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George Douglas, a spokesman for Golden-based NREL, said thin-film holds promise because it can be manufactured in a less-expensive fashion and has other properties inherent to the technology that can improve efficiency. The added competition from China, a drop-off in the European business and lack of financing have hindered some thin-film companies like Abound, he said.

"As far as we know, (Abound's) process and what they're trying to do is sound -- scientifically and technologically," he said.

Although Solyndra also used thin-film technology, the California company had the copper indium gallium diselenide rolled into cylindrical tubes. The form was intended to lessen the installation costs, said Solar Today's editor Masia.

"Prices plunged on the more-efficient and more-traditional flatplate ... that killed them," Masia said. "I think the other people in the thin-film business think that Solyndra's failure wasn't a judgment on the thin-film technology, but the cylindrical form."

Because of the uniqueness of Solyndra's technology and machinery, it limited the recouping of federal dollars as the assets were not useful to others in the industry, he said. When it comes to flatplate thin-film manufacturers, if one fails, there are other firms producing similar products that could purchase the assets, he said.

Masia said he believes Abound will resume production of its more-efficient module, but he cautioned that if the company goes under, the effects would be broad.

"Any failure of a company is a blow to the solar sector as a whole just because it becomes a political football," he said.

'Backing a losing horse'

Solyndra and the Chevy Volt's battery fires already have been wrapped into storylines that suggest the Obama administration's green energy products are not working, said Ken Bickers, a professor and chairman of the political science department at the University of Colorado. Any failure at Abound could play into that narrative, he said.

"It's never good when you're the incumbent, when you have one of your prized projects going under," he said. "It creates a storyline that the Republicans will no doubt use as we move from the nomination process to the general election."

Recently, the Committee on Oversight and Government Reform came down on the Obama Administration's $14.5 billion clean energy loan program, claiming the government "wasted millions of taxpayer dollars" by ignoring warning signs and making excessively risky loans to companies with "junk" status credit ratings.

One of those firms was Abound, committee officials wrote in the report.

"Fitch (Ratings) gave the (Abound) project a credit rating of 'B' (worse than Solyndra's) with a recovery estimate of only 45 percent," officials wrote. "Fitch labeled the project 'highly speculative' and described Abound as lagging in technology relative to its competitors, failing to achieve stated efficiency targets and expecting that Abound Solar will suffer from increasing commoditization and pricing pressures."

Committee officials also detailed Abound's ties to Democratic politicians that include the backing of donor Pat Stryker's investment firm, the hiring of a congressman's nephew and the support of Gov. Ritter.

"The combination of Abound Solar's junk credit rating, financial problems and the company's political connections raise serious concerns about whether DOE based the decision to invest $400 million on merit and whether taxpayers could again lose millions on a dubious solar manufacturing project," according to the report.

Bloomberg analyst Chase said she doesn't believe the government will "go into the manufacturing business again."

"The trouble is, you can always find a reason not to invest in innovation, so I can't say I exactly blame them for not realizing it, but ... they were sort of backing a losing horse.

"I don't think they'll stop backing projects; I think the U.S. has a lot to give the world still in terms of technology."

But betting on upstart businesses is a high-risk, high-reward investment, she said.

"It was a venture capital-type deal, and the thing about venture capital-type deals is that many of them tend to fail," she said. "It would be shortsighted to say just because these failed, the sector failed. It does mean that market was more difficult."