexibility aren't needed, says Dana Olson, a research scientist at the National Renewable Energy Laboratory, in Golden, CO.

At first, Konarka will focus on niche applications such as umbrellas and tents, while working to increase the efficiency of the solar cells to between 7 and 10 percent, at which point the company could compete in cost with conventional sources of electricity, Hess says.

US tech startups that are "science experiments" based on the work of academic researchers regarding novel materials systems or unique form factors and mechanical designs have tended to come to a bad end.

Meanwhile, the Chinese have been working hard to bring down the cost of making old, reliable crystaline silicon solar cells, the kind that have been working on satellites for decades.

Blowing $500 million on CIGS thin films inside of glass tubes is a bit worse than blowing $1.5 million on Konarka in an early stage round.

[Flatulo]

5. Sometimes other factors are at work. I worked for a year at Evergreen Solar, and they had

a very elegant process for growing silicon wafers that did in fact evolve from an MIT science project. They could create silicon wafers cheaper, and with less energy use, than the traditional process of slicing up bars of silicon.

But they still has to build panels, which involve over a thousand solder connections, an encapsulation process, and mounting the finished module in a frame. Even though they built a state-of-the-art fully robotized factory, they still couldn't meet the magic number of $2 per watt to meet grid parity.

So they partnered with a state-owned Chinese solar manufacturer called Jai Wai. Jai Wai would build panels using Evergreen's wafer process, which would be duly licensed, and have armies of workers do what the robots in Massachusetts were doing. They could produce panels for about $1.25 per watt, far less than Evergreen's US factory.

Of course, once the Chinese factory was up and running, the US factory made no sense, so Evergreen sold the wafer producing equipment (over 100 massive furnaces of mind-boggling complexity) for a song. The CEO walked away a very rich man, and over 800 workers were let go and their beautiful green factory was shuttered.

Where did Evergreen go wrong? They were a very good company, extremely green, and they treated their workforce well. The culture was wonderful, and everyone was very optimistic that the company would succeed. But by partnering with the Chinese, they sealed their fate, and I'm sure that the leadership of the company understood this very well. I believe they were packing their parachutes well in advance.

Should Evergreen have been further subsidized so that they could have sold panels at a price that would match the Chinese? I don't know.

But I do know that if you're going to try to compete with the Chinese on labor costs, you'd better have a product that is so clearly superior that customers are willing to pay a lot more for it (see Audi and BMW). Solar panels are now a commodity item, like memory chips or disk drives. No on cares where they come from, only what they cost.

The war for the solar business has been lost.

[SkatmanRoth]

11. Other factors such as China's complete lack of enforcement of environmental laws

Chinese solar manufacturers are allowed to just dump their toxic waste without regard for the environment. Silicon processors in the United States have to adhere to strict regulations on disposal of waste, such as silicon tetrachloride, which drive up our costs.

Our products would be more competitive if the Government refused to import foreign made goods that are not manufactured to our standards for protecting the environment.

[Flatulo]

12. Oh yeah, I didn't even get into that. The China plant was in Wuhan, which is just an industrial

nightmare of a city.

[FailureToCommunicate]

14. They also have nothing like our OSHA. Of course their costs

will be lower.

It is astonishing to see the numbers of physically injured workers in China.

[Scootaloo]

15. When I speak economics with conservatives...

They invariably bring up the need to fight unions here, to cut wages and benefits, in order to "stay competitive with China."

Simply informing them "you can't be competitive in a labor market that includes slavery" actually does manage to shut them up, at least until they figure out another yapping point to latch onto. It's funny, in a sad way, to see people have to choose between faith and reality like that.

Too bad they always choose faith.

[Flatulo]

21. And that, in a nutshell, is the problem.

When I worked for Evergreen Solar as a design engineer, I was making over $100k annually.

I was replaced by two Chinese engineers for quite a bit less than half of that, and that was for the both of them.

The production workers were making the equivalent of a buck or so per hour, with 12 hour days, zero benefits, and no EPA or OSHA type regulations.

You can't have trade with countries that use slave labor and have no regulatory environment.

[bhikkhu]

6. Worth noting -Solyndra's success or failure hinged upon commodity prices

so it wasn't really a science experiment. As in most things in a relatively mature market, basic business skills and good planning make the most difference, but you can still gamble and fail.

[FarCenter]

10. I thought that Solyndra had other issues, such as getting the manufacturing processes to work

IIRC, the solar cells were made by deposition on the inside of glass tubes, similar to the large type of florescent tube. These were capped at both ends to seal out the environment, and the caps were metal in order to provide the electrical connection to the terminals of the photocell.

