California-based Solar Trust of America filed for insolvency this week after its German parent company – Solar Millennium AG – filed for bankruptcy in December.
This is bad news for U.S. solar in particular because Solar Trust's Blythe Solar Power Project – set to be the world's biggest solar project, capable of powering 300,000 homes across America - operations have been stopped before they even started.
Solar Trust of America has been added to the lengthy list of renewable energy companies that have filed for bankruptcy in the last year. In the U.S. alone, Energy Conversion Devices Inc., lithium-ion battery manufacturer Ener1 Inc., and solar panel maker Solyndra LLC have all gone under.
In 2005, Germany issued feed-in tariffs to spark growth and support the fledgling industry, mainly funded by taxpayer dollars. But after installations of solar panels wildly surpassed projected annual targets and the prices of solar panels dropped, the government introduced subsidy cutbacks to limit the impact on energy consumers and potentially make solar power more affordable, which it failed to do.
While Germany previously dominated the collective movement toward alternative energy, hasty decisions to reduce once-generous aid and above market prices put Germany back on the ground, no longer soaring above the competition, but one among low-cost contenders. Such drastic cuts have plunged the solar market into enormous debt, the epitome of “too much too soon."
Foreshadowed in Bloomberg BusinessWeek in late February, the demise of German solar manufacturers, including Solarhybrid, Q-Cells SE, Conergy, and Solon, should come as no surprise.
Proponents of the renewable energy industry are unwaveringly, and perhaps prematurely, committed to creating a green-powered economy, which is all well and good, but the growing list of failed energy companies is a red flag that such an ideological agenda needs a harsh reality check.
Until next time,