Manatt Division Chair Speaks to Energy Risk About Solar Project Funding
“Solar Failure Raises Questions About Funding for Renewables”Energy Risk
October 1, 2011 – Manatt’s Craig Moyer, chair of the firm’s Land, Environment and Natural Resources Division, spoke to Energy Risk about the impact Solyndra’s bankruptcy could have on the future of solar project funding.
Energy Risk, a magazine for commodity traders and risk managers, reports that solar company Solyndra faults external factors, including the global economy and industry conditions, for its Chapter 11 bankruptcy filing. Though opinions vary as to where the company went wrong, Solyndra points to the unexpected increase in polysilicon availability in 2009 for its downfall. Solyndra alleges it was unable to lower its prices in time to compete with the companies that use polysilicon in their solar panels.
"There is no question that external factors had an impact – Solyndra didn't anticipate falling prices," said Moyer. "There is also a question about whether under any circumstances the Solyndra panels had a real market. I think they are a disruptive technology and that's what venture capitalists look for, and they are really excellent products for certain applications. But were those applications enough to sustain the kind of investment that was being made in Solyndra? In retrospect, it looks like they were not."
Industry observers now question what effects Solyndra’s bankruptcy will have on future funding for upcoming solar projects, especially when the U.S. government’s 1603 Program, which offers energy developers subsidies and supports private investing, is scheduled to expire in December.
"There's no question that this has had an impact on government programs already. Politicians are calling for an end to the 1603 Program," Moyer said. "But it's important to remember that the point of having a government program is to support new technologies when there isn't enough funding in the private sector."
Moyer predicts the effects of Solyndra will not have a lasting impact on the industry. "In the short term, it will be harder for private equity funds to raise money for clean tech projects," Moyer says. "Over the next several years, however, I think interest will come back."
© 2013 Manatt, Phelps & Phillips, LLP. All rights reserved.