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  (Source: seaportinnovationdistrict.com)
Satcon's financial demise was caused by increased competition with Chinese companies and decreased demand for solar power installations around the world

It's just not a good week for renewable energy companies. Just one day after A123 Systems filed for bankruptcy, solar company Satcon Technology has now filed for Chapter 11.

Satcon Technology, which is a Boston-based company that develops solar inverters, filed for Chapter 11 bankruptcy protection today as a result of the poor state of the solar power industry as well as financial earnings. It filed its petitions in the U.S. Bankruptcy Court for the District of Delaware.

Satcon's financial demise was caused by increased competition with Chinese companies and decreased demand for solar power installations around the world. 

From 2005-2011, the solar company posted annual financial losses. It also reported losses in the first six months of 2012, and announced that it would reduce its workforce by 35 percent in January. Around that same time, Satcon also mentioned closing a factory in Canada.

"This has been a difficult time for Satcon," said Steve Rhoades, Satcon's president and CEO. "After careful consideration of available alternatives, the company's Board of Directors determined that the Chapter 11 filings were a necessary and prudent step, allowing the company to continue to operate while giving us the opportunity to reorganize with a stronger balance sheet and capital structure. Our goal is for Satcon to emerge from bankruptcy reorganization and continue to provide our customers with the quality products that they need."

Satcon isn't the only solar company to file for bankruptcy. In September 2011, solar panel company Solyndra filed for bankruptcy after receiving a $535 million loan from the U.S. Department of Energy (DOE). After that, a line of other alternative energy companies also filed for Chapter 11 after receiving government loans, such as Beacon Power, a flywheel maker for grid efficiency that received $43 million in 2010, and Ener1, an electric vehicle (EV) battery maker whose EnerDel subsidiary won a $118.5 million grant in 2009. 

Just yesterday, EV battery maker A123 Systems filed for bankruptcy. It was reported that A123 was missing loan payments and finally decided to sell its automotive business assets to Johnson Controls, which is a company that optimizes energy efficiency in car batteries, buildings and electronics. The total value of the transaction was $125 million.
 


Sources: Washington Post, Reuters, Satcon Technology



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Interesting
By Gondor on 10/18/2012 3:09:02 AM , Rating: 3
I find it interesting that so many companies involved with solar power are going bankrupt. Why ? Government in Europe (and elsewhere around the world) are actively pushing solar power ahead, heavily subsidizing solar power price and making it mandatory for power distributors to purchase all electricity produced from small solar plants (so it's a guaranteed sale).

These subsidies are long-term (12-15 years in countries I'm familiar with), always remain at the level set at the time when the contract is signed, and the prices are outrageously high compared to what the electricity from other sources (nuclear, coal, hydro etc. plants) costs.

Essentially they are diverting money from consumers (who ultimately pay for this crap) to companies installing the solar plants (a plant pays itself off in 7-8 years, everything after that is pure profit so most are built by taking a loan at consumers' expense), which should in turn benefit manufacturers of equipment for solar plants ... yet they are still filing for bankruptcy ?




RE: Interesting
By AnnoyedGrunt on 10/18/2012 3:32:23 AM , Rating: 3
I've heard it said that it has become essentially impossible for USA based panel companies to compete with the Chinese. It's been implied that the Chinese companies were dumping panels to drive the cost down and force competitors out of business, but it may be that they are simply able to use their lower average standard of living to their advantage. Not sure how Euro solar panel companies are faring, but the US panel industry has been in tough times for the past year or so.

Keep in mind that the panel companies are different from the solar engery companies (typically). The energy company will buy panels that are the best value, and if you can't compete in watt/$, then as a panel maker you won't be around too long, even if the overall industry is growing.

-T


RE: Interesting
By Ringold on 10/18/2012 4:32:41 AM , Rating: 3
A highly under reported point is that Chinese panel producers aren't booming, either. There's consolidation and waves of bankruptcy among the weaker ones over there as well, as the entire world simply built WAY too much capacity. Exactly the sort of thing one expects when government tries to control a market.

Without financial data that I doubt is reliable and publicly available it'd be impossible to say for sure, but have to keep in mind Chinese factories probably have fixed costs whether they operate or not, same as any company. So if they're truly dumping panels below-cost, it might be because they lose less by producing than by idling. So it could be a case of Micro econ 101, where such a move is logical for the short run (but bankruptcy long run).

Again, this is a market that exploded only because of government diktat. Companies sprang up everywhere as the government seemed set to subsidize and mandate solar as far as the eye can see. Capacity blossomed.

