# Third Solar Maker In A Month Goes Broke



## BrotherBart (Aug 31, 2011)

http://www.cbsnews.com/stories/2011/08/31/scitech/main20099928.shtml


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## begreen (Aug 31, 2011)

Companies that are not dropping prices to meet the competition are getting hammered. 

http://tinyurl.com/3c3blvz


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## Later (Sep 1, 2011)

BeGreen said:
			
		

> Companies that are not dropping prices to meet the competition are getting hammered.
> 
> http://tinyurl.com/3c3blvz



Seems as though the ones that are, are getting hammered too.


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## mbcijim (Sep 2, 2011)

It's just amazing how many people built a business that is based on government's whim of the moment.  Total idiocy.  

Locally, about $10,000,000 of solar was installed because they were given large grants from the state and the 30% Federal ITC grant.  However, even after that, you still need the SREC sale to justify a commercial sized investment into it with normal returns.  In our case (Pennsylvania) SREC sales were around $300-$350 last year on the spot market.  So you had all these experienced businessmen investing in what is essentially a spot market.  Do oil drillers drill wells based on $140/barrel oil prices?  I don't think so.

So, what happened locally?  SREC prices crashed, last I checked they were down to $90, which means a horrible return on investment.  

So what do said businessmen (socialists) do?  They organize a meeting with their local legislature and try and get them to change the laws.  

These guys who are all upside down don't get that if SREC prices returned to $300, the return on investment for systems built today (not when they built) the returns would be 50-75% annually because of how much prices have crashed on installs.


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## mbcijim (Sep 2, 2011)

Part of the huge reason for the glut is basically Germany stopped all their subsidies, they have the most installed PV in the world, and they basically shut down all new installations.


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## daveswoodhauler (Sep 2, 2011)

Ask Massachusetts how well they did with Evergreen Solar.
Ask me how I did being a shareholder lol


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## semipro (Sep 2, 2011)

mbcijim said:
			
		

> It's just amazing how many people built a business that is based on government's whim of the moment.  Total idiocy.
> 
> Locally, about $10,000,000 of solar was installed because they were given large grants from the state and the 30% Federal ITC grant.  However, even after that, you still need the SREC sale to justify a commercial sized investment into it with normal returns.  In our case (Pennsylvania) SREC sales were around $300-$350 last year on the spot market.  So you had all these experienced businessmen investing in what is essentially a spot market.  Do oil drillers drill wells based on $140/barrel oil prices?  I don't think so.
> 
> ...



As much as I like the idea of alternative energy I question the wisdom of all the incentives for the reasons you cite and others.  

It seems like doing away with subsidies across the board for all energy sources (including fossil fuels) and then paying a "true" cost for energy based on cradle-to-grave life-cycle costs, including environmental and health impacts, in a free market is the way to go.   Of course who determines true costs and how its done is a big issue.


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## mbcijim (Sep 2, 2011)

Semipro said:
			
		

> mbcijim said:
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Ah, a true libertarian!  What a novel idea.  Imagine if the costs of war were tied to gasoline!  But then Exxon would have their own army... and this topic would belong in the ashcan!  I'm 100% with you semipro!


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## begreen (Sep 2, 2011)

Have to agree with you both. There are so many hidden costs of mining and manufacturing that are picked up by we the taxpayers. Interesting to note that Germany has a cradle to grave policy in place. They recycle about 70% of their waste (as compared to 33% in the US). They have set up the system to avoid non-recyclable waste in the first place. German manufacturers must consider waste avoidance, waste recovery and environmentally compatible disposal for all their products.


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## semipro (Sep 2, 2011)

mbcijim said:
			
		

> Semipro said:
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I've been called a lot of things, but a Libertarian!   I guess I should make it clear that I definitely support the government's role in setting standards and promoting research for the common good.  So I may not qualify as a true Libertarian.


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## mbcijim (Sep 2, 2011)

BeGreen said:
			
		

> Have to agree with you both. There are so many hidden costs of mining and manufacturing that are picked up by we the taxpayers. Interesting to note that Germany has a cradle to grave policy in place. They recycle about 70% of their waste (as compared to 33% in the US). They have set up the system to avoid non-recyclable waste in the first place. German manufacturers must consider waste avoidance, waste recovery and environmentally compatible disposal for all their products.



They do this via massive incineration projects and local co-gen facilities for heating their homes is also common.  American environmentalists fight both dumps and incineration at every turn.  

