A solar company in which Abu Dhabi's Masdar had invested US$30 million has declared bankruptcy, illustrating the uncertain prospects for renewable energy.
US solar firm files for protection
A California solar company in which Abu Dhabi had invested US$30 million (Dh110.1m) is filing for bankruptcy protection, the latest casualty of increased competition in the renewable energy sector.
Masdar, the emirate's clean energy company, owns a 2.36 per cent stake of Solyndra, the third US solar company to seek bankruptcy protection in a month, citing competition from China.
The story of Solyndra illustrates the uncertainty that remains in the renewable sector despite advances in technology and financial backing from governments.
Solyndra was the darling of American clean energy policy, receiving $527m in loans and a visit from Barack Obama, the US president. It made a unique cylindrical solar panel that could capture the sun's rays from any angle.
Between 2007 and 2009, Masdar invested $30m in Solyndra through its venture capital vehicle, the Masdar Clean Tech Fund.
But the support was not enough to counter competition from Chinese manufacturers that have benefited from even more extensive government subsidies. Countries from Spain to Germany have also cut back on subsidies on solar power generation, erasing some demand for solar panels.
"The markets are oversupplied," Martin Simonek, a solar analyst at Bloomberg New Energy Finance, wrote in a recent report.
"Producers are preparing for a painful consolidation that could see several players exit the solar industry."
Solyndra plans to file for Chapter 11 this week and has already laid off 1,000 employees.
If it decides to liquidate its assets, Masdar and other private investors would be among the first in line to recoup their investment, according to Bloomberg News.
"Masdar regrets the news that the board of Solyndra decided last week to close down operations and evaluate other options," Masdar said in a statement yesterday. "Our thoughts are with the company's employees and their families."
Masdar Capital, the venture capital unit, invests about $540m through two funds and has hinted that a third fund could be established under the right market conditions.
It targets investments of $15m to $40m each, the most recent in eCullet, a glass-processing company in Palo Alto, California. In July, Alex O'Cinneide, the director of Masdar Capital's venture capital unit and a member of Solyndra's board of directors, was optimistic about its investment prospects.
"We think the market is improving in terms of the quality of companies we're seeing," he said at a briefing in Abu Dhabi. "We're [in] the business of making a profit."