Then reality hit. Homeowners in many places decided the return, or the cost of tying up the capital, didnt seem worth it. Governments realized, particularly in Europe, that money didnt grow on trees, so subsidies were cut or not expanded as hoped. Suddenly, there's tons of capacity, and nobody that wants it.

I also think we're the pot calling the kettle black if we REALLY go after China for the subsidized interest rate loans their solar companies get. Our companies get help from the Import-Export Bank and subsidies at the federal level and state, county and city governments in many cases threw every tax break in the book at a lot of our companies. Not to mention our very own low-interest loans via Obama and the DoE and stimulus. We're no less guilty, IMO.


RE: Interesting
By FITCamaro on 10/18/2012 7:33:28 AM , Rating: 3
Even with cutbacks, money is still being thrown around like candy here in the US for "green" energy. And these companies still can't stay in business.

The fact is, it's expensive, unreliable, doesn't work everywhere, and where it does work, still puts out less energy than other sources per dollar.

If I built my own home in an area where solar makes sense, would I have it built with the home? Sure. Individual solar installations make sense, albeit they're still more expensive than most people can afford. But building power plants out of solar panels do not. Power plants need to provide stable power at all times. Not just when the sun is up or the wind is blowing.


RE: Interesting
By paydirt on 10/18/2012 9:14:21 AM , Rating: 2
European governments are actually removing the subsidies. Some big ones have been removed already (Spain & Germany).


RE: Interesting
By FITCamaro on 10/18/2012 9:22:21 AM , Rating: 2
Is Europe in the US?


RE: Interesting
By Ammohunt on 10/18/2012 11:26:26 AM , Rating: 5
Lately under this administration its been hard to tell the difference...


RE: Interesting
By mdogs444 on 10/18/2012 9:46:00 AM , Rating: 2
To be fair, Spain did not remove their subsidies because the model was so successful. They did so because they have 25% unemployment and they are going bankrupt.


RE: Interesting
By Paj on 10/18/2012 9:15:20 AM , Rating: 1
quote:
Then reality hit. Homeowners in many places decided the return, or the cost of tying up the capital, didnt seem worth it. Governments realized, particularly in Europe, that money didnt grow on trees, so subsidies were cut or not expanded as hoped. Suddenly, there's tons of capacity, and nobody that wants it.


You couldnt be more wrong. Germany's solar capacity has quadrupled from 6GW in 2008 to 25 GW in 2011 - over half the world's solar capacity. The effect of this is that the wholesale price of energy during the day (ie when the sun is shining) has dropped dramatically - by up to 40 percent in some cases.

It's aim is to have 52GW of capacity installed by 2020. It only needs to add 3GW per year to achieve this, which is half the rate it is at currently.

http://arstechnica.com/science/2012/04/german-sola...

Even now, utility companies there are cutting their feed in tariffs as they are starting to lose money - but this hasn't dampened demand there at all. It's true that some companies have closed, but this just serves to make the existing companies more cost conscious, and adopt better working models.

Solar is approaching grid parity, even without subsidies. Germany's solar expertise continues to grow, to the point where it will start exporting its know-how overseas. There is a huge opportunity for US and Chinese companies to get involved.


RE: Interesting
By Wy White Wolf on 10/18/2012 9:57:57 AM , Rating: 2
I get the impression that he was writing about manufacturing capacity.

With Germany only needing to add 3GW a year to reach it's goal means demand for new panels and equipment is cut in half. Lower demand can't support all the suppliers so many are going bankrupt.

Simple supply and demand.

WWW


RE: Interesting
By Ringold on 10/18/2012 5:09:07 PM , Rating: 1
Like the other guy said, I was referring to manufacturing capacity, since the article is all about manufacturers, not power utilities.

Germany is also one of the worlds very few bright spots. Germany didn't go hog-wild and jump on the spend-now, pay-never socialist pandering model southern Europe did, so Germany can afford to waste money on solar.

And Germany's a nation I'd never bring up as being intelligent on energy policy; they're working to make their country permanently nuclear-power free, and they've long been strangely comfortable with their Russian oil and natural gas overlords. Germany's also, in the grand sweep of the world, squarely a 'mediocre' at best location for capturing sunlight.


RE: Interesting
By Samus on 10/18/12, Rating: 0
RE: Interesting
By martin5000 on 10/18/2012 4:37:17 AM , Rating: 2
The government already does subsidize a lot of industries.


RE: Interesting
By Ringold on 10/18/2012 4:48:18 AM , Rating: 3
"If it moves, tax it. If keeps moving, regulate it. And if it stops moving, subsidize it." - Reagan

I can agree though on the benefits of modern socialism. I need more practice with my Mosin Nagant rifle, and some Greek-style unrest might just afford the opportunity! That thing can hit the side of a barn, in France.. from Moscow.


