Just under a week ago, one of the US solar industry’s big players, SunEdison stunned the solar community by filing for bankruptcy. This sudden admit to defeat shocked the nation, mainly due to SunEdison being one of the first large renewable energy companies in the US to fail. Should the industry be concerned if an energy giant as established as SunEdison are announcing a fiscal crisis? It’s important to consider this crash and burn may not be a reflection on the industry as a whole and could be down to SunEdison’s own poor business decisions.
SunEdison is thought to owe its upstream suppliers over $321 million. Additionally, lawsuits have been filed against the company for $2.3 million worth of unpaid donations. Industry shares on a whole have recently taken a hit after the announcement, so it seems the community has grown concerned about SunEdison’s bankruptcy. Having said this, solar project developers are still on high demand despite this and shares in First Solar, one of SunEdison’s main competitors have, of course slightly increased following this. According to The Guardian, SunEdison’s bankruptcy has prevented many projects from starting across the world, with some searching for new financing and others not going ahead at all.
The US isn’t the only country taking the hit either. SunEdison has claimed equity partnerships are being searched for by the company to fund their 2.4 gigawatts of capacity in India. Around 4 gigawatts of clean-energy projects are now up for grabs and India’s solar prices are already considerably low due to the fact they sell their solar projects by auction (to the lowest bidder). This accounts for 10% of the nation’s solar and wind capacity. Investors will inevitably become hesitant to put any funds into solar projects, which means that India’s plans to install 100 gigawatts of solar by 2020 at an estimated cost of $100 billion are at risk of failing.
A contributor to SunEdison’s failure, is the fact that it grew at an astronomical rate using ridiculously cheap means of funding, but at such a high frequency, it couldn’t pay half of its investors or lenders back when creditors wanted repaying or at least see a glimpse of ROI. SunEdison is a perfect example of a business that had huge dreams but didn’t deliver to its own expectations.