Chinese solar producer Suntech declares bankruptcy

Chinese solar producer Suntech declares bankruptcy
bostonherald.com

Hopefully the market recovers and we continue to see prices come down in double-digit percentages each year. With every price drop, the return on solar installations grows and the business model of companies like SolarCity grows more viable.

http://www.bloomberg.com/news/2013-03-20/china-s-solar-billi...

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-...

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...

"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.'"

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).

My understanding is that many people invest in solar panels because of additional government incentives.