Wikipedia Deep Dive

Solyndra

11 min read

Half a Billion Dollars for Glass Tubes That Couldn't Compete

In the annals of government investments gone wrong, Solyndra stands as perhaps the most politically explosive failure of the Obama era. The company received $535 million in federal loan guarantees—the very first recipient under Obama's economic stimulus program—and then collapsed spectacularly just two years later, leaving taxpayers holding the bag and handing Republicans a ready-made attack ad.

But here's the twist that often gets lost in the political shouting: nobody was ever charged with a crime. After FBI raids, Department of Treasury investigations, and Congressional hearings that dragged on for months, investigators found no evidence of criminal wrongdoing or political corruption. What they found instead was something perhaps more troubling in its banality: bad business judgment, a technology that couldn't keep pace with a rapidly changing market, and a company that misled the government about its financial health.

The Cylindrical Dream

Solyndra wasn't your typical solar company. While everyone else in the industry was making flat panels covered in crystalline silicon—the kind you've probably seen on rooftops—Solyndra took a radically different approach. They manufactured cylindrical tubes.

Imagine a rack of glass cylinders, each about an inch in diameter, arranged in rows. Inside each cylinder sat an inner tube coated with a thin film of copper indium gallium selenide, known in the industry as CIGS. Between the inner and outer tubes, the company pumped silicone oil, then sealed everything hermetically using techniques borrowed from fluorescent lamp manufacturing.

The theory was elegant. Traditional flat solar panels work best when pointed directly at the sun, which means their output peaks at midday and drops off sharply in morning and evening hours. Solyndra's cylinders, by contrast, presented some portion of their curved surface to the sun at all times. They could capture direct sunlight, indirect light, and—crucially—light reflecting up from white rooftops below.

The company claimed their systems could generate up to twenty percent more electricity on a white roof compared to conventional panels on a black one. They also argued that their cylindrical design let wind pass through rather than pushing against flat surfaces, eliminating the need for heavy anchoring systems that could damage commercial rooftops.

It was genuinely innovative thinking. And it almost worked.

The Rise

Chris Gronet founded the company in May 2005 in Fremont, California—a city in the San Francisco Bay Area that had become synonymous with technology manufacturing. Tesla would later build its factory there. In Solyndra's early days, the location made sense: close to Silicon Valley talent, close to venture capital, close to the future.

The money poured in. George Kaiser Family Foundation. U.S. Venture Partners. Richard Branson's Virgin Green Fund. Masdar, the Abu Dhabi government's clean energy initiative. By 2009, Solyndra posted $100 million in revenue. Analysts estimated the company could be worth up to $2 billion.

In 2006, Solyndra began deploying demonstration systems around the world—fourteen of them, each bristling with sensors measuring solar radiation, wind speed, temperature, and humidity. The data fed into forecasting software that would help predict energy yields. By the time the company collapsed, it had installed over a thousand systems globally, representing one hundred megawatts of generating capacity.

But the real inflection point came in 2009, when the Obama administration selected Solyndra as the flagship recipient of its clean energy loan guarantee program under the American Recovery and Reinvestment Act—the stimulus package designed to pull the economy out of the Great Recession. The $535 million guarantee was meant to signal that America was serious about green energy, that government could help promising technologies reach commercial scale.

California piled on with a $25.1 million tax break. Solyndra was the future.

Fab 2: The Monument to Optimism

With government backing secured, Solyndra built its monument: Fab 2, a $733 million manufacturing facility that opened in September 2010. The word "fab" comes from semiconductor manufacturing, short for "fabrication plant," and Solyndra's new facility aspired to that level of sophistication.

It was, by all accounts, extraordinary. Robots whistled as they moved materials through the production line. The employee facilities included spa showers. The combined capacity of Solyndra's two plants was projected to reach 610 megawatts annually by 2013.

The company estimated that building the complex would employ three thousand construction workers, that operating it would create over a thousand permanent jobs, and that installing the resulting panels would create hundreds more positions. The technology would be duplicated in multiple other facilities. This was the green economy that politicians loved to talk about: American innovation, American jobs, American leadership in the industries of tomorrow.

