EnergyWire’s Ferris discusses impact of SunEdison bankruptcy on industry, politics of renewables

Source: Monica Trauzzi, E&E • Posted: Monday, May 2, 2016

Five years post-Solyndra, another major solar company declared bankruptcy this month. How is SunEdison Inc.’s bankruptcy unique, and what does it represent about the state of the solar industry? On today’s The Cutting Edge, EnergyWirereporter David Ferris discusses the impacts of SunEdison’s bankruptcy on the broader industry. He also talks about the political shift on solar since Solyndra.

Monica Trauzzi: Welcome to The Cutting Edge. Five years post-Solyndra and another major solar company declares bankruptcy. How is SunEdison’s bankruptcy different, and what does it say about the solar industry more broadly? EnergyWire‘s David Ferris joins me today. David, thanks for coming on the show.

David Ferris: Sure.

Monica Trauzzi: David, you and our colleague, Saqib Rahim, have a great piece in EnergyWire this week that compares the Solyndra and SunEdison bankruptcies. It’s been five years since Solyndra. What have been the biggest changes that we’ve seen in the industry?

David Ferris: Well, we have to remember what a wallop the Solyndra bankruptcy was for the solar industry. We have to remember that back then in 2011 solar was like a little kid compared to how it is now. It wasn’t trusted by Wall Street. It hadn’t arrived on the power grid in a very significant way.

Then along comes this scandal around Solyndra that painted the whole industry black. Every other company in the solar industry had to face this accusation. Prove to us that you’re not like that government boondoggle of Solyndra.

Since then a great deal has changed. The biggest one being that solar is a lot cheaper than it was. Solar modules have dropped in price. They’re a quarter of what they were in 2011. That’s led to much more use of the panels. It’s made it much more mainstream.

Last year 26 percent of all new installed capacity on the U.S. electric grid is solar. So now instead of being a kid, it’s more like a teenager. It’s more like up here. There’s still people who don’t quite trust it, but it’s trusted enough that Wall Street and the power industry feel like they can hand it the keys and let it drive once in a while.

Monica Trauzzi: So then where did SunEdison go wrong, and how do their mistakes compare to the mistakes that Solyndra made?

David Ferris: Well, they’re both similar in that they both made bets on a market and the market turned against them. In other senses they’re very different. Solyndra is a company that had a novel way of producing solar by taking what’s called thin film and making it into a cylinder. As they were coming to market the Chinese started producing huge amounts of crystalline photovoltaic panels, the kind that we’re all familiar with. The market turned against them. The market was cut out from under them. So they went bankrupt.

For SunEdison it’s an entirely different company. It actually grew out of a multinational semiconductor company that made a pivot into being a renewable energy developer and became hugely ambitious. They wanted to be the first supermajor in the renewable energy industry and did development all over the world in Europe, in Latin America, in India, in North America. Made a lot of really expensive acquisitions, including a $2 billion attempt to buy Vivint, which is one of the largest rooftop solar panel installers.

Last year when energy stocks took a hit, credit dried up and they couldn’t pay their bills. So last week it all came to the end.

Monica Trauzzi: So why isn’t SunEdison’s bankruptcy as politically charged as Solyndra was?

David Ferris: Well, we have to remember the political context in which it happened. When Solyndra went bankrupt in 2011 it was two years after Obama’s Recovery Act. Eight hundred billion spent that the Republicans hated. As part of that Recovery Act, Solyndra got a half-billion-dollar loan guarantee. So when they became bankrupt it provided an easy club for Republicans to beat Obama over the head for his spending priorities and for his energy policy.

Now Obama’s term is ending. Ironically SunEdison has actually received twice as much federal funding as Solyndra ever did though it didn’t get it all in one big, emphatic lump.

In the meantime, solar has become much more mainstream. Solar just passed a million rooftop installations, and it’s a very different picture than it was —

Monica Trauzzi: As you noted at the top, the solar industry faced many impacts from the Solyndra bankruptcy. How does the SunEdison bankruptcy affect solar more broadly or does it?

David Ferris: Well, the thing that surprised Saqib and I is so what a shrug it caused in the industry. Part of it was expected. People had seen it coming for a year, but also it’s just not the story that it was before.

Monica Trauzzi: Any concerns about market stability for solar?

David Ferris: Not really. There still are doubters out there, but in general, in Wall Street and among the energy industry, it’s surprising to have such a large company go south and to have no one really care all that much. You can tell in the difference that after Solyndra the assumption was that the industry was sick and that a company had to prove itself healthy. Now the assumption is that the industry is healthy and that SunEdison was one sick player. So it’s much easier for the rest of the players in the industry to prove that they have value.

Monica Trauzzi: Great reporting by you and Saqib. Thanks for coming on the show.

David Ferris: Thanks.

Monica Trauzzi: More Cutting Edge coming next Friday. We’ll see you then.

[End of Audio]