

Chinese solar producer Suntech declares bankruptcy - memoryfailure
http://bostonherald.com/business/business_markets/2013/03/chinese_solar_producer_suntech_declares_bankruptcy?

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tokenadult
Some of the reporting on Suntech by other news organizations is quite
interesting. From "China’s Solar Billionaire Undone as Banks Push Suntech to
Brink"

[http://www.bloomberg.com/news/2013-03-20/china-s-solar-
billi...](http://www.bloomberg.com/news/2013-03-20/china-s-solar-billionaire-
undone-as-banks-push-suntech-to-brink.html)

comes this striking summary of the market: "'Being in the solar manufacturing
industry over the past eight years has been an excellent way to turn a big
fortune into a small one,' said Jenny Chase, lead solar analyst at Bloomberg
New Energy Finance in Zurich."

The Australian press has especially good reporting because of the connections
between Suntech and Australia through Shi Zhengrong, the founder of Suntech
who moved to Australia after completing higher education degrees in China. The
story "Suntech's failure forces Beijing policy rethink" from the newspaper The
Australian

[http://www.theaustralian.com.au/opinion/columnists/suntechs-...](http://www.theaustralian.com.au/opinion/columnists/suntechs-
failure-forces-beijing-policy-rethink/story-e6frg9fo-1226601984327)

reports,

"In substantial part, Suntech -- whose board first kicked Shi out of the chief
executive's position last August, then a fortnight ago removed him as chairman
-- is the victim of state industrial policy.

"As Carl Walter and Fraser Howie, American bankers with decades of experience
living and working in China, point out in their important book Red Capitalism,
China's party leaders have believed in recent years that 'they are better
positioned than any market to value and price risk'."

The New York Times reports in "Chinese Solar Panel Maker Falters as Prices
Plunge"

[http://www.nytimes.com/2013/03/21/business/energy-
environmen...](http://www.nytimes.com/2013/03/21/business/energy-
environment/chinese-solar-companys-operating-unit-declares-bankruptcy.html)

"Ocean Yuan, the president of Grape Solar, an importer of solar panels based
in Eugene, Ore., said he foresaw a series of bankruptcies by big Chinese solar
panel manufacturers, some of which, like Suntech, have very high debt. Chinese
manufacturers lost as much as $1 for every $3 of sales last year as they
struggled to keep factories open despite falling prices.

"'They are bleeding every day,' Mr. Yuan wrote in an e-mail. 'The more they
sell, the more they lose money.'"

~~~
dguido
Looks like all that stolen technology can't save the company from making bad
business decisions. Solar and other green tech intellectual property has been
among the highest priorities for Chinese hackers in recent years.

~~~
Volpe
Citation? Or is this just racial slur?

~~~
smackay
Last time I checked, China was a very large and quite diverse country. The
comment has a touch of jingoism about it, but racially motivated, hardly.

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MikeCapone
Bad for the industry, but good for the customers (and the power grid). As
Warren Buffett said multiple times, there are many industries that have the
potential to change the world and benefit society tremendously, but that won't
make anyone any money.

The airline industry is a good example. Since the Wright brothers, that
industry has probably destroyed capital in the aggregate, yet it's changed the
world and flying is incredibly cheap and convenient now.

Solar could be the same, and only solar installers like SolarCity and the
owners of solar farms are likely to make money (they actually benefit from
lower solar panel prices).

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reportingsjr
It turns out when you sell products near cost to gain as much market share as
possible, not only do you shut them down, but you will eventually get shut
down. Who would have thought?

~~~
jseliger
>Who would have thought?

Amazon.com?

~~~
reportingsjr
Amazon isn't in the same situation as solar companies though. Amazon has many
other items they have a good margin on that helps them recoup their costs on
the items they undercut on. Solar companies only have one item period.

------
TwoBit
I've been looking into Solar for my house and it's hard to justify. A $15,000
installation pays back only $150 a month in electricity. This is little more
than what I could get by putting that $15,000 into a mutual fund.

~~~
JumpCrisscross
I suspect your numbers may be off. A $15 000 investment that produced $150 in
nominal cash flows a month for 20 years (low end) would produce an internal
rate of return of 9.1%.

Yet solar panels do not produce nominal cash flows, they make energy - a real
good. Energy inflation for urban consumers in the U.S. has averaged, month-to-
month annualised, 6.7% over the past 10 years. This raises your IRR to 16.3%.
The closest maturity-matched non-callable bond is TXU's 2034 6.55 yielding
15.2% to maturity and rated CC by Fitch.

Even allowing you to capture only 1/2 of the energy inflation, your return is
12.7%. A whole point south of Venezuela. Then again, a warranty from a solar
company may be worth as much as a dollar lent to Caracas...

~~~
yessql
PV is coming down in cost precipitously. Energy companies are buying huge PV
farms. Their cost of energy will drop.

Utilities are regulated to limit their rates to guarantee minimum
profitability, so their price must be correlated to their cost.

Ergo, electricity costs will drop. Your rooftop PV system is never going to be
much cheaper, if ever cheaper at all, than the electricity that the utility
will provide from utility scale PV that has been installed much more cheaply,
and much more optimized than the arbitrary orientation of your roof.

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anonfunction
It's bittersweet in that the production is there but demand has not caught up.

~~~
geargrinder
Even with massive government subsidies the price doesn't make sense yet for
the average homeowner.

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yekko
Easy come, easy go.

