To date, 76 solar companies have “closed, gone bankrupt, become insolvent” and another 36 have “ended up in assignment for benefit of creditors, or have been acquired in less than positive circumstances,” according to Greentech’s Eric Wesoff.
Greentech has been monitoring solar company closures since 2009, when only some five companies went bankrupt or closed and 5 more were acquired by other companies. But the number of bankruptcies and closures shot up dramatically by 2012 and 2013 to 38 and 20, respectively.
“That was when solar manufacturing overcapacity and price pressure brutally culled the field,” writes Wesoff. “The 2014 dead pool is much smaller and much less painful to view.”
So far in 2014, only eight solar companies have closed their doors while another four have “ended up in assignment for benefit of creditors, or have been acquired in less than positive circumstances,” according to Wesoff.
Wesoff argues, however, that while the list is somewhat “macabre” it’s a good sign for the industry as “solar companies left standing in 2015 are the firms with effective business plans and value to add to the marketplace.”
Solyndra was quickly followed by Abound Solar and other green energy companies backed by the federal government. Abound got a $400 million loan guarantee from the Obama administration, but only used $68 million before the government cut off funding in the wake of Solyndra’s scandalous bankruptcy.
Executives from Solyndra and Abound blamed China for their financial woes. They argued a flood of cheap solar panels from China were undercutting their ability to compete, since Chinese panels could be made more cheaply than U.S.-produced panels.
“With over $30 billion in reported government subsidies, Chinese panel makers were able to sell below cost and put Abound out of business before we were big enough to pose a real competitive threat to China’s rapidly growing market share,” Abound Solar CEO Craig Witsoe told Congress in 2012 after his company had declared bankruptcy.
In the years following the demise of Solyndra and Abound, U.S. solar panel producers successfully lobbied the Obama administration to slap tariffs on panels imported from China. In July, imposed tariffs between “26% and 42% on equipment made by several Chinese solar-panel makers,” The Wall Street Journal reports.
The move has helped spur domestic solar manufacturing by making their more costly panels more economically viable. WSJ notes that Chinese panels “have been far cheaper than those produced in other countries, driving down overall prices in the U.S. by about two-thirds since 2010.”
Chinese panels now cost about “68 to 73 cents a watt, compared with an average of 83 cents for panels made in Europe, Japan and the U.S.,” WSJ reports.
In 2013, the EU came to an agreement with China on solar panel exports, but companies, led by German-based SolarWorld (which also led the tariff fight in the U.S.), are already accusing Chinese companies of selling panels below the minimum-allowed price.
Aside from high tariffs, solar panel producers benefit from a slew of federal, state and local subsidies and mandates aimed at increasing green energy production.
For example, solar panel users can get a 30 percent federal tax credit for “qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer,” according to the Database for State Incentives for Renewables & Efficiency.
Most states also have what are called Renewable Portfolio Standards. These are mandates that utilities get a certain amount of their power from green energy sources, like solar and wind, each year. California currently has the most aggressive RPS, requiring utilities to get 33 percent of their power from green energy by 2020.