• 1 hour Saudi Aramco CEO Affirms IPO On Track For H2 2018
  • 3 hours Canadia Ltd. Returns To Sudan For First Time Since Oil Price Crash
  • 4 hours Syrian Rebel Group Takes Over Oil Field From IS
  • 3 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 3 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 3 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 3 days Schlumberger Warns Of Moderating Investment In North America
  • 3 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 3 days New Video Game Targets Oil Infrastructure
  • 3 days Shell Restarts Bonny Light Exports
  • 3 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 3 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 4 days British Utility Companies Brace For Major Reforms
  • 4 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 4 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 4 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 4 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 4 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 4 days Rosneft Signs $400M Deal With Kurdistan
  • 4 days Kinder Morgan Warns About Trans Mountain Delays
  • 4 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 5 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 5 days Russia, Saudis Team Up To Boost Fracking Tech
  • 5 days Conflicting News Spurs Doubt On Aramco IPO
  • 5 days Exxon Starts Production At New Refinery In Texas
  • 5 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 6 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 6 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 6 days China To Take 5% Of Rosneft’s Output In New Deal
  • 6 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 6 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 6 days VW Fails To Secure Critical Commodity For EVs
  • 6 days Enbridge Pipeline Expansion Finally Approved
  • 6 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 6 days OPEC Oil Deal Compliance Falls To 86%
  • 7 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 7 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 7 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
Alt Text

What’s Stopping An Oil Price Rally?

Oil prices rallied in Q3…

Alt Text

Global Oil Supply Disruptions Lowest Since 2012

Unplanned disruptions in global oil…

James Burgess

James Burgess

James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…

More Info

As SunEdison Tanks, Is Rest Of Solar Going With It?

As SunEdison Tanks, Is Rest Of Solar Going With It?

SunEdison, one of the giants in solar power globally, may file for bankruptcy protection, as the solar industry gambles on its future, struggling to compete with low oil and gas prices while simultaneously trying to capitalize on what looks like a rosier long-term future.

The company is at the moment negotiating with creditors that gave it a $725-million second-lien loan in January. What is reportedly being negotiated is a debtor-in-possession deal, which is effectively bankruptcy protection, which would mean relinquishing control of its assets to creditors.

What necessitated the negotiations is SunEdison’s failure to provide lenders with its financial statement for the last quarter of 2015, which was a condition set out in the loan agreement. If it does not release its fourth-quarter report by the end of this month, it will be in technical default on more than one loan, an analyst told Bloomberg, and will face charges of some $1.4 billion. Related: Bright News In Dark Times For The Coal Sector

This is the second time SunEdison has delayed the release of its Q4 results. The first time, at the end of February, a couple of former executives at the company questioned the accuracy of the financial data, so SunEdison brought in independent auditors to review the data. The audit is still ongoing, which is the explanation for this second delay announced last week.

Investors and creditors, however, are getting restless, and with a good reason. According to SunEdison’s latest financial report, for the third quarter of 2015, the company had a debt pile of $11.67 billion, while cash and cash equivalents were just $2.39 billion.

How did it come to this for one of the oldest players in the solar industry?

It seems the number-one reason for the current state of affairs was SunEdison’s growth strategy, which focused on acquisitions. It made the same mistake that the top players in another industry—3D Systems and Stratasys¬—made: too many acquisitions in too little time, and returns failing to live up to expectations.

What’s more, it was so cash-strapped it couldn’t complete its latest acquisition after creditors refused to fund the deal. Now the target company, Vivint Solar, is suing SunEdison for the failed acquisition. Related: Record Loss For Petrobras As Political And Economic Crisis Worsen

But unfavorable market trends have also played a role here.

How is the solar industry really doing? It depends who you ask.

Greentech Media (GTM) research forecasts the U.S. solar market to surpass 100 cumulative gigawatts by 2021, led by the utility-scale segment.

The CEO of the Solar Energy Industries Association (SEIA), Rhone Resch, calls this the “new energy paradigm,” and maintains that solar “officially has a seat at the table with the latest energy producers.” In part, this optimistic opinion is made possible through the extension of the federal investment tax credit (ITC), which was set to expire in December but was then extended.

This sets the stage for an alternate view.

Consider the opinion of Breitbart, which suggests that if you still own solar shares, “you’ve been in the sun too long” because the “sector is tanking”, dependent as it is on government subsidies. Related: Brussel’s Terror Attack Drives Europe Further Into Terrorism Rabbit Hole

Renewables and hydrocarbons generally enjoy an inverse relationship: When oil and gas prices are high, solar becomes more attractive; when oil and gas is low, expensive solar wanes. As such, the oil price slump hits solar hard. Indeed, SunEdison reported a net loss of $284 million for its third quarter. Key rivals such as Sunrun and SolarCity also reported losses for 2015.

The near-term prospects for the industry are not particularly rosy, but the general outlook for the medium and long term is optimistic.

Failing to spot early a change in the market winds has taken many companies under. Yet, according to some observers, it was SunEdison’s growth strategy—too much, too fast¬—that was the culprit. It couldn’t handle the internal combustion.

By James Burgess of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • Sal on March 25 2016 said:
    SUNE's departure will be a boon for other solar companies. No shortage of them. Expect First Solar, Sun Power, Jinko, and JA to benefit most from it.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News