Another solar energy company is failing

Normally, when quoting from newspaper articles, I try — not always successfully — to limit myself to the first four paragraphs. Donald Douglas, on the other hand, frequently quotes more, and considering that the original source is The New York Times, which limits non-subscribers to ten free article views a month, I think that I’ll refer you to Professor Douglas’ article, where you can read more without going over your NYT limit:

Fears Over China’s Currency
Interesting piece on the move toward a larger official trading band for the Chinese yuan, at the New York Times, “In China, Shaking Up Currency’s Strength.

Beijing heavily controls the value of the yuan (when it appreciates against the dollar, Chinese goods become more expensive, potentially hurting the country’s export-led economy). But what fascinated me about this piece was the effects on global traders from the default of a major bond investor to the tune of $163 million:

Over the years, China’s investors and trade partners have come to rely on what amounts to a “Beijing put,” an option that provides assurance that a minimum level of growth will be attained. When the country looked set to fall short, the government would intervene to prime the pumps — freeing up credit, introducing subsidies and otherwise ensuring that China avoided any real economic pain and remained on track as the world’s fastest-growing major economy.

Yet in the face of apparently slowing growth, this implicit guarantee is showing signs of fraying. Markets around the world are growing worried, from Australian iron ore miners to the luxury fashion houses of Europe to American scrap exporters.

Take copper, where global prices have fallen sharply in recent weeks. This is partly the result of concerns that growth is slowing in China, which accounts for more than 40 percent of global consumption of the metal. But the falling prices represent another, bigger fear — one that focuses on the role copper plays in China’s huge shadow finance sector and the realization that Beijing will not always be there with a bailout.

Further down in the article, if you choose to read it — and you should — you’ll notice that the problem was caused by a default on ¥1 billion ($163 million) of bond interest payments due by Shanghai Chaori Solar Energy Science and Technology Company.

Dr Douglas’ article, as well as the Times original — and there is more there, if you want to read it — goes more deeply into the financial situation, and I’m happy to let them address that part of the issue. What intrigued me was that the default was by a small producer of solar panels. The Chinese aren’t concerned or controlled by our House of Representatives and the evil Republicans who dominate it; how is it that everyone in the world other than we wicked American conservatives are so concerned about global warming, and doing something about it, yet the manufacturers of solar panels are having such problems?1

Somehow, no matter how much good, noble, well-intended people like former Vice President and Nobel Laureate Al Gore tell us that we have to worry about climate change, no matter how much august statesmen like Secretary of State John F Kerry tell us that climate change is as big a global threat as terrorism, poverty and weapons of mass destruction, in the actual real economy, it seems as though the favored businesses to provide alternative, renewable energy sources just aren’t doing very well. It’s almost as though it isn’t just radical right-wing global warming deniers who don’t take the Chicken Littles of climate change very seriously.

8 Comments

  1. “Somehow, no matter how much good, noble, well-intended people like former Vice President and Nobel Laureate Al Gore tell us that we have to worry about climate change, no matter how much august statesmen …”

    You forgot to insert your dripping sarcasm icon after “well-intentioned” …

  2. I noted to a former poster here on Facebook about Solar Energy. About 2 or more years ago the folks at Iowa Liberal were all excited about covering large parts of the SW deserts. Sounds like a good idea overall, but I saw One Huge Fly In The Ointment – Envirowhackoes. I said the plan wouldn’t happen because of the Whackoes. Of course I was castigated for being Anti-Solar, although I have a solar Ni-Mh battery charger and bought a solar panel to experiment to have back-up power for occasions like when the ice storm killed the electrical wires in the area for 21 hours for heat. But, it was a short time later the Whackoes said NO TO DESERT SOLAR due to a desert rat and some other animals. Predictable as sunrise.

  3. The solar industry, like any fast growing emerging technology will see a number of failed companies. Especially when the sector went from a few manufacturers a decade ago to more than 500 manufacturers. Once the consolidation is complete, expect you will probably see 10 or 20 main suppliers. However, don’t let that hide the fact that the industry has continued to grow at fast rates, with a 41% increase in solar installations in 2013 and more than $250 Billion in investments worldwide. More solar was built last year than in the previous 25 years and 30% of all new electricity generating capacity built in the US last year was from solar. This isn’t really about global warming, it’s about a clean source of energy that is far cheaper than coal and nuclear power, and now cost competitive with natural gas. Check out recent competitive bids from all sources of energy in places like Texas, Minnesota, Colorado and other markets. The trajectory on solar is upwards, as are the stock prices on the companies that are expected to survive the inevitable shake out.

  4. You forgot to insert your dripping sarcasm icon after “well-intentioned” …

    Good one, DNW!

    First rule of arguing politics: NEVER assume a left winger has good intentions. Never. Assume they are scum sucking vermin until they prove otherwise.

  5. Kevin Smith, I like the way you think. All business is good business as long as it’ s real business. I have no problem with solar energy, or any other “cheaper” form of energy. Frankly I think that’s great! As long as “the government” does not force anyone to do anything. I just love free markets, free choice and freedom as it is. If you or someone else has a problem with that, well sorry!

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