(3BL Media/Jusmeans) - Just when it seemed like solar was going gangbusters, with double-digit growth rates, studies showing that states could produce anywhere from 25-45% of their power from the sun, and overall growth in the five years starting 2010 of 418%, we get this news that SunEdision, one of the largest American producers, has gone bankrupt. Does this indicate that the solar boom is coming to a screeching halt? Or is this the story of one particular company whose fortunes have crashed and burned due to specific circumstances?
That question was answered right out of the gate in Jenny Chase’s post on Bloomberg New Energy Finance. “SunEdison’s bankruptcy says more about the company’s strategic decisions than about the solar industry as a whole.” She assures us that companies like SunPower and First Solar are doing just fine.
“What has distinguished SunEdison,” says Chase, “has been the relentless and unfocused pursuit of growth, in which it has invested vast amounts of borrowed money.” In short, the company took a lot of risks, with borrowed money, and not enough of them paid off.
In the world of big projects and high finance, timing is critical. Some of projects SunEdison invested in were not bad risks, per se. They just took a little too long to come to fruition. Others, like attempting to enter China in 2014 when six of the top ten producers in the world are Chinese, were probably unwise.
The company spent $3.1 billion on a two-year acquisition spree. By the time they declared bankruptcy, they were $16 billion in debt.