The worlds biggest solar PV seller was worth $13bn: now bankrupt

How is the hallowed Green tech industry working out for China? Not so well.

Shi Zhengrong was called a “hero of the environment” by Time Magazine. He was a billionaire who ran the worlds largest seller of solar PV cells. But the glory days of 2008 – 2011 are gone. Another bubble bursts. Wiped out in two years. How fast was this fall?

Chinese solar panel maker Suntech flames out

By Steven Mufson, Published: May 3 The Washington Post,

In 2008, CNN named Shi “China’s Sunshine Boy.” In 2009, Fortune anointed him “China’s new king of solar.” That year, New York Times columnist Thomas Friedman also cited Shi and Suntech as models of China’s green leap forward — which he called “the Sputnik of our day” and a spur for U.S. clean energy policy.

Now, however, the Chinese Sputnik has crashed to Earth, and the Sun King has been toppled.

… a Chinese court declared the company bankrupt after a petition from eight Chinese banks. On Wednesday, the company announced that its 2012 revenue had plunged 48 percent from the previous year.

Suntech — which in 2011 was the world’s biggest seller of silicon-based photovoltaic modules — was once valued at $13 billion on the New York Stock Exchange; it is worth less than 1 percent of that today. A news report that Warren Buffett might be eyeing all or part of Suntech lifted the battered share price more than 80 percent in one week, but acquiring Suntech could be a risky bet. [Buffett denies this according to Bloomberg]

Quartz reports that just last week Suntech cancelled a major order: “This doesn’t look good. Suntech, the embattled Chinese solar panel maker, has canceled $1.3 billion in polysilicon orders…”

Shi was trained in Australia, under our best.

The rise of Suntech was a rags-to-riches story for its founder. Given up for adoption by destitute parents in a farming area, Shi excelled at school and obtained a master’s degree before moving to Australia in 1989 on an exchange program. He accepted a scholarship to do solar cell research at the University of New South Wales, quickly earned a PhD … [The Washington Post]

An old fashioned glut with new fangled technology. There were just too many solar panels in the world that nobody wanted:

China has about two-thirds of the world’s solar panel manufacturing capacity. China alone, theoretically, could supply all of the world’s solar demand and there would be no room for U.S., German, Japanese or Taiwanese companies. [The Washington Post]

And people said that solar was becoming more competitive with coal?

“Analysts said Suntech’s business model, deliberately pushing down prices to capture larger market share despite narrower profit margins, contained the seeds of its own destruction.” [The West]

The last profit was in 2010:

Suntech recorded a net loss of $1.0 billion in 2011, from a profit of $237 million in 2010, according to company filings. The firm has yet to report financial results for 2012. [The West]

What the government giveth, a bureucrat can take away, and when combined with a rapid expansion at the wrong time, it became the perfect (solar) storm:

… just as Suntech became the world’s largest solar panel manufacturer, the European debt crisis hit. Profit margins collapsed, and customers’ unpaid bills piled up. In June 2012, a puzzled Citigroup analyst noted in a report that as major countries such as Germany and Italy sharply reduced subsidies, Chinese manufacturers led by Suntech boosted capacity 30 percent, “only exacerbating the excess supply conditions.” The report said that “module prices are likely to remain below Suntech’s production costs for the foreseeable future.” [The Washington Post]

If Shi had been doing his research properly and reading skeptical blogs he might have seen the writing on the wall.

Remember how we are supposed to be following China and how China is “going Green”?

Suntech is not unique. Most Chinese solar panel manufacturers have been losing money…

But the Chinese government may not come to the rescue. Indeed the government’s support for solar energy in China has grown tepid, despite an ambitious goal of adding about six gigawatts a year for the next decade. The National Development and Reform Commission approved a feed-in tariff for solar power — a guaranteed fixed-rate payment to developers — of 15 cents a kilowatt hour, but no one wants to pay for it. The state electricity company, State Grid, isn’t allowed to raise rates for households. But the central government hasn’t put the subsidy in the budget, either. In addition, connecting to the grid isn’t easy.

The full story is in The Washington Post, hat tip to Tom Nelson.

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