US Solar: Lawsuits, A Quiet Exit, and Grand Plans But Fewer Results

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Lessons From SunEdison, First Solar, and SolarCity

by Paula Mints

SunEdison (SUNEQ)

Currently SunEdison faces at least 15 lawsuits. SunEdison, Terraform (TERP) and other defendants asked to have the cases against them consolidated.

Along with the lawsuits, from October 2015 through May 26 at least 20 security class actions have been filed against SunEdison its subsidiaries, officials and underwriters. Many of these actions relate to claims that investors were misled about the liquidity of SunEdison, et al. Meanwhile, GCL-Poly wants to buy SunEdison’s (MEMC) polysilicon business for $150-million and those in charge of selling off the company bit by bit are eager to nail this bid down.

Comment: Potential buyers aren’t just circling overhead they are diving swiftly in. Meanwhile, future investors in renewable funds should learn to think very carefully before investing the retirement funds of groups such as the Municipal Employee Retirement System of Michigan.

The solar industry remains volatile and despite ongoing growth is still subject to heartbreaking, dream shattering and retirement income depleting crashes.

Lesson: SunEdison stands as a stark lesson in solar industry bad behavior. Hubris encouraged Icarus to fly too close to the sun. Overtime too many solar companies have followed his path up and unfortunately met the same fate.

First Solar (FSLR)

In July First Solar finally pulled the plug on its crystalline ambitions by announcing it would shutter TetraSun and convert the manufacturing facility in Malaysia to CdTe production.

Comment: Well … First Solar tried CIGS and quietly pulled the plug following at least two unsuccessful years and now it has less quietly exited crystalline manufacturing after a couple of years of assuring everyone that it would be very successful in this regard. As a-Si production
is almost nonexistent hopefully the company will now focus 100% on CdTe and continue with its world leadership in this regard.

Lesson: Hopefully First Solar has learned that shifting focus from its core technology focus just results in a shifted focus because it certainly has not resulted in revenue.

SolarCity (SCTY)

In SolarCity’s August earning call the company, meaning proud new parent/owner Elon Musk spoke enthusiastically about Silevo’s new custom BIPV product and basically ignored offering any details about manufacturing delays and manufacturing cost. SolarCity announced a gross  profit of $118.8-million for 2015, operating losses of $647.8-million and net losses of $768.8-million. SolarCity also lowered its installation guidance for 2016.

Comment: Hmmm. So, SolarCity’s Silevo acquisition has shipped nothing from its 1-GWp manufacturing facility and though it has produced nothing and shipped nothing is announcing a new custom BIPV product that will be more expensive to manufacture than the panels it has yet to produce. SolarCity loses money on its sales business. Daily there is an article or blog either announcing the SolarCity/Tesla merger as evidence of the genius of Elon Musk or, well, something entirely different from genius. Perhaps the genius is to continue announcing grand plans followed by delays in grand plans and to continue losing money while piling on the debt and expanding.

Lesson: The lesson is that the market loves a unicorn and will embrace one even if it is an illusion. Sometimes all one can do is watch in fascination.

Paula Mints is founder of SPV Market Research, a classic solar market research practice focused on gathering data through primary research and providing analyses of the global solar industry.  You can find her on Twitter @PaulaMints1 and read her blog here.

This article was originally published in the August 31st issue of  SolarFlare, a bimonthly executive report on the solar industry, and is republished with permission.

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