Suntech, a Chinese company that as recently as 2011 was the world’s largest producer of solar panels, is teetering on the edge of bankruptcy. It’s running low on cash, owes bond investors half a billion dollars (which it failed to pay recently), and is saddled with payments on billions of dollars in loans as it struggles to make money in a market f looded with its product.
If Suntech fails and shuts down its factories, that might not be a bad thing. Some industry experts say that hundreds of solar companies need to fail to help bring the supply of solar panels back in line with demand. That would slow the fall in prices and, as demand recovers, allow companies to justify buying new equipment and introducing the innovations that will ultimately be needed for solar power to compete with fossil fuels.
But there’s a good chance that Suntech, and many other companies in China, will be bailed out by local governments, which would delay the much-needed reduction in production capacity. Worldwide, solar companies have the capacity to manufacture between 60 and 70 gigawatts’ worth of solar panels a year, but demand in 2013 is only expected to be about 30 gigawatts.
The worldwide glut of solar panels – which has lasted nearly t wo years – is partly the result of big, government-backed investments in factories in China, where two-thirds of solar panel production capacity is located. The surplus has been good news for consumers and installers, because it’s helped drive a precipitous drop in solar panel prices. They’ve dropped 60% since