Cloudy Prospects

$10 billion company, SunEdison renewables, now bankrupt

Renewable energy producer SunEdison of Maryland Heights, Mo., appears to be on the verge of filing for Chapter 11 bankruptcy. The company, which is currently the leading producer of renewable energy in the world and employs approximately 7,300 people, has been bruised by a flurry of financial problems over the last two years.

A blanket explanation for SunEdison’s financial woes is overextension. The company produces both solar and wind energy, with the former producing its primary dividends. It manufactures nearly all components required for photovoltaic plants, including silicon “wafers”, the semiconductor material used to convert solar energy. These wafers were the company’s flagship product back in 1959, when these items were only used as semiconductor chips and SunEdison was named MEMC Electronic Materials. Eager to build, as any business would be, the company steadily absorbed more responsibility over the second half of the century and expanded geographically, opening properties in Malaysia and Japan. It entered the solar industry in earnest in 2006, and became SunEdison in 2009.

SunEdison's future looks bleak — by natural light or light bulb.

SunEdison’s future looks bleak — by natural light or light bulb.

Beginning in early 2015, accumulative debt began to indicate a decline, and consequent events sharply lead to crisis. The company reported a total debt of $11.7 billion by the end of September 2015 after making multiple acquisitions, including solar projects and company purchases on six continents. Two companies planning to do business with SunEdison then sounded the alarm. Hawaiian Electric Companies cancelled three power purchase agreements, and Vivint Solar, a residential solar developer, abandoned its proposed merger worth $1.82 billion. Predictably, investors fled and SunEdison’s stock tumbled…and it’s been cloudy ever since.

On Monday, sprawling reports indicated that SunEdison owes money to a number of sources. “Clients big and small are seeking payments. Western Massachusetts based Valley Home Improvement Inc., says it is owed $37,000 for installing solar panels on two homes, while temporary staffing firm Aerotek Inc on Friday alleged SunEdison failed to pay more than $1 million at projects in Colorado, California and elsewhere,” Nichola Groom of Reuters reported. In all, two dozen legal claims have been filed against the company since the beginning of 2016.

On Tuesday, USA Today reported that TerraForm Global filed a lawsuit against SunEdison, accusing the parent company of paying $231 million for India renewable energy projects that SunEdison failed to deliver.

On Wednesday and Thursday, Reuters and Forbes reported that the fallout is likely to delay a separate ‘Ultra Mega’ solar project from launching in India. SunEdison’s project there was the first of 32 planned complexes, part of Indian Prime Minister Narendra Modi’s goal to increase the country’s renewable energy fivefold.

To cap it off, the company’s CEO cancelled a scheduled speech at a graduation ceremony that same day. Ahmad Chatila was scheduled for a keynote speech for the University of Pennsylvania Wharton School of business, which will hold its executive MBA graduation ceremony on May 7 in San Francisco.. The prestigious business school offers the program alongside a similar course of study at its Philadelphia campus.

On the bright side, optimists contend that industry fallout could be minimal. Analysts and executives from the Bloomberg New Energy Finance summit, which took place earlier this week in New York City, say the aggression and poor money management by the company are not emblematic of the industry at large, and that “the solar and wind industries remain on sound footing, poised to grow briskly in the years ahead.”

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