For Solar, No Guarantees

With solar panel prices falling and a prominent manufacturer in bankruptcy, the U.S. solar industry has been hard-pressed for good news. But Washington continues to hand out loan guarantees.

The Department of Energy says the guarantees will create U.S. jobs in the green-energy industry. But critics say the government is trying to pick winners instead of leaving that function to the marketplace, citing the struggles of several companies that received government funds.

The White House this month made final a $197 million guarantee for SoloPower Inc., a maker of lightweight solar panels in San Jose, Calif. Two more guarantees for solar manufacturers valued at a combined $425 million are due to be approved before a Sept. 30 deadline.

The funding comes from the 2009 economic-stimulus package, which set aside enough cash to back about $60 billion in loans for renewable energy and transmission projects. Congress twice has raided those funds, leaving enough to back $25 billion in loans. The DOE has until the Sept. 30 end of the federal government's fiscal year to dole out the funds or lose them.

While demand for solar panels is rising, competition from Chinese manufacturers has driven down prices and made it hard for U.S. makers to compete.

Evergreen Solar Inc. this month filed for bankruptcy protection after closing a Massachusetts plant built with the help of state and local subsidies. Evergreen's panel technology, which uses less polysilicon than competitors do, looked like a good bet in 2008, when prices of the material were high. Polysilicon's price has plummeted since.

Solyndra Inc., which received a $535 million loan guarantee from the DOE to build a factory in northern California in 2009, last year had to close an older factory and lay off workers.

Some European countries subsidize solar power and other renewable energy sources by guaranteeing producers electricity rates that will help offset the producers' costs, which are then passed on to consumers. But proposals for such "feed-in tariffs" in the U.S. have stalled at the federal level.

Jesse Pichel, a clean-energy analyst at investment bank Jefferies & Co., said feed-in tariffs would give market forces a greater role in picking winning technologies. "The government really should not be picking technology bets," Mr. Pichel said. "It's fraught with potential failures."

The DOE acknowledges that loan guarantees don't always pan out but are worthwhile nonetheless. "While not every company will succeed in this competitive industry, we believe that solar generation and manufacturing play a vital role in helping America win the clean energy race," said DOE spokesman Damien LaVera.

To compete with larger manufacturers in China, SoloPower is targeting a niche of commercial and industrial buildings. The company's panels are lighter and potentially less expensive to install on rooftops because they are built without glass, said Chief Executive Tim Harris. "You want to get as much power per roof as you can. We can simply get more panels on the roof," he said.