RE: Interesting
By bupkus on 10/18/2012 6:19:05 AM , Rating: 2
Just as one should deal with French barns-- I hate them.


RE: Interesting
By Denigrate on 10/18/2012 8:43:08 AM , Rating: 2
Great rifle.


RE: Interesting
By Ammohunt on 10/18/2012 11:30:32 AM , Rating: 2
Been thinking about picking one of these up as a cheap fun gun.


RE: Interesting
By FITCamaro on 10/18/2012 7:01:57 AM , Rating: 2
You're a fool.


RE: Interesting
By mdogs444 on 10/18/2012 7:39:28 AM , Rating: 3
What exactly are these "benefits" of socialism? I cannot think of a single one.

Socialism is only good until you run out of everyone elses money. Its theft from one person and giving it to another who did not earn it. It creates government dependency and strips out the benefits of going above and beyond for success, and completely removes any responsibility for failure.

It's like giving participation trophies to all kids in a baseball league because you do not want to teach them that winning is good, and how to lose with pride and dignity.


RE: Interesting
By ebakke on 10/18/2012 12:07:28 PM , Rating: 2
quote:
What exactly are these "benefits" of socialism? I cannot think of a single one.
Usually a select group of people get a warm fuzzy feeling for a while.


RE: Interesting
By gamerk2 on 10/18/2012 2:08:05 PM , Rating: 2
quote:
What exactly are these "benefits" of socialism? I cannot think of a single one.


Better economic growth, higher standard of living, a free-market thats not dominated by one or two large coorporations, and the like.

Then again, maybe theres a reason why Truman, Eisenhower, JFK, LBJ, Nixon, and Clinton ALL were able to reduce the debt as a percentage of GDP by following "socalist" economic policies, and Ford, Regan, Bush I, and Bush II all grew the debt as a percentage of GDP by following "capitalist" economic policy. Funny how "socalism" both reduced the debt and grew the economy, isn't it?

Seriously, the US has undergone 40 years of near continuous economic mismanagement. With the middle class more or less defunct, there is no engine of economic growth. Hence the recession.


RE: Interesting
By mdogs444 on 10/18/2012 2:31:57 PM , Rating: 3
quote:
Better economic growth, higher standard of living, a free-market thats not dominated by one or two large coorporations, and the like.


Wow. Where to start....

Better economic growth? I fail to see HOW. You do realize that in a socialist country, the government essentially controls the input and output of the domestic product, which in turn, does not create wealth because it all gets spend on social programs. In this style of government, there turn out to be no wealthy of successful citizens because the government absorbs the wealth.

Higher standard of living? First, this is complete nonsense. Second, its not sustainable. Socialism takes from one and gives to another. Therefore it brings down person A's standard of living in order to prop up person B's standard of living. Person A then sees no reason to achieve success because person B is able to live the same lifestyle without the same effort. All socialism does is absorb everyones wealth through redistribution, and then the country goes down, down, down because no one wants to work for anything since it is taken and just given away.

Lastly, you do realize that a free market is what allows multiple corporations to compete against each other for business, right? In a socialist state, the government dictates which businesses are successful through artificial price controls and tax payer subsidies in order to prohibit real competition from taking place in a market.

quote:
Then again, maybe theres a reason why Truman, Eisenhower, JFK, LBJ, Nixon, and Clinton ALL were able to reduce the debt as a percentage of GDP by following "socalist" economic policies, and Ford, Regan, Bush I, and Bush II all grew the debt as a percentage of GDP by following "capitalist" economic policy. Funny how "socalism" both reduced the debt and grew the economy, isn't it?


Ahh that is a nice attempt, but missing the forest for the trees. By raising taxes and increasing government revenue in the short term to balance the budget, while at the same time printing money out of thin air to devalue the dollar both increases GDP and lowers the debt to gdp ratio. You see, our debt is based on foreign held debt, not what we actually owe to the treasury. If it were, then Obama's deficit would be more in the range of $3T per year as opposed to $1.3T. You need to look at all the factors in this. For example, Obama made the statement the other day that gas was only at 1.83/gal because the economy was on the rocks. That is not true at all. There is a reason that gasoline has skyrocketed in cost - its called devaluation of the dollar. If you sell widgets for $5 today and you sold them for $4 yesterday, the "GDP" would essentially increase if everything else was consistent - and that is because the change in the value of currency, not because of socialist policies bringing about increased value. Increased cost =/ increased value.

quote:
Seriously, the US has undergone 40 years of near continuous economic mismanagement. With the middle class more or less defunct, there is no engine of economic growth. Hence the recession.

