We’ve all heard how China is “investing in green energy,” and if we don’t do the same and subsidize companies over here, we’re going to be left behind and be dependent on foreign technologies. So $535M goes to Solyndra, and it’s down the tubes, not to mention:
Energy Conversion Devices ($13.3M)
Nordic Windpower ($16M)
Konarka Technologies Inc. ($20M)
Evergreen Solar ($25M)
Raser Technologies ($33m)
Beacon Power ($43M)
Range Fuels ($80M)
A123 Systems ($279M)
Abound Solar ($400M)
This list is not complete, and there are many other “green energy” companies with government-guaranteed loans that are struggling, but I found this fascinating:
It came as no surprise today when the photovoltaics manufacturer Suntech, the world market leader in recent years, filed for bankruptcy in China. The company was well known to be in serious financial trouble and has been under investigation for having spent the equivalent of almost US $700 million for bonds that probably are fraudulent, to provide financial collateral for solar projects in Germany. Last week Suntech forfeited on a US $541 million bond, and the company’s chairman, Shi Zhengrong (photo), a scientist widely admired the world over as an innovative entrepreneur, had to step down, as speculation centered on whether the Suntech’s municipal sponsor, the city of Wuxi, would step in to save it with some kind of bailout package.
The news, however expected, is nonetheless, stunning. In recent years, Suntech led the pack of low-cost Chinese PV makers who laid waste to commodity manufacturers in Europe and the United States, making life impossible for innovative startups like Solyndra in the U.S. and Germany’s Q-Cell, the world market leader when Suntech first emerged as a force to be contended with. But then there was sharp push-back from the United States and Europe, which imposed trade sanctions after their manufacturers complained the Chinese were “dumping” PV modules at below production costs. It now appears those complaints were well-founded, as the Chinese have run up huge debts that they cannot pay back, reportedly from selling their product at a loss. As the old joke goes, for only so long can you do that and make it up in volume.
Looked at another way, the Suntech collapse appears to be a case of a technology revolution devouring its own children. According to Keith Bradsher of The New York Times, who made his reputation as a technology and business correspondent covering the troubled U.S. auto industry, “China’s approach to renewable energy has proved ruinous, financially and in terms of trade relations with the United States and the European Union. State-owned banks have provided $18 billion in loans on easy terms to Chinese solar panel manufacturers, financing an increase of more than tenfold in production capacity from 2008 to 2012. This set off a 75 percent drop in panel prices during that period, which resulted in losses to Chinese companies of as much as $1 for every $3 in sales last year.”
Suntech itself is believed to owe its Chinese creditors upwards of $2 billion.
Read the whole thing.
Get this through your head: This is not CAPITALISM. This is what happens when governments try to INFLUENCE THE FREE MARKET.