What Does the SunEdison Bankruptcy Mean For Solar?

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Fossils want to paint SunEdison’s crash as a failure of the solar industry. They are SO wrong…

Driving to work this morning, I was listening to American Public Media’s “ Marketplace Morning Report.” David Brancaccio, the host, was discussing SunEdison’s announcement of bankruptcy filing last week. Brancaccio’s guest, Eric Gordon University of Michigan’s Ross School of Business did a pretty good job of explaining how SunEdison’s “nearly maniacal” growth brought them down, and rapid expansion without adequate capital made their demise inevitable. Brancaccio, however, wasn’t really willing to let Gordon off without trying to draw some conclusions about the state of the solar industry from SunEdison’s greedy, boneheaded nose-dive. “Does it indict the rest of the solar industry?”

APR's David Brancaccio

APR’s David Brancaccio

Gordon wasn’t willing to go there… he replied that “…Solar power is actually a good industry…There are solar companies that are doing well… solar is attractive even if oil and natural gas prices stay low.” Brancaccio replied, “Well, that’s the key, right? It’s a great business to be in when competing energy source is expensive…that ISN’T the world we live in right now.”

I almost punched David Brancaccio right in the radio dial.

No, you &%*$%!! That IS NOT the key! That is the exact opposite of what Professor Gordon just said!!!” I yelled at the radio.

Brancaccio isn’t the only person in the media out there who is try to frame this as an “indictment of the solar industry.” But, this piece was exceptional in it’s underhanded and indirect approach. Brancaccio opens with a loaded question that puts this idea in the listener’s ear. When Gordon doesn’t take the bait, Brancaccio closes the exchange by giving a summary of the Professor’s statement that is the exact OPPOSITE of what he actually said.

Why am I not surprised? Because the “Marketplace Morning Report” on “Public Radio” opens with the the announcement that the program is sponsored by Koch Industries. Yes, THAT Koch industries.

Perhaps Brancaccio doesn’t know that oil does not compete with solar? No, he knows. In 2014, when oil prices began to tank, many economic experts called for a decoupling of solar from other fossil energy stocks. Here at Solar Tribune, we reported that “…petroleum supplies only 1% of US electrical generation. Petroleum prices could drop precipitously, and make virtually no dent in the price of electricity. On the other hand, solar does compete directly with natural gas, which is the nation’s #2 source of electricity, providing 27% of US electrical generation. Back in March, CNBC reported that price links between solar and crude prices had “begun to break down completely.” However, current conditions indicate that the uncoupling from petroleum is not yet complete.”

Bloomberg, another regular critic of solar, also made a half-hearted attempt to draw false analogies between the SunEdison debacle, fossils and the rest of the renewable industry. Bloomberg’s Liam Denning writes: “SunEdison’s bankruptcy should give everyone in the renewables business at least a moment of pause, though. As in the mining business — and, for that matter, the oil business and pipelines business — SunEdison’s mission creep, governance failure, and sheer recklessness exemplify what can happen when cheap capital hooks up with a can’t-lose story. Like the old energy businesses it seeks to replace, the renewables industry has to sharpen its pencils and convince the market all over again.” On the surface, this seems to be a reasonable conclusion, but earlier in the piece he makes the argument that: like all such models, it lives and dies by its assumptions. And one in particular looks very suspect: That customers will, at the end of their 20-year contract, sign up for another decade at 90 percent of the cost of their previous contract….To which the obvious response is: Show me a piece of technology worth 90 percent of its original value 20 years later. That’s especially so when you consider the whole notion of solar power displacing traditional energy rests squarely on the idea that the technology keeps getting better and cheaper.”

Yes Liam, the generation technology WILL continue to get cheaper. BUT NOT THE ENERGY IT PRODUCES. In 20 years, sadly, we will still be getting the majority of our electricity from traditional sources, and that power is going to continue to get more and more expensive.

00-sunedison-logo-whiteFortune’s headline reportsHow SunEdison’s Bankruptcy is Hurting India’s Solar Market”, while the Business Standard’s headline reads “Why SunEdison’s exit won’t hurt India’s solar sector:Its exit is unlikely to impact the market too much as there are other American and Chinese players waiting to step into the gap.” Wait, What?

Meanwhile, other media outlets, even those that have reveled in their attempts to paint solar as an industry that will never flourish without government subsidies, have not even bothered to draw inferences about the solar industry based on SunEdison’s face-plant.  Forbes, whose writers can be pretty savage in their criticism of solar, ran a very good, factual piece on the machinations that lead to the collapse. Their conclusion is that “It was financial maneuvering that turned SunEdison into a hedge fund darling, but that also led to its failure.”

Luckily, most news sources are more like Forbes on this story.  The simple fact is, it was SunEdison’s foray into the financial sector that sunk it. That says a whole lot about our toxic banking system, but almost nothing about the solar industry. It’s sad though, when liberal stalwarts at Public Radio are behind Forbes and the Wall Street Journal in their analysis of the renewable energy industry.

 

 

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