If you are a local government or institution, a commercial business or even a developer of residential housing—as a buyer—solar panel costs per-unit have dropped significantly thanks to the over saturation of players in the market, a development that's spurred competition and ultra-competitive prices. A local government, for instance, is eager more than ever to invest in this sector not only motivated by the low cost of solar in and of itself, but these organization are also the recipients of state and or federal subsidies if they take the plunge. It is indeed a buyer's market.

As for the sellers: Lots of venture capitalists came out of the woodwork to underwrite business models, getting them up and running accordingly. This increased the players and fostered supreme competition.

Oh, how the mighty have fallen. Start with Solyndra LLC, the bankrupt solar-panel maker that built a plant in early 2011 financed by a $535 million federal loan guarantee in a program with the U.S. Energy Dept. Solyndra shut down last August 31, firing about 1,000 of its more than 1,100 employees.

 

When the Obama administration's investment in Solyndra occurred, the deal reaped more than $500 million in taxpayer-backed loan guarantees for Solyndra. The administration’s zeal to advance green energy programs was the motivating factor. But, it was also allegedly rife with “political motives that spawned reckless policymaking and resulted in millions of wasted taxpayer dollars,” according to a report last year in The Washington Post.

Solyndra apparently owed lenders $783.8 million, including $527.8 million to the U.S. government, and held assets valued at $859 million as of Jan. 1, 2011, according to court papers.

 

Solyndra indicated it failed because it couldn’t compete with foreign manufacturers funded by their governments—starting with China, which now fancies a reputation as an ambitious, high-volume solar panel maker. Those factories produced an oversupply of panels at low prices and offered buyers lengthy payment terms. (According to a report in The Wall Street Journal December 27, China's significant solar capacity is such that the nation and its solar stakeholders were allegedly inclined to “dump” product into the U.S., further compounding the oversupply dilemma and shaving prices.)

 

Solyndra had been a producer of cylindrical solar panels which are different from the flat panels that are standard in the industry. Because its product is unique, Solyndra had to design its own manufacturing equipment.

 

The company’s factory opened in January 2011 and was built with the Energy Dept. loan and private financing. The company has about $3 million of that private financing left in a special account that once held $198 million, according to court papers.

Now, what's next for solar makers large and small state-side? Some firmly believe that industry consolidation is inevitable to occur throughout this year, so that the survivors can right the ship from a profit performance standpoint. Market capitalization of most of the players has dipped significantly.

 

It will be interesting to see how the willing buyer's market is affected as this all plays out.

One final footnote: The distinction between the U.S., and China solar manufacturing sectors is that China is staking its claim on high volume production with less innovation time to ground down the throughput; according to documented reports. The U.S. is seen as having drawn a bead on higher innovation over mass production. Imagine the solar panel supply situation domestically if the U.S. based theirs on China's push-them-through strategy...