First off, there is no such thing as the "middle class". That is a figment of your imagination - a made up term by people in government used to wage class warfare for votes. Your life and successes are what you make of it. There is a reason that "classes" were not a definition in the constitution, because they felt everyone one equal. Not everyone is entitled to equal output regardless of input.


RE: Interesting
By Ringold on 10/18/2012 5:36:22 PM , Rating: 2
quote:
Seriously, the US has undergone 40 years of near continuous economic mismanagement. With the middle class more or less defunct, there is no engine of economic growth. Hence the recession.


And yet.. Still doing better than most of Europe! How about that! And the brightest corner of Europe, Germany? Not the socialist paradise most liberals wish it was. Indeed, the picture there is more nuanced, but nuance is one thing you clearly don't have, nor any sense of history. Obama would call JFK, if he were alive, belligerent in foreign policy for daring to be unabashedly pro-American, in bed with the military, and a Tea Party "extremist" for having the crazy notion that tax cuts would create a rising tide that lifted all boats. He'd of called him dangerous for pressing the USSR so hard during the Cuba Missile Crisis; should've just gone to the UN and negotiate to let them have their nukes in Cuba, right? Maybe with UN oversight, right?

But, he was shot, and happened to be a Democrat, so even though the party has completely changed since then, he's a hero for the left, and liberals are too dense to realize the irony because most aren't aware of any true history before Bill Clinton. (And sadly, the youngest liberal trolls online don't even remember Clinton)

That post is a prime example of the problem of out-sourcing independent thought to MoveOn.org.


RE: Interesting
By Reclaimer77 on 10/18/2012 5:45:28 PM , Rating: 2
quote:
As a small business owner, I already lose 50% of my income to tax, anyway, so I'm ahead of the curve!


"A Government large enough to give you everything you want, is big enough to take everything you have"


RE: Interesting
By martyrant on 10/18/2012 5:30:04 AM , Rating: 2
I worked for this company until several months ago and I can tell you the reason this particular one went bankrupt was absolutely incompetent management. There was a lot, and I mean a lot, of not so kosher things going on at this company. I quit several months ago because 1.) you can't hide anything from IT and I knew the company was in the shitter in November of last year, and 2.) there is a lot of immoral things going on (both with money and women) at the company in addition to the crazy college buddyfest that is known as management.


RE: Interesting
By FITCamaro on 10/18/2012 7:01:36 AM , Rating: 4
When its not your money why be responsible.


RE: Interesting
By danjw1 on 10/18/12, Rating: 0
RE: Interesting
By Jaybus on 10/18/2012 1:56:12 PM , Rating: 2
On what planet is chapter 11 reorganization not a failure? It means either the company acquires financing by very substantially diluting current shareholders (somewhere around a 90% loss), or that the creditors assume control leaving current shareholders with a 100% loss.


RE: Interesting
By Ringold on 10/18/2012 5:49:08 PM , Rating: 2
First of all, results should be GREAT, since the companies benefited from far below market interest rates. That makes a dramatic impact on return calculations. A child should be able to borrow money for almost nothing and make money.

Private equity investors, hedge funds, etc., obviously never loan money at such low rates. Remember, Berkshire invested equity in Goldman Sachs, a proven gold-standard investment bank, for a 10% interest rate, plus other goodies.

Second, those sorts of investors have a different objective; they want the companies they invest in to make money, so that they can make money. The governments objective is to create positive press coverage for itself for re-election purposes, which means the company needn't be highly profitable, efficient, or even necessary in the market place, it simply has to avoid running out of money to pay the (extremely low) interest on loans until some far off date in the future. Private equity, pension funds, they want to create value. Politicians, votes. Totally different.*

Finally, it's been 3 years at most for a lot of these companies. It's at least a couple more years before I think we'll start seeing complete, in-depth analysis.. but for all the reasons above, obviously DOE loans shouldn't be a total disaster. That doesn't mean they worth it, doesn't mean it wont get worse, and doesn't mean there were obvious cases of possibly criminal corruption when the DOE's own people recommended against Solyndra loans, practically pin-pointing the future month they'd go bankrupt... But the White House had a photo op to make.

*: Just double checked. Return on Equity is still there at Yahoo Finance, but no Votes:Loan ratios.


RE: Interesting
By marvdmartian on 10/18/2012 3:23:35 PM , Rating: 1
Difficult to compete against $20/day wages in China. Doesn't help that natural gas prices are so low, that it doesn't pay to bother with solar, since you won't really save anything. This is where the Obama comments of driving up energy prices come from, since it's pretty much a given that people won't bother investing in green technology, while non-green energy is so cheap.

If they really want to permanently sink this company, though, just give them a DOE grant!


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