I've built/work in many, many American manufacturing plants, if they are taking something to the dump, they are throwing away their money.  With all due respect American manufacturing facilities are very lean already when it comes to waste.


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## begreen (Sep 2, 2011)

That is not the whole picture in Germany and definitely not always true here. For example, I have seen shavings by the tractor trailer load dumped into public landfill by a well known ski company. And where do you think carpet scraps and used carpets go? I only know of one American carpet company that takes cradle to grave responsibility for their carpets. Yet they are a large part of what gets dumped in landfills. And what about packaging designed to hog shelf space and catch eyeballs? How many times have you unpacked a bottle of pills that is 90% packaging and a little bottle inside of it?

The German program is designed to reduce inputs and to make sure that most of the outputs are recyclable, be it a car bumper or a babyseat. It is a national policy and not simply a plan of incineration to make power. 

http://www.sfs-dortmund.de/smac/EnviAct1.html
http://earth911.com/news/2009/07/13/trash-planet-germany/


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## Seasoned Oak (Sep 5, 2011)

"Under pressure from foreign competition - particularly from China - Solyndra said it could not achieve full-scale operations rapidly enough to compete."
Not the first or the last industry to bite the dust due to china. I think our Govt could do a lot more to make it harder for foreign suppliers to trash one industry after another,just ask Japan and South Korea how its done,they keep their factories buzzing supplying the US market for cars while all but shutting us out of their market.
Their most effective tool(japans) is a long list of costly safety inspections which in effect doubles the price of the cars.


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## Seasoned Oak (Sep 6, 2011)

Just read an article on how the chinese give their startups in critical emerging industries free land,massive tax breaks and a wide array of other subsidies in order to corner an new global market.THey did the same thing with wind power machinery. By the time the US and other countries can file a complaint with the WTO they already have huge market share locked up. AS our solar products are superior to those made in china ,theres no reason we should not be a major player in that industry.Its time we stop letting these countries(and japan and South Korea) piss on us at every turn.


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## flyingcow (Sep 11, 2011)

Great thread guys.


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## btuser (Sep 12, 2011)

China is building an industrial powerhouse that in the end will fail.  They are building last year's, last decade's last generation's cities, factories, and using economic models that we abandoned.  Let them subisidize massive industries and pollute their air and spend our money on buying more stuff to make so we can buy it from them again.  It won't last.

10 years from now some 20yr old kid working at MIT is going to grow a crystal in a fish tank and  a 100 billion dollars of subsidized solar panel business in China will be worthless.  Its too fast, to quick to think about a business infrastructure.  We're going to leap-frog over this.


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## webbie (Sep 12, 2011)

It's not government that made these people go broke - if anything it is the lack of (policy, long term plans, thinking, etc.)......

I was deeply involved in the first solar boom in 1979-80 and we installed a bunch of systems that are still working today! My own house had a system on it for 25 year...when I sold it in 2005 it was still cranking....

What destroyed that boom - and what is now probably destroying this - in inconsistency. Reagan rolled back the tax credits to ZERO - INSTANTLY, and pulled out the rug from the entire industry. A similar thing has happened recently, as the GOP has made it clear in both states (NJ, etc. etc.) and Federally that they are not interested in helping the alternative energy or conservation industry. BTW, this includes wood and pellet stoves, insulation and other such things...

This, for instance, never happened:
http://www.efficiencyfirst.org/home-star/

OK, I know that some people will say no energy should be subsidized. Well, let me know when farmers, oil and gas companies, etc. stop being subsidized for vast numbers of billions of dollars, and we'll talk....

You need to have plans. You can't send a signal to industry - which Congress AND GW BUSH (I think he signed the last tax credits) did - and then, without any further plan, yank the rug.

If, for instance, you instead laid out a 10 year plan and said you were going to roll back the tax credits by "x" each year...then you might get the desired results. As it stands, we are once again going to see a certain segment of the political spectrum - you know, the one that wants to drill more holes, spill more oil, fight more wars and dig more coal.......they are going to purposely undermine and ruin the advances toward Green Energy and THEN say "Hey, look how bad it is. Companies have gone out of business"........

BTW, lots of early car companies went out of business. But the car didn't fail. Government made certain to build enough roads and other improvements so that the technology had a fighting chance.


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## webbie (Sep 12, 2011)

btuser said:
			
		

> China is building an industrial powerhouse that in the end will fail.
> 
> We're going to leap-frog over this.



