Riding the Solarcoaster as Shares Plunge Even More Than Coal

Solar Energy / Economics

Date posted: 05/10/16

Joe Ryan and Brian Eckhouse, of Bloomberg, report that for all the upbeat forecasts about the growth of solar power, this is a punishing year for the industry. And it will not improve anytime soon. For example, SunEdison Inc., the biggest solar energy company, is bankrupt. Yingli Green Energy Holding Co., once the top solar panel maker, warned it may be inching toward default. And SolarCity Corp., the largest U.S. rooftop installer, plunged as much as 27% after scaling back its installation forecast for the third time in seven months. They are not alone. A Bloomberg index of 20 major solar companies has slumped more than 30% this year. Soaring installations and growing global demand for clean energy is being trumped by investor concerns that the debt-fueled strategies employed by SunEdison, Yingli and SolarCity are endemic to the industry and dangerous for shareholders. They call it the solarcoaster for a reason, said Nancy Pfund, managing partner of DBL Partners and a SolarCity director. With so much happening, both positive and negative, it has been hard for investors to follow. At a time when falling prices, renewed U.S. tax breaks and the Paris climate deal are fueling solar sales worldwide, solar shares are performing even worse than coal stocks. And, the drumbeat of bad news continues. Abengoa SA, a builder of solar-thermal power plants, is seeking investor support for a 9.4 billion-euro ($10.7 billion) debt restructuring plan to avoid becoming Spain largest corporate failure. And last week, hedge fund manager Jim Chanos said SolarCity, which is down more than 50% this year, will face more financial trouble in 2016, in part because the largest U.S. rooftop solar provider loses money on every installation. His view was backed up Monday when SolarCity posted a wider first-quarter loss than analysts were expecting. Many solar companies have growth-at-any-cost business models that are neither profitable nor sustainable even with subsidies. O&M?