They were adapting machinery from a supplier to the florescent lighting tube industry, and they encountered delays in making the machinery work properly at production volumes. Possibly, the machines were also delayed while being modified and shipped into the US. At any rate, they continued to burn capital and tubes were not coming out of the factory in panels at a rate that would make the factory economical.

[bhikkhu]

13. That could be - several challenges there

but the main one was that the product was only competitive to begin with if silicon costs remained high, which they didn't.

Kind of like the energy industry in general, where over history various alternatives to oil have been competitive, then snuffed out when oil became cheap again...though I think we are done with cheap oil for good now!

[sakabatou]

4. Not surprised.

[Bigredhunk]

7. Yeah, But

This won't make it into the bubble (Bill Maher).

[patrice]

9. And that's just stuff that was orbiting around the outer edge of this particular PRIVATE vortex. nt

[Festivito]

16. I'm sorry, I'm confused. This latest is the second of THREE???

Konarka Technologies of Lowell, Massachusetts
is the second, after,

Evergreen Solar of Marlborough, MA

and

Beacon Power, LLC of Tyngsboro, MA

===============
At the water-cooler even teabaggers can count to three so I can't go in there with this information.

[IamK]

17. US Solar appears to be dead..... n/t

[FailureToCommunicate]

19. Shhhh! Don't tell Massachusetts:

http://articles.boston.com/2012-05-27/business/31852076_1_solarcity-solar-sector-solar-market

[Flatulo]

20. The sale and installation and integration of solar systems is doing well here in MA,

But the R&D and manufacturing businesses have been decimated.

The systems that are being installed most likely are using Chinese panels.

[BlueIris]

18. But, but, he is promising a brilliant economic revitalization!!

[Thinkingabout]

22. Obama is going to have a busy campaign trail

If he goes in front of all businesses Romney has been associated with which failed. Actually Obama should go to all the companies Romney and Bain raided.

[FloridaJudy]

23. Count on the Repubs

To point to this as proof we need to drill/mine even more, and that alternative energy doesn't work. Not, of course, that Mittens has a habit of buying companies, wringing every last groat of profit out of them, and then declaring bankruptcy...

[JayhawkSD]

24. I'm not sure I get the point, here

We are criticizing Romney for investing in solar power? Why, exactly? I don't like Romney, in fact I find him disgusting, but...

I thought we wanted business capital being invested, particularly in renewable energy, and particularly in new businesses. Ever since capitalism was invented, new businesses have failed from time to time, so some of Romney's investments have failed. Maybe, in order to keep himself safe from us trumpeting the failure of his businesses he should not start any business. Then we would criticize him for "sitting on his money" and not creating any new jobs.

Yes, he criticized Solyandra because he doesn't think taxpayer money should be used in speculation in new and risky businesses. Actually, I don't either. Investing taxpayer money in businesses like GM and Chrysler makes fairly good sense, but if a new business cannot secure venture capital, then it is best left alone. As Romney's investment shows, solar firms are attracting venture capital, so why should the government get into it? Solyandra was trying for loans and failed, trying for investment and failed, and the government came through. That actually does look like the government was dabbling in areas it didn't belong in.

There are plenty of legitimate areas in which to criticize Romney, we don't need to just make stuff up. I think these solar businesses are something for which he deserves credit, and his remarks about Solyandra are one of the very few times that he has actually made a little bit of sense.

[Flatulo]

25. It all gets down to industrial policy. We do not have one.

Every advanced country in the world has an industrial policy. We do not. We rely on the free market to decide which companies survive and which companies fail.

If we are to compete with countries like China, who heavily subsidize industries like manufacturing and alternative energy in a bid to dominate them, then it sometimes makes sense for our government to subsidize industries as well.

I know for a fact that the $500 million invested in Solyndra was a drop in the bucket compared to what China has invested in their own solar businesses. The Chinese invested $5 billion in solar alone.

Government investment in selected industries could be thought of like investment capital. Sometimes the investment pays off, and sometimes it does not. Solyndra crapped out, mainly because Chinese investment in they're own solar industries have made them the dominant player, and the game is already over.

I think the point of the OP was that for Romney to criticize the investment in Solyndra reveals that he does not believe that the United States should have an industrial policy, and everything should be left to the private sector.

[hughee99]

26. If the Obama Adminstration had invested a total of $9 million

in taxpayer money to companies that went out of business about 7 or 8 years later, I'm not sure the story would have the same teeth to it.