At the core of solving the Grand Societal Challenge of climate change lays the need to replace traditional coal and fossil-fuel sources of energy with renewable sources. Among the most promising of these energy sources, including; wind, hydro and biomass sources, is energy derived from the sun. Harnessing the power and promise of these renewable energy sources entails a great deal of technological research and innovation. This process of technological development is one requiring a significant funding and support with very little certainty regarding its successful monetization. Following the bankruptcy of California-based solar-panel technology manufacturer Solyndra’s, at the end of August, the renewable energy industry was beset by uncertainty, leaving some in doubt as to the future of the solar industry.

The industry was plagued by widespread speculation and doubt in the press as well as from industry insiders and analysts due not only to the great promise which Solyndra showed at its outset, the MIT Technology Review named it one of the 50 most innovative companies in the world, but also due to the significant role which U.S. government funding played in its rise. Solyndra’s decline is reported to have been largely due to its inability to keep up with the rapid pace of technological innovation in the solar industry, having built an expensive new manufacturing plant which was priced out by cheaper alternatives soon after its completion. This inability to compete technologically was further compounded by the effective over-pricing of the company’s out-dated technology when compared with the aggressively priced offerings of its foreign competitors.

At the heart of concerns regarding the impact that Solyndra’s collapse would have on the future of the renewable energy and clean tech industries as whole was the U.S. government’s central role in the funding of Solyndra. Solyndra had received, throughout its lifetime, a total of $535 million in federal loan guarantees from the U.S. government, helping it to secure its over $700 million in venture capital funding. Many feared that the, not insignificant, losses facing the U.S. government would spur debate over the future of government subsidization and funding of the industry. These fears were based in the, very real, uncertain nature of investments in the renewable energy and cleantech industries due to the unpredictability caused by their constant evolution and development, increasing the difficulty of predicting which companies will remain successful. These concerns were additionally compounded by the accusations of cronyism leveled at the Obama administration as a result of evidence suggesting an early awareness of Solyndra’s doubtful prospects.

While the ultimate outcome of the Congressional hearings presently being conducted into the events leading up to Solyndra’s bankruptcy have yet to emerge, fears of the collapse of the U.S. or international solar industries have been allayed. While early reactions to the bankruptcy announcement were indeed marked by a considerably gloomy tone, the overall strength and rapid rise of the industry, the U.S. solar market alone doubled last year and is expected to do so again this year, proved to quell fears of its downfall. Concerns regarding the industry’s instability are, however, not easily dispelled as the very nature of emerging industries makes it very difficult to reliably predict which technology will ultimately prevail as winners emerge through constant competition and development. While investment in emerging industries requires a great deal of caution and foreknowledge, this does not mean that governments cannot afford to become averse to funding these industries, as without broad support and incentives private investors will hardly be able to provide sufficient support the large-scale implementing of these technologies.

More than anything, Solyndra’s failure is a sign of the overall strength of the international solar energy industry, as Solyndra’s bankruptcy was largely a result of the increased competitiveness of the industry. This increased competitiveness drove prices for solar energy equipment down far below Solyndra’s cost structure, which led to Solyndra’s steep decline. While this decrease in price led to the fall of one of the industry’s early leaders, it has also ensured that solar energy will continue to become a more accessible option to replace existing, CO2 heavy energy sources. In light of recent signs of European and American governments’ reluctance to support solar energy, such as German Chancellor Angela Merkel’s recent statements suggesting that the country will cease providing funding and subsidies to the solar industry, the source of this future technological innovation seems increasingly likely to be outside of the U.S. or Europe. China’s overwhelmingly robust state support of the clean-tech and, in particular, renewable energy industries ensures that Chinese companies will be able to continue to direct unparalleled resources towards research and development activities with a significantly reduced impact on the eventual price of their products. The future of renewable energy, while in a persistent state of flux, remains full of promise and with the continued support of governments across Asia, Europe and the Americas the industry will continue to make invaluable contributions to society’s efforts to reduce the effects of climate change.

Read More:

Reuters article on the bankruptcy
Bloomberg on the initial bankruptcy announcement
The wider impacts of Solyndra’s failure at Time’s Swmapland blog
Bloomberg on renewable energy research funding in the wake of Solyndra’s bankruptcy
NY Times on the volatility of new markets 
Think Progress article on China’s rise in the solar industry 
Press release from the Solar Energy Industries Association (SEIA) 
A snapshot of the state of the US solar energy industry at Climate Central 
Accusations of complicity and cronyism weighed against Obama administration 
NY Times article on the White House’s concerns regarding Solyndra’s stability 
NY Times article on a second loan for Solyndra
Gigaom article on the future of renewable energy investment in China
Article on Germany’s stance on solar energy funding
In-depth analysis  regarding the future of the US government's support of the solar industry

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