The recent bankruptcy of Solyndra Energy resulted in a media frenzy that directed considerable attention and scrutiny to the clean energy industry. The failure of this solar company has been called a “black eye” for the renewable energy industry, the end of green jobs, and as David Roberts of Grist warned, a climategate-level mess.

A mess, yes, but not because it signals the collapse of the renewables industry. The Solyndra debacle has resulted in a mixed messages and misinformation, obscuring reality: the solar energy is making tremendous strides.

What killed Solyndra?

There are several factors that contributed to Solyndra’s bankruptcy, but one in particular can be perceived as a positive turn of events—falling module prices. Ironically, one could argue it was the explosion of the solar industry that played a big role in Solyndra’s demise.

Back in 2005, Solyndra offered a unique system design, one that did not rely on polysilicon, the primary material for the traditional crystalline solar module. At the time, this business model had strong potential for competing in a market hampered by high costs of polysilicon. Instead, the thin film product used copper indium gallium diselenide, and, by applying the thin film to a cylindrical design, the modules could be easily installed for maximum exposure to the sun. The novel approach initially attracted many investors.

But then the price of polysilicon nosedived due to a combination of increased demand for and production of crystalline silcon solar modules. Between the period when Solyndra applied for and was awarded the loan guarantee (December 2006-June 2009), the price of polysilicon went from about $300/kg to $460/kg—then plummeted below $60/kg. It has remained around $70/kg since.

To be fair, the failure of Solyndra cannot be entirely blamed on these prices. However, it most certainly had an impact on the advantages of its technology. The market, not the government, had already chosen a winner. In a September 9th memorandum, the Congressional Research Service echoed this sentiment:

The solar market has essentially become commoditized. Solar PV firms that have proven technology, can warranty their products, and have enough operational performance to satisfy financial risk concerns of dept and equity finance provider will be acceptable solutions for solar PV projects. Competition therefore will likely be based on either module prices or electricity costs. Solyndra’s technology is relatively new with limited operational performance history.

Solar Power: Clear Skies or Clouds?

Solyndra is just one of many solar companies, so it’s a stretch to suggest they’re emblematic of an entire industry (check out this great infographic—Solyndra vs. the solar industry). In truth, the solar industry is demonstrating improved strength and growth—two words that aren’t frequently used to describe today’s economy. In the last six years, solar photovoltaic installations increased by an average of 64 percent. And in just over a year (August 2010 to August 2011), the industry saw a 6.8 percent growth in private sector jobs. All this while U.S. job growth languished at 0.7 percent.

This is positive news, but the solar industry still has ground to cover. Although prices continue to fall, solar must reach an even more competitive price while demonstrating additional benefits.

“I think the most important lesson is that, for the solar industry to survive and to flourish, it’s absolutely essential that the industry provide a product that has market demand,” said Ned Harvey, Rocky Mountain Institute’s Chief Operating Officer. We’ve got to identify some other mechanisms that benefit what solar can provide to consumers and utilities. Price is always going to be important, but we’ve really got to understand the impact of price on both supply and demand”

Poised for Take-Off

The solar industry is on the cusp of even greater success. Betting the future of an entire industry on the failure of one company is at best foolish and at worst dangerous. The growth of this industry is good for jobs and it’s good for American competitiveness.

“If we want to capture the benefits in our country,” Harvey said, “if we want the U.S. to be a leading player in clean tech and clean energy, it’s going to take investments and they’re not all going to pay off.”