Solar’s sunny outlook despite Solyndra

Despite the disaster of Solyndra, now is still the best time to invest in solar companies, the FT and Stanford Graduate School of Business’s Financing Innovation conference was told on Tuesday.

In a panel discussion, Steve Westly, a leading cleantech venture capitalist, said that, while the Californian solar cell maker’s bankruptcy had been a terrible thing, four or five global solar brands would emerge within five to 10 years.

“Solar companies will become household names almost akin to auto companies today,” he predicted.

“Just remember this moment – everyone now says dump solar companies, it’s a bubble, not a real business. But five to 10 years from now you will see a consolidation and four or five very large global brand names will emerge – [now] is the best time to invest not the worst.”

For example, First Solar, the US solar panel maker, had the resources to go on a “buying spree” over the next two years, he said, picking up technology bargains among struggling rivals.

Mr Westly, formerly an eBay executive, state financial controller for California and National Finance Committee member of the Obama for America campaign, defended the government’s cleantech investments.

Solyndra was a terrible error, I feel terrible for the employees and investors, but people are going to draw precisely the wrong conclusions,” he said.

“ The first is: Oh my god, those people in government don’t know what they’re doing, when in fact [Energy secretary Steven] Chu is probably the best secretary of energy we’ve ever had.

“He brought a team into Silicon Valley to make their investment strategy, got the money out relatively quickly and, in spite of the fact that Solyndra was an error, [bankrupt flywheel energy storage maker Beacon Power] was an error, and you’re going to hear about 10 other mistakes, there were some huge successes.”

He cited Tesla Motors and First Solar among the successes and said Solyndra’s downfall was that no one dreamed the cost of solar would come down so quickly – a trend that was now making the industry look attractive.

Solyndra was one of three US solar companies to file for Chapter 11 bankruptcy protection in August. It had been backed by a $535m federal government loan guarantee and was one of many cleantech companies to benefit from the $18.4bn in clean energy loans from Mr Obama’s $787bn stimulus package in 2009.

Fellow panellist Steve Jurvetson, managing director of the VC firm Draper Fisher Jurvetson, said companies failed all the time, but Solyndra had been a particularly bad investment by the government.

“To spend $1bn before you know if you have a product is kind of a risky proposition,” he said. But he agreed with Mr Westly that the net result of government investments would be positive.

“In the big picture, in a weighted-average portfolio, it’s going to be just fine,” he said.