 With the global price of oil in a prolonged slump, it’s been a rough year for
many traditional energy companies.
But a number of big, renewable companies aren’t doing so hot either.
The latest example? SunEdison, which bills itself as the largest global
renewable energy development company and has received at least $2.84 million in
taxpayer money from the the federal government, has been making financial
headlines lately for all the wrong reasons.
The company’s market cap has tumbled from more than $9 billion just three months
ago to $2.6 billion and its stock has swooned from a 52-week high of $33.45 to
below $9 a share:
As a result, SunEdison announced it is laying off 15 percent of its
7,300-employee workforce and will take a write-down of between $30 million and
$40 million.
On Tuesday, a reported $700 million deal between SunEdison and the owner of wind
and hydropower projects in Chile and Peru came to an acrimonious end.
In May, SunEdison and Latin American Power had agreed the company based in
suburban St. Louis would acquire Latin American Power, but the deal collapsed,
with the Wall Street Journal quoting sources saying SunEdison failed to make an
upfront cash payment of roughly $400 million.
Latin American Power representatives said SunEdison breached its contract while
SunEdison CEO Ahmad Chatila said in a conference call Wednesday, “The seller
there did not satisfy the conditions” of the agreement.
It’s another hit for a company that’s going through turbulent times.
But in the conference call, Chatila tried to reassure financial analysts at some
of the top firms on Wall Street by giving details on Sun Edison’s three-pronged
strategy to bounce back: focusing on its core markets in the United States,
India, China and Latin America; simplifying its business structure, and
delivering cost reductions.
“While we believe the under-performance is being driven by technical factors
rather than a change in the underlying fundamental structure, we need to adjust
our tactics, at least in the short to intermediate term,” Chatila said.
Like a lot of renewable energy companies, SunEdison has received financial help
from the federal government.
The U.S. Department of Energy website showed SunEdison is in possession of
$968,120 in a DOE “cooperative award” to take part in the department’s SunShot
Incubator program, which has funded more than 350 projects aimed at driving down
the cost of solar power.
The money was originally given to a company named Solar Grid Storage that was
bought by SunEdison. Cooperative awards don’t have to be paid back, but DOE says
it has a rigorous series of milestones that companies have to maintain to get
reimbursed.
According to the DOE website, the money was granted to develop a Solar Storage
Operations Center “to address the unique needs of managing grid-connected
photovoltaic (PV) + storage assets.”
A DOE spokesperson told Watchdog.org late Wednesday it is checking on whether
SunEdison has received other DOE grants or loans.
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 In addition to DOE money, SunEdison received grants totaling
$1,874,901 from the stimulus package.
A look at the spreadsheet tracking the nearly 9,800 entities that
got stimulus dollars through the Treasury Department’s 1603 program
shows SunEdison received funding for projects in five different
states:
Chart compiled from U.S. Treasury Department Section 1603
spreadsheet
Chart compiled from U.S. Treasury Department Section 1603
spreadsheet
The company also picked up $992,000 from the Obama administration in
September 2009 for a 443-kilowatt photovoltaic system at Owens
Corning’s facility in Kearney, New Jersey. Watchdog.org could not
determine if the $992,000 was separate from or a part of the
$778,734 grant SunEdison received from the stimulus grant it got
from New Jersey in 2013.
But even excluding the $992,000, the total from DOE and stimulus
funds to SunEdison comes to at least $2.84 million.
Watchdog.org called the corporate communications officer at
SunEdison for details of the awards — was the money given as a grant
or a loan, has SunEdison received other monies from DOE, etc. — but
did not receive a response by press time.
While SunEdison’s corporate headquarters are in Maryland Heights,
Missouri, its solar headquarters are in Belmont, California.
SunEdison has offices in eight states and 22 countries.
SunEdison joins another global renewable giant suffering through a
difficult time.
As reported by Watchdog.org last month, Abengoa — the Seville,
Spain-based multinational that has received $2.9 billion in grants
and loan guarantees through the Department of Energy to undertake
solar projects in California and Arizona — has seen its stock price
slump from $29.32 on Sept. 2, 2014, to $5.00 on Wednesday.
“Government has no business picking winners and losers,” William
Yeatman said in a telephone interview. “The Department of Energy is
not an investment bank. They have a loan office that mimics the
functions of an investment bank by guaranteeing private sector loans
but there’s no reason to think they’d be successful there. Why would
we think that from whole cloth, the Department of Energy can create
a green bank?”
Yeatman is a senior fellow specializing in environmental policy and
energy markets at Competitive Enterprise Institute, a think tank
that supports free-market ideas and criticizes government creating
programs like DOE’s SunShot Initiative and using stimulus dollars to
help renewable companies.
The sustained fall in oil prices has made renewables less attractive
to some investors because their higher costs and a number of solar
companies such as SolarCity, SunPower and FirstSolar have
experienced price swings in recent months.
SunEdison’s problems have been worse after it went through a flurry
of billion-dollar acquisitions, the largest being the announcement
this summer to buy solar installer Vivint Solar for $2.2 billion.
“We have more than enough cash flow left to service our obligation
in our upcoming maturities,” SunEdison CFO Brian Wuebbels said
Wednesday.
“We are also optimistic about the long-term outlook for renewable
energy and the incredible value and our focus there,” Chatila said.
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