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How SunEdison went from No. 1 to the edge of bankruptcy

Lucas Mearian | April 1, 2016
The renewable energy producer is not a canary in the coal mine for the industry.

The cost of rooftop solar-powered electricity will be on par with prices for common coal or oil-powered generation and the technology to produce it will only get cheaper, according to Deutsche Bank.

The sharp decline in solar energy costs is the result of increased economies of scale leading to cheaper photovoltaic panels, new leasing models and declining installation costs.

New U.S. solar power installations this year are set to break all previous records by more than doubling what was installed last year, with 16 billion new watts of photovoltaic capacity, according to GTM Research's U.S. Solar Market Insight Report 2015 Year in Review.

When accounting for all projects (both distributed and centralized), solar accounted for 29.4% of new electric generating capacity installed in the U.S. in 2015, exceeding the total for natural gas for the first time.

While the original renewable power industry was built upon public subsidies, other energy industries, such as oil, were as well, Ogden said. And, since the onset of these renewable subsidy programs, both the costs of renewable energy technology and installations have been continuously dropping. That has been reflected in a decrease in subsidies that renewable energy companies need to survive.

"SunEdison is not a canary in the coal mine for the solar industry," Ogden said. "It's an example of a large developer that tried expanding way too fast in too many directions in a poorly managed way."

With its stock crash, SunEdison's market cap is down to about $170 million, according to Prabhu. The company's acquisition potential will largely depend on how they emerge out of bankruptcy court (if they do file for bankruptcy) as they have huge debt load.

"They have large private equity and hedge fund investors who will have a large role in how this all plays out," Prabhu said.

 

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