On March 15, Suntech Power Holdings Co., one of China’s largest solar photovoltaic (PV) manufacturers, failed to pay its US$541 million convertible debt, causing its stock price to bottom out. (See Figure 1.) Three days later, eight Chinese banks filed a petition asking for the company’s main operating subsidiary, Wuxi Suntech, to be declared insolvent and proceed to restructuring. With Wuxi Suntech owing the banks 7.1 billion RMB (US$1.14 billion), the company was forced to declare bankruptcy on March 20.

Figure 1: Stock price of Suntech Power Holdings Co. (Unit: USD) (Source: Google Finance)

There was discussion about whether the Chinese central government would rescue the former star of China’s solar sector, but the National Development and Reform Commission (NDRC), abiding with its new policies for renewable energy, said the government “wouldn’t and shouldn’t intervene.”

This put the municipal government of Wuxi, in China’s Jiangsu Province, in a dilemma. On the one hand, Suntech had become a model enterprise showcasing Wuxi’s sustainable development success; it would be extremely difficult for the local government to let it go. In 2012, a proposal from Suntech Power to shut down Wuxi Suntech had distressed the local government so much that the municipality made an effort to save the company, securing an additional 200 million RMB ($32.2 million) loan from the Bank of China.

But this time around, having lost the creditworthiness to receive strong support from state banks, government bailout options were limited. Wuxi Guolian Development Group, a financial company controlled by the municipal government, