Photo by AP/WideWorld
POSTER CHILD President Obama praised Solyndra and its technology during a facility tour in May 2010.

The bankruptcy of a Silicon Valley-based solar panel manufacturer, announced Aug. 31, followed by an FBI raid on the company a week later, sent shock waves through the solar industry and provided an easy opening for congressional Republicans to question the wisdom of the federal government's $535-million loan guarantee as well as its investment in renewable projects in general.

But solar industry sources claim the bankruptcy of Solyndra LLC is an isolated case. And the Obama administration so far is showing no signs of faltering in its commitment to solar power, announcing on Sept. 14 that it has finalized a $1.2-billion loan guarantee to Abengoa Solar Inc. The Denver, Colo.-based firm plans to build a 250-MW solar power plant in California's Mojave Desert.

Salo Zelermyer, an attorney with the Washington, D.C., office of Bracewell and Giuliani, says the bankruptcy may give more ammunition to lawmakers who believe “that the government shouldn't be in the business” of guaranteeing loans. Elliot Isban, CEO of Stamford, Conn.-based American Solar & Alternative Power, agrees. “I think unfortunately it's being politicized now,” he says, “where maybe it was just a bad business decision” on the part of the DOE.

The Dept. of Energy says it hopes to finalize more guarantees—valued at nearly $10 billion—for 14 additional solar companies by Sept. 30.

Troubled History

Fremont, Calif.-based solar panel manufacturer Solyndra received the Obama administration's first loan guarantee under the DOE's 1705 loan guarantee program, which was created under the 2005 Energy Policy Act to support innovative projects that might have trouble receiving private-sector financing.

Solyndra received a $535-million loan guarantee to develop a manufacturing facility for its thin-film cylindrical solar panels in September 2009. President Barack Obama toured Solyndra's facilities in May 2010 and said at the time, “The true engine of economic growth will always be companies like Solyndra.”

At a Sept. 14 hearing of the House Energy and Commerce's Subcommittee on Oversight and Investigations, Republican lawmakers discussed e-mail exchanges between the White House and the Office of Management and Budget that appeared to suggest that White House officials pressured the OMB to speed up the review process for the loan guarantee ahead of a

Cliff Stearns (R-Fla.), chairman of the oversight subcommittee, said documents obtained by his panel show that “the rush to push out stimulus dollars may have impacted the depth and quality of DOE and OMB's review.”

White House Press Secretary Jay Carney denied that the White House pressured the OMB and told reporters, “What the e-mails make clear is there was urgency to make a decision on a scheduling matter.”