The global solar shakeout continues to rattle the renewable ranks, with the world’s second-largest maker of wafers, China’s LDK Solar, revealing that it has cut 5,554 workers this year after plunging prices cut margins to record lows. LDK has cut staff by about 22 per cent since the end of 2011, in reaction to the “highly competitive” solar market, the company’s COO Xingxue Tong said in a conference call on Monday. Bloomberg reports that LDK logged an operating margin of minus 126.5 per cent and a gross margin of minus 65.5 per cent due to a “significant” drop in prices, according to the company statement released Monday. The decline in prices led to a net loss of $588.7 million for the quarter, compared with a net income of $145.2 million a year ago. Inventory writedowns and provisions for purchases totaled $232.6 million, while “doubtful” receivables and prepayments required a $179.2 million provision, LDK said.
Bloomberg says the company’s margins were the lowest among its Bloomberg Large Solar index, which tracks the biggest listed players in the industry. In the fourth quarter, operating and gross margins for these companies averaged minus 36.4 and minus 7.6 per cent, respectively. “The solar industry experienced a tremendous supply and demand imbalance throughout the value chain during the fourth quarter,” LDK’s CEO Xiaofeng Peng said in a results statement. “In 2012, we expect that excess capacity and further policy uncertainties in Europe and the U.S. will result in continued intense competition within the solar industry.” The job cuts at LDK follow on from those at First Solar, which last month announced plans to cut about 30 per cent of its workforce, or 2,000 jobs. Vestas Wind Systems is cutting about 10 per cent of its staff, or 2,335 employees, and may announce further cuts this year.
UK crowd-funded wind project abandoned
London-based renewables outfit Abundance Generation has been forced to abort its first attempt at using a new investment platform that allows businesses and individuals to invest as little as £5 in renewable energy schemes, after the project’s wind turbine supplier declared itself bankrupt. BusinessGreen reports that Abundance wrote to investors on Friday, confirming it had suspended proceedings because Resilient’s German turbine supplier PowerWind had started insolvency proceedings in the Hamburg courts. The company’s first crowd-funded investment call, launched on 21 April, aimed to raise up to £1.3 million for Resilient Energy’s Great Dunkilns wind farm in the Forest of Dean. Investors were asked to buy debentures, a type of bond issued by the project developer in return for a share of the profits the project makes generating green energy.
Resilient is now considering its options and Bruce Davis, joint managing director of Abundance, told BusinessGreen the investment had become too risky. Describing the situation as “frustrating”, Davis said the company had carried out due diligence on the project and had been confident of PowerWind’s financial situation. He added that the £125,000, which it had raised in less than a week, had now been offered back to customers. PowerWind filed for insolvency on April 24, citing “substantial project delays mainly caused by difficulties within financial institutions [which] led to negative impacts on the business”.
On the upside…
In better solar news, Germany’s Bundesnetzagentur grid regulator has revealed that the nation has installed about 650 megawatts of solar panels in the first two months of this year, almost double the amount compared with the same period of 2011. According to the regulator, installations rose by about 450MW in January and about 200MW in February, compared with about 266 megawatts and 100 megawatts in the corresponding periods of 2011.
And in the US, SolarCity, the California-based developer of rooftop solar power systems that is chaired by cleantech entrepreneur Elon Musk – Tesla Motors’ founder, chairman and CEO – is planning an initial public offering. Bloomberg reports that the IPO will begin after the SEC reviews a draft registration statement the company submitted last week. As Bloomberg points out, this IPO bucks the current trend, with various other renewable companies of note – BrightSource, Enerkem – recently abandoning plans to float their companies. SolarCity was founded in 2006 by brothers Lyndon Rive, CEO, and Peter Rive, COO and CTO, who also happen to be cousins of Musk.
REC regulator announced
The establishment of Australia’s REC Agents Association – a new independent body that will represent and self-regulate the activities of businesses creating and trading in Renewable Energy Certificates (RECs) the trading system that underpins Australia’s Renewable Energy Target (RET) and facilitates the installation of solar panels and solar hot water systems – has been formally announced today. In a media statement released today, the RAA said it would work closely with the federal government and the new Clean Energy Regulator to monitor and improve compliance, and to provide advice to the statutory review of the RET. It also said it would be a strong, public advocate for the RET and other market-based schemes, while also working to address some of the misinformation around the cost and effectiveness of green schemes as drivers of rising electricity prices.
The body’s inaugural board includes four of the leading REC Agents in Australia: Ric Brazzale, President (CEO of Green Energy Trading); Fiona O’Hehir, Vice President (Greenbank Environmental); Geoffrey Alexander, Treasurer (COZero) and Stephen Coleman (RET Australia). Initially, the group plans to focus on the small-scale renewable energy market and the creation and trading of small-scale technology certificates. RAA believes that the experience and expertise of the inaugural board will provide strong guidance to its members on both compliance and policy perspectives.