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SunEdison’s filing leaves the renewable-energy industry unfazed

6th May 2016

By: Bloomberg

  

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Renewable-energy companies distanced themselves from the collapse of Sun-Edison, saying the largest US bankruptcy this year will not harm the industry.

The world’s biggest developer of clean-energy projects sought protection from creditors after racking up $16.1-billion in liabilities following a $3.1-billion expansion spree that spooked investors and industry partners.

The bankruptcy says more about SunEdison’s “relentless pursuit of growth” than the solar industry as a whole, says Jenny Chase, chief solar analyst for Bloomberg New Energy Finance. She notes that other large developers, such as First Solar, have been profitable in recent years. SunEdison’s restructuring may even benefit some other solar developers.

“The issue with SunEdison was that they tried to grow too fast and took on too much debt,” Andrew de Pass, CEO of Conergy, said in an interview. “The developer is majority-owned by Kawa Capital Management, a Miami-based asset management firm that acquired assets of an insolvent German solar company three years ago. Conergy completed almost 500 MW of solar plants last year, generating revenue of more than $500-million and has “little” debt, he says.

The biggest impact from SunEdison’s bank-ruptcy could be the potential sales of project assets offered in what has already become a buyer’s market. Conergy may bid on such assets with a partner, he says.


“There’s going to be a flood of projects available and a supply glut,” De Pass said. “Assuming we get a capital partner, hopefully it means we’ll be able to pick up some of them at good prices.”

Others companies are already snapping up SunEdison assets. An hour after the bankruptcy filing, British green energy supplier Ecotricity Group announced it had acquired SunEdison’s UK portfolio of 800 solar rooftop installations on April 8 for a “seven-figure sum”. More precise terms were not disclosed.

“This is our first step into the domestic solar market, as the price of the technology continues to fall,” DaleVince, Ecotricity’s founder, said in a statement. “We’re confident that it’s only a matter of time before we can resume the work SunEdison started and help more homes take advantage of solar power.”

Barely a decade old, the renewable-energy industry has no real dominant companies, with a handful emerging then flaming out. Suntech Power Holdings was the last major default in 2013, handing over leadership of solar manufacturing first to Yingli Green Energy Holdings and then Trina Solar. Solyndra’s bankruptcy in 2011 tilted political support away from subsidies for renew-ables. SunEdison owes Trina $10.5-million, according to filings in the bManhattan federal court on April 21.

The WilderHill New Energy Global Innovation Index of 98 clean-energy companies was little changed last week after climbing 19% since the middle of February. SunEdison shares are part of the index and were suspended from trading before the announcement, having lost almost all their value in the past year.


Even so, investment in the industry hit a record $329-billion last year, more than triple the investment a decade ago, according to data compiled by Bloomberg New Energy Finance. Governments everywhere are stimulating renewables and ratcheting back support for fossil fuels after agreeing in Paris in December to limit the emissions causing global warming.

“The future is brighter than ever,” says Alan Russo, senior VP of sales at REC Solar, a com- mercial solar installer backed by US utility Duke Energy.

GlassPoint Solar, which is developing systems to stimulate production of the most viscous grades of oil, says the industry is increasingly rivalling traditional fuels on price.

“The travails of one company will not stop the rise of solar power,” says Rod Mac Gregor, cofounder of GlassPoint. “We stand at a watershed moment where solar technologies are both proven and economical in applications from rooftops to oilfields.”


SunEdison’s woes started with an acquisition binge, where it bought up wind and solar projects on every continent except Antarctica. At first, the market responded positively, driving the shares to a peak of $32. Doubts started to creep in in July, when it announced plans to buy Vivint Solar at a 52% premium.

After delays and renegotiation, Vivint scrapped the deal in March and is now suing SunEdison. The US Department of Justice and the US Securities and Exchange Commission also started inquiries into SunEdison.

The bankruptcy of this “former solar star” should not give the impression that the solar industry “can be lumped in with the incumbent energy industries,” says Jeremy Leggett, founder of Solar Century Holdings and author of four books on climate change and energy.

SunEdison joins a crowded list of energy and commodities companies to file for bankruptcy this year, according to data compiled by Bloom-berg, and comes after Peabody Energy, the world’s biggest independent coal company, announced bankruptcy on April 13.

“The mass bankruptcies among coal companies and oil and gas drillers in shale are to do with broken business models in markets with broken prospects,” said Leggett in an email. “SunEdison managed to fashion a broken business model in a market with huge growth prospects.”

Large-scale photovoltaic solar farms, Sun-Edison’s core focus, will grow from about 100 GW in 2015 to 450 GW in 2025, according to Bloomberg New Energy Finance. The cost of solar and wind technology has tumbled it the past few years, stimulating demand.

The trend for dramatic changes and consoli-dation in the solar market is expected to continue “in the foreseeable future,” said DavidRenne, president of the International Solar Energy Society, in an email.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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