The MIT Kid will hire a factory in China to make the stuff.....

China will not, IMHO, fail. There is a lot of room for mistakes in this world...heck, look how much money and talent we have thrown away on war! Look at how many DECADES we have wasted.....energy and resources, and yet we can recover relatively easily (if we wanted to!)....

China is somewhat like Google. That is, they can try lots of various projects and simply dump the ones that don't work after awhile - and keep the good ones. 

Wind technology is not really rocket science. They can win that one with simple brute force...mass production and installation of turbines. 

I just heard that iphone 5's are being cranked at at 2 every second in China as we speak. Pretty impressive. We can't do that here. I did the math. Can't do it (not enough workers, infrastructure, etc.).


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## btuser (Sep 12, 2011)

Nah, it will be cheaper to build the iphone 9 here.  Rough road ahead, no doubt, but all they've got is people.  We've got it all.  Just think 30-1.  Robots are gonna getcha.


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## Seasoned Oak (Sep 12, 2011)

btuser said:
			
		

> We're going to leap-frog over this.


Before we can leap we have to run, right now were crawlin. Theres always going to be a lot of HS dropouts here. 1000 to one for every kid from MIT . We had better find some manual labor that they can do unless we plan to have that kid from MIT support them all. pessimistic?, maybe but i see it gettin worse before it gets better. Hope im wrong. 

0 job growth in august. population rising by 1/4 million a month.


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## btuser (Sep 12, 2011)

I'm optimistic for America, not for all Americans.  We will benefit from the next wave of innovation about as much as the average Chinese citizen has benefited from their current wave of early-19th century industrialization.   Well, probably less than that because they started with so much less.  

A thousand to one is no big deal when you're the programmer for a factory full of robots doing the work for 10,000 people.  No health care or unions neeed.


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## DaveH9 (Sep 13, 2011)

Interesting to me is that the PV companies listed in the articles as possibly going under are the ones that use different technologies. Evergreen uses ribbon cell, spectrawatt uses prisms between the cells, soldyndria makes pv in  glass tubes. Daystar makes thin film on glass.  These are all good technologies, but they are not competitive compared to standard PV methods were the manufacturing process is highly advanced due to the widespread use of the machinery, the multitude of players throughout the material streams and the use of robotics combined with low wage labor.

Q cells had inventory that depreciated before they could move it fast enough.  That is the biggest issue now, over supply.  Basic rules of economics. The industry is evolving before our eyes. If the government stops the subsidies, then  many companies will go under because demand will halt and the prices will drop.  As they did this year due to Spain, and Germany curtailing incentives. Solar is competing due to the longevity of the technology. the value of 25 - 40 years of production is bankable and sunlight is dependable.


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## mbcijim (Sep 23, 2011)

Webmaster said:
			
		

> It's not government that made these people go broke - if anything it is the lack of (policy, long term plans, thinking, etc.)......
> 
> I was deeply involved in the first solar boom in 1979-80 and we installed a bunch of systems that are still working today! My own house had a system on it for 25 year...when I sold it in 2005 it was still cranking....
> 
> What destroyed that boom - and what is now probably destroying this - in inconsistency. Reagan rolled back the tax credits to ZERO - INSTANTLY, and pulled out the rug from the entire industry. A similar thing has happened recently, as the GOP has made it clear in both states (NJ, etc. etc.) and Federally that they are not interested in helping the alternative energy or conservation industry. BTW, this includes wood and pellet stoves, insulation and other such things...



None of which you talk about has happened.  

Solar policy, for a solar builder, on the federal level is FANTASTIC.  30% Federal tax credit, in place for a few years now, I think locked in for the next 6 or so.
On the state level, Pennsylvania requires an additional 10-15MW installed per year through 2020.  It's state law, and already in place for about 3-4 years.  I have not heard of a single state that has pulled back their requirements for solar installations.  

I am saying this as the owner/developer of a 200KW system with another 100KW under construction as we speak.  I am ready, willing, and able to build another 20-40 similar sized systems when I can sell my SREC's.  

The current bust is much more likely because of lack of sophistication of buyers, at least in the mid-atlantic area.  We have something like 2-3 times more solar installed than is required to be purchased by the utilities.  They were getting $350/KW(SREC)/Year on the spot market and they foolishly thought that would continue forever and based investment decisions on that fact.  I am aware of 18,000 SREC's total in 4 systems that don't have their SREC's sold, and that's without me picking up the phone.  In June 2012 Pennsylvania requires the purchase of an additional 21,000 SREC's.  So basically those 4 systems, already built, gobble up all of the gain required in 2012.  

