Industries to Watch: Solar Rebound?

It would be an understatement to call the 2011 financial meltdown of solar panel manufacturer Solyndra a blush for the Obama Administration, which had approved grants in excess of a half-billion dollars for the company before it went bust. Solyndra and a rash of other bankruptcies in the solar industry made it one to watch with a wary eye, but companies that made it through the industry downturn may now have renewed opportunities.

After going virtually silent on the issue for a few years, President Barack Obama came out firing again in May, championing how good solar could be for US businesses, using Walmart as an example of a cost-conscious corporation using alternative energy to its advantage. He also renewed a pledge to make solar a key component in a goal to reduce electricity consumption in federal buildings by 20% by the end of this decade. Administration staffers followed up with a small media blitz promoting solar. While there was no direct talk of the widespread renewal of government investment and assistance, one could surmise such a stark push isn’t simply a one-off.

“Clearly the president is reengaging in the discussion with the hot topic being about climate change again. Obviously something is going on,” said Michael Joncich, manager of Credit Management Association’s Adjustment Bureau. Joncich notably predicted the massive rough patch for the US solar industry, a result of factors including market saturation and aggressive price-cutting from Asian competitors, in a Spring 2011 article in NACM’s Business Credit.

With Asian and European manufacturers now having their own industry downturns, it appears conditions have stabilized somewhat domestically. Barring a reversal of conditions, creditors may be able to ease their concerns about the industry, even if only slightly.

“I guess it’s a good sign we have not been hearing about anyone going down lately,” Joncich said of the slowed trend of industry bankruptcies. “Those companies that survived the financial crunch in the last five years are better for it. They’ve made it through lean times and should be positioned to take advantage of the improved economy.”

Therein could be the hook, even more important than renewed interest by the White House: the economic rebound. As big a factor as any in the fall of solar was that perceivable high upfront costs became an increasing obstacle as consumers showed elevated concern about the falling value of their homes and the security of their jobs. One veteran credit manager who was in the solar industry at the beginning of this decade said he believes any solar revival will be primarily on the shoulders of American consumers, not lawmakers. “I think solar is going to have a big future, as the technology is improving and you’re going to get price parody eventually,” said the credit professional, who asked to remain anonymous. “Would I consider going back? I definitely would.”

- Brian Shappell, CBA, CICP, NACM staff writer

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