Green energy in the red--The SunEdison bankruptcy
Financially strapped SunEdison opted Thursday to file for Chapter 11 bankruptcy protections after growing too large before its renewable energy portfolio could prove more profitable.SunEdison was obviously highly leveraged. They are now learning the downside of leverage when the market moves against what you are selling. Their business model appears to have also relied too heavily upon government subsidies in the form of tax credits and loans. Green energy is still not that competitive with more traditional energy sources which have also declined in price because of the glut of natural gas.
SunEdison quickly grew into the world’s largest renewable energy developer and is building a handful of solar and wind farms in West Texas and the Panhandle. But the renewable power company took on too much debt and has seen its stock value plummet from more than $30 a share in July to less than $1 in April.
The Chapter 11 filing comes just more than a month after SunEdison saw its $2.2 billion acquisition of Vivint Solar rooftop solar company abruptly canceled. Vivint cited an alleged “willful breach of the merger agreement” by SunEdison as the reason for pulling out of the deal. The acquisition was widely criticized for months by investors who have bemoaned how leveraged SunEdison is with debt after making too many acquisitions.
In March, SunEdison said it will permanently shutter its Houston-area manufacturing plant in Pasadena and eliminate 180 jobs as part of a plan to help restore the company’s stability. The local plant makes polysilicon, a primary building block of solar panels.
In Texas, SunEdison is currently building two phases of the 500-megawatt South Plains Wind farm in Floyd County near Lubbock to be completed this year. The Route 66 Wind project was completed in the Texas Panhandle last year, but SunEdison sold a majority stake in it to J.P. Morgan Asset Management.