My conclusion is that the sector is overbuilt and will take 2-3 years to repair itself.  You show me a state or national policy that has changed and we'll talk but I am not aware of one.


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## peakbagger (Sep 23, 2011)

I am a bit more cynical after working for a long term alternative energy company that went bust. The company was into wind power and distributed generation, they scored big when they went to the "dark side" and built remote power systems for pipelines. They had good cash flow, so Wall Street bought them and did an IPO blending this company with another one with cutting edge renewable technology ( and no cash flow). All the initial investors cashed in ASAP after the IPO and awarded themselves bonuses. They then hired a hack for a CEO whose only goal was to book projects regardless of profit, when the reality came out that most of the projects were loosers, they went bankrupt. Then a few investors bought some of the remains whille dumping all the junk and they are at it again. I am waiting for the next IPO.  

I expect that if Wall street didnt get involved, the original company would still be in business and would be making good money as they had some great technology that had been set aside because it didnt have short term cash flow. Many of the solar companies might have been good ideas to begin with, but once VC money and Wall street gets involved, the original concepts get warped to take advantage of the latest federal incentive and the investors suck the company dry rather than reinvesting. As there is no intent to run them as an operating company, they might as well make them big as it more money to suck dry before the inevitable bankrupcy.

A lot of the current issues with solar was that there was a shortage of polysilicon a few years back so any alternative that used less polysilicon was a sure bet. Unfortunately the polysilicon industry overexpanded and they world is awash in it making the alternatives uncompetitive.  

Of course it you draw parallels to the early automotive industry, hundreds of cars companies went out of business and the survivors were built on the remains of several failed companies. Maybe that will happen again but unfortunately the companies will have Chinese names.


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## Hunderliggur (Sep 24, 2011)

"so Wall Street bought them" AFTER the owners to the cool, profitable alternative energy company agreed to sell to them.  Yes, there was mismanagement in the new owners, but the original owners did not have to sell to the buyers they accepted.


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## karl (Sep 24, 2011)

btuser said:
			
		

> 10 years from now some 20yr old kid working at MIT is going to grow a crystal in a fish tank and  a 100 billion dollars of subsidized solar panel business in China will be worthless.  Its too fast, to quick to think about a business infrastructure.  We're going to leap-frog over this.



Sorry but China has hundreds of engineers reading every patent filed in the U.S.  They will see that crystal, copy it, and have it in production before the kid at MIT gets a pat on the back.


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## mbcijim (Sep 26, 2011)

Hunderliggur said:
			
		

> "so Wall Street bought them" AFTER the owners to the cool, profitable alternative energy company agreed to sell to them.  Yes, there was mismanagement in the new owners, but the original owners did not have to sell to the buyers they accepted.



This is a problem in every industry, not just alternative energy.

Medium sized companies 8-9 figure top line sells to private equity.  Private equity buys them out but puts major loans on the company books.  I'll use the pipe industry as an example that I just saw.  $125 million in sales, bought the company for $75 million, but borrowed $125 million.  $75 million went to the original owners, $50 million went to the private equity buyers.  The guys in private equity just know how to borrow money.  You think the sellers would have just borrowed the $125 million in the first place?  Yep, if they knew how!  

3 years later sales are down, declare bankruptcy, loan is wiped off the books, the banker becomes the owner, and the private equity company still gets paid to manage the company.  

This is typical for 75% of all companies of that size today.  I see their books all the time.


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## webbie (Sep 26, 2011)

peakbagger said:
			
		

> Of course it you draw parallels to the early automotive industry, hundreds of cars companies went out of business and the survivors were built on the remains of several failed companies. Maybe that will happen again but unfortunately the companies will have Chinese names.



I think this is somewhat accurate....production capability is so vast today that there is no need for hundreds or thousands of companies. The winners will not always be the best - some of it is luck. Look at VHS, much worse tech than BetaMax..but it won.

Production today is amazing. Look at Apple - this one company, if it came to it, could probably supply 100% of the worlds smart phones  and touch pads. The same goes for a lot of other things - Intel could supply most of the computer chips for Planet Earth.

Who knows? Things are changing too fast for any of us to do much more than hang on.


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