Suntech Power, the solar giant founded by Australian-trained Shi Zhengrong, may become the largest renewable-energy insolvency after its main unit was pulled into bankruptcy proceedings in China.

Eight Chinese banks filed a petition for insolvency and restructuring of its main solar manufacturing unit, Wuxi, China-based Suntech said today in a statement. Suntech said it won't object to the filing in Wuxi Municipal Intermediate People's Court.

Suntech defaulted last week on $US541 million ($520 million) of bonds.

Dr Shi, who studied and worked at Sydney's UNSW, founded Suntech in 2002 and took the company public three years later, becoming one of the world's first solar billionaires. Backed by government loans, the company more than quadrupled its panel-production capacity to 2400 megawatts a year from 2007 to 2011, dominating the industry. Australia's total installed solar capacity is about 2000 megawatts.


“It's truly the end of an era,” said Jenny Chase, lead solar analyst at Bloomberg New Energy Finance in Zurich. “For years, it was the world's biggest solar manufacturer.”

Initiating proceedings in China may make it difficult for creditors in other countries to collect, said Christopher Peterson, a partner at the law firm Kaye Scholer LLP. “There is a fundamental disadvantage that non-Chinese lenders have in a bankruptcy.”

Shares halted

Trading of Suntech's American depositary receipts, each worth one ordinary share, was halted today after they slumped 28 per cent to 42 US cents before the start of regular trading.

They declined 46 per cent in the past week through yesterday as the company announced efforts to renegotiate the $US541 million in bonds that matured March 15 and went unpaid. That led the company's other creditors to call in debts.

Suntech's collapse follows bankruptcies in Germany of manufacturers such as Q-Cells SE, previously the biggest solar manufacturer. Sharp of Japan, which led solar cell-making until 2006, has been scaling back operations overseas. In 2011, Solyndra collapsed despite $US535 million of support from the U.S. Energy Department.

Restructuring

Suntech said the court process for its Wuxi Suntech Power Holding Co. unit will help it restructure liabilities.

About three-fourths of Suntech's total cell manufacturing capacity is in Wuxi, and about 1,200 megawatts of its 1,800 megawatt total can be attributed to the Wuxi Suntech unit, according to Suntech's last annual report. The remaining capacity is in joint ventures. The unit makes both cells and panels.

Suntech's corporate parent is incorporated in the Cayman Islands, and the unit in insolvency is a Chinese company. It has additional cell and module production in Wuxi, Shanghai and Luoyang.

Chinese solar companies, backed by credit from the China Development Bank expanded capacity to wrest control of the industry from German and Japanese competitors. Panel demand slowed in 2012 as governments in Europe and North America pared subsidies. That created a global oversupply, driving down prices and eating into margins and profits.
Suntech hasn't reported a profit since the first quarter of 2011.

Production plan

If the court approves the insolvency, the company intends to keep producing panels to meet customer orders, Suntech said in the statement. It didn't name the banks involved in the filing.

The official Xinhua News Agency reported that the Wuxi Intermediate Court already has started implementing “bankruptcy reorganisation” at Wuxi Suntech.

Solar Consolidation

Suntech's failure will have more direct impact on its customers, creditors and suppliers than on the industry, Lian Rui from Solarbuzz, an industry consultant, said by phone.

“Suntech's case is symbolic in industry consolidation,” Lian said. “We will see more companies to go bankrupt.”
The company continues to “work closely with all of our stakeholders and take the necessary steps to put Suntech back on track,” David King, chief executive officer of Suntech, said in the statement. “While we evaluate restructuring initiatives and strategic alternatives, we are committed to continuing to provide high-quality solar products to our global customer base.”

Shi's ouster

Shi was ousted as chairman on March 4 as Suntech sought financial aid from the regional authorities in Wuxi. That assistance hasn't materialised as advisers to government agencies said China is seeking to shake the weakest companies out of the $US25 billion-a-year solar panel industry.

Other Chinese solar companies will probably “fail in the consolidation this year,” Wang Xiaoting, a Beijing-based analyst for New Energy Finance, said.

The survivors will be companies with better cash flow and diversified operations, including production plants and sourcing agreement in other countries, she said.

China's Industry

Four of the six top panel manufacturers are based in China. Suntech ranked fifth in capacity last year behind Trina Solar, Yingli Green Energy, First Solar and Canadian Solar, according to New Energy Finance.

“Suntech's bankruptcy rather strengthens the position of other leading suppliers,” said Stefan de Haan, principle solar analyst at the consultant IHS Inc. in Munich. “The consolidation in the PV industry will continue. There are still many hundreds of suppliers, and there is still a fundamental overcapacity in the market.”

Suntech had more than $US2.2 billion of de

The message seems to be that renewable energy businesses can't survive without public subsidies.
What kind of future is that?

What subsidies does coal get?
I don't know about nuclear but I don't think it is subsidised in the OECD economies.

I really do wonder who'll be there to honor the warranties for all the solar panels in the next couple of years.. You can't even buy a watch these days that'll last for 2 years, how the heck people think something sitting on their roof in the elements isn't gonna degrade is beyond me.

Come in spinner!

As for wind farms and tidal turbines....god forbid an even more hostile environment...ongoing maintenance will get to the point of ridiculous, the tomb stones to the stupidity of pretending cottage industry power generation was ever gonna work. Where the fu5k are the adults??

hadrian_now wrote on Mar 21^st, 2013 at 9:19am:


Yeh but how much does it pay for its filthy pollution and how much is a coal fired power station with full carbon capture and storage ?

Around half the cost of grid electricity is represented by distribution cost ("poles & wires"). If solar electricity is generated at the place where it is consumed, it can be competitive with coal even when the raw per kilowatt cost is significantly higher.

Technology improvements and economies of scale are continuing to bring down the price of solar. That was the problem for Solyndra: its unique panel design, which looked highly cost-competitive at the time the company was started, was being undercut by conventionally designed panels by the time that its production ramped up. Its cells used thin film copper indium gallium selenide, so failed to benefit from the rapidly falling price of high purity silicon, which most other manufacturers used.

Jeff Immelt, CEO of GE, was in Sydney yesterday and spoke positively about the future of solar (interview transcript on The Australian web site). He said:

"No one has predicted what the Chinese have been able to do with solar panels, right.  So we thought the theoretical minimum price might be 25 cents a kilowatt hour.  It's coming in at 10." 

When manufacturing cost of a product changes dramatically, there's often a big shakeup among manufacturers as they get used to lower price, lower margin and the need to sell far more quantity to make the same income. This happened to PC manufacturers as the price changed from around $5000 in 1983 (from memory - or was it more?) to a few hundred dollars for an incomparably more powerful machine. Over that period, dozens of firms merged, were acquired or simply shut their doors. Even IBM, which started the "IBM-compatible" PC market, got out of the business.

We're seeing the same sort of thing happening in solar.

Just as a side thought on silicon technology, when the first silicon transistor memory for computers was introduced around 1972 (by IBM), it sold for $100,000 a megabyte. Price today? Less than a cent.

newtown_grafitti wrote on Mar 21^st, 2013 at 11:35am:


Liberal governments, in NSW at least, are charging the full distribution costs on small roof top solar.  So even though only a couple of electrons might make it onto the large transmission lines from solar generate electricity, solar producers are still charged full costs for them.

Barry OFarrell has deliberately blocked all renewable energy sources (solar and wind) because he wants to increase the value of his coal plants he wants to flog. And get big "donations" from the coal industry.

How long can this madness be sustained ?

Quote:

Herb Stein's Law: If something cannot go on forever, it will stop.