But by November 2010—just two months after Fab 2 opened—Solyndra announced layoffs. Forty employees gone. One hundred fifty temporary workers not renewed. The older plant, Fab 1, was mothballed. Plans to expand Fab 2 were postponed. Annual production capacity was cut in half.

The reason? Market conditions.

The Collapse of Polysilicon

To understand what killed Solyndra, you need to understand what was happening on the other side of the Pacific.

Conventional solar panels use polysilicon—extremely pure silicon that serves as the semiconductor material converting sunlight to electricity. For years, polysilicon was expensive, which is part of why Solyndra's CIGS thin-film technology seemed promising. If the raw material for your competitors costs a fortune, your alternative approach has room to compete.

Then China mastered the Siemens process.

The Siemens process, named after the German engineering company that developed it in the 1950s, is a chemical method for producing highly pure polysilicon. Chinese manufacturers invested heavily in scaling up this technology, and between 2009 and mid-2011—the exact window of Solyndra's federal loan—the price of polysilicon collapsed by roughly eighty-nine percent.

Read that again. The key ingredient for Solyndra's competitors dropped in price by almost ninety percent in less than two years.

Companies like Suntech and Yingli, both Chinese manufacturers, could suddenly produce conventional flat panels at prices Solyndra couldn't match. The efficiency advantage of crystalline silicon over thin-film technologies like CIGS made the math even worse. Solyndra's cells converted twelve to fourteen percent of sunlight into electricity—respectable for CIGS, but below what conventional panels could achieve. And those efficiency numbers were for cells laid flat; the company never published performance data for cells rolled into cylinders.

Working backward from Solyndra's specification sheets, the actual field efficiency of their panels came to about 8.5 percent. Against cheap, more efficient Chinese competition, the cylindrical dream was dying.

The Final Days

On July 27, 2010, Brian Harrison took over as CEO. He was a veteran of Intel Corporation, brought in to turn things around. Chris Gronet, who had led the company since its founding, stepped aside.

Harrison had about thirteen months.

On August 31, 2011, Solyndra announced it was filing for Chapter 11 bankruptcy protection. Eleven hundred employees were laid off. All operations ceased. The company that was supposed to exemplify American clean energy leadership was raiding its own offices, with FBI agents visiting the homes of both Harrison and Gronet to examine computer files and documents.

The Department of Treasury launched its own investigation. The criminal probe focused on whether Solyndra and its officers had misrepresented the company's finances when seeking the federal loan guarantee, or had engaged in accounting fraud.

Internal emails painted an uncomfortable picture. As early as August 2009, an aide to then-White House Chief of Staff Rahm Emanuel had asked a Department of Energy official about concerns in the investment community regarding Solyndra. The official dismissed the idea that the company had financial problems. Other emails showed the Obama administration had concerns about the legality of the Energy Department's loan restructuring plan and warned that the plan should be cleared with the Department of Justice first—advice that went unheeded.

The Political Fallout

Solyndra became a weapon.

During the 2012 presidential campaign, Americans for Prosperity—a conservative advocacy group backed by the Koch brothers—spent $8.4 million on television advertisements in swing states attacking Obama over the loan guarantee. The Wall Street Journal called it "perhaps the biggest attack on Mr. Obama so far."

The critique was straightforward: the government had gambled with taxpayer money on a company that couldn't compete, and politically connected investors—particularly George Kaiser, a major Obama fundraiser—had benefited from sweetheart deals. The term "cronyism" was everywhere.

But the investigations told a more complicated story. No criminal charges were ever filed. No evidence of political corruption emerged. What investigators found was that Solyndra had "used inaccurate information to mislead the Department of Energy"—bad enough, but not the criminal conspiracy that critics alleged.

The bankruptcy proceedings themselves became contentious. The Department of Justice objected to Solyndra's restructuring plan, arguing that its "primary purpose is tax avoidance through the preservation of hundreds of millions of dollars of net operating losses." The successor company, awkwardly named 360 Degree Solar Holdings, Inc., would control approximately $350 million in tax attributes.

In the end, Solyndra's owners—Argonaut Ventures and Madrone Partners—realized tax benefits worth between $875 million and $975 million in net operating losses. The Department of Energy, which had provided the $535 million loan guarantee, received nearly nothing. Taxpayers took a $528 million loss.

The Lawsuits

Solyndra didn't go quietly. The company's bankruptcy estate filed a $1.5 billion lawsuit against Chinese solar panel manufacturers, alleging price fixing. If successful, the government hoped to recoup some of its losses.

The results were modest. In November 2015, Yingli Green Energy settled for $7.5 million. In April 2016, Trina Solar settled for $45 million. A third defendant, Suntech Power Holdings, reached a dismissal agreement in June 2016. Combined, these settlements recovered a tiny fraction of what taxpayers lost.

Employees who were abruptly laid off sued as well. When your company announces bankruptcy one day and tells eleven hundred workers not to come back the next, the legal consequences follow.

What the Cylindrical Panels Actually Did

Lost in the political noise was the fact that Solyndra's technology, while ultimately uncompetitive, represented genuine engineering innovation.

The construction of each cylinder was intricate. Equipment the company developed in-house deposited CIGS material on the outside of the inner tube, creating up to two hundred individual solar cells per cylinder. On top of the CIGS layer, an "optical coupling agent" concentrated incoming sunlight. The inner tube slid into the outer tube, the assembly was filled with silicone oil to improve light transmission and heat dissipation, and the whole thing was sealed against moisture—critical because humidity degrades CIGS performance.

Forty of these cylinders went into each panel, which measured roughly one by two meters. The panels were designed for large, low-slope commercial rooftops—warehouses, big-box stores, factory buildings. Unlike residential installations where aesthetics matter, commercial rooftops prioritize energy output per square foot of available space.

Solyndra argued that their horizontal mounting system could cover more roof area than conventional tilted panels, and that the combination of direct sunlight capture, diffuse light collection, and reflected light from white roofing membranes would generate more electricity over the course of a year. The cylindrical design also meant that daily output was more consistent—no sharp midday peak followed by steep morning and evening declines.

These weren't absurd claims. The physics made sense. The problem was economics.

Lessons in Industrial Policy

Solyndra is often cited as evidence that government shouldn't pick winners and losers in the marketplace. The argument goes like this: bureaucrats can't anticipate market shifts, political considerations corrupt investment decisions, and taxpayer money inevitably gets wasted on technologies that can't compete.

But the full picture is more nuanced. The same loan guarantee program that funded Solyndra also backed Tesla's Model S production facility. That loan was repaid early, with interest, and Tesla went on to become the world's most valuable automaker. The Department of Energy's overall loan portfolio has actually performed reasonably well, with losses concentrated in a handful of high-profile failures.

The deeper lesson may be about the speed of technological change. When Solyndra received its loan guarantee in 2009, polysilicon was expensive and CIGS thin-film technology looked like a plausible path to cost-competitive solar power. Nobody in the Department of Energy—or, apparently, in Solyndra's investor base—anticipated that Chinese manufacturing would drive polysilicon prices down by ninety percent in two years.

Markets move fast. Government investment decisions, shaped by political timelines and bureaucratic process, often can't keep pace.

The Afterlife

A small number of Solyndra's glass tubes found an unexpected second life. In 2012, they became part of an art installation at the University of California Botanical Garden—a quiet memorial to a company that tried to reimagine how the world harvests sunlight.

Chris Gronet, the founder, eventually landed at Applied Materials, one of the world's largest suppliers of semiconductor manufacturing equipment. According to his LinkedIn profile, he became Vice President and Chief Architect of Emerging Products in the company's ICAPS business unit in September 2024. He works remotely from Santa Monica.

The Fremont facility that once housed Fab 2 has been repurposed. The robots have stopped whistling. The spa showers serve other workers now.

And the debate about Solyndra continues whenever anyone proposes that government invest in emerging technologies—a reminder that even the most promising innovations can be swept away by forces no one saw coming, and that half a billion dollars can disappear faster than anyone thought possible.