The world’s top-selling producer of solar panels has defaulted on a $541 million bond payment. The Chinese firm Suntech hasn’t posted a profit since the first quarter of 2011 and has been relying on the government of Wuxi, the city where it is headquartered, to stay solvent. But as more bills come due, this renewable energy producer is looking less and less sustainable. The WSJ reports:
The China-based company, whose shares are listed in the U.S., was scheduled to repay foreign investors for the bonds on Friday. But Suntech, which has faced shrinking profit amid difficulty in the solar-panel market, didn’t make the payment on the 3% convertible notes. [...]
Monday, the American depositary shares of Suntech fell 8.4% to 64 cents in 4 p.m. trading on the New York Stock Exchange.
(Sixty-four cents. By comparison, the stock was trading at $85.16 in December 2007. And as of today, it’s still falling.)
Suntech, like most solar panel producers, is failing due to a glut of Chinese panels in the global market. The oversupply has driven prices below profitable margins, despite the fact that solar remains three times more expensive than coal in China.
Governments around the world have thrown money at the as-yet uncompetitive technology to act as first-movers in the industry, often to disastrous results. The spectacular collapse of Suntech is a clear illustration of the folly of the subsidy approach to fledgling green energy industries.
[Broken solar cell wafer image courtesy of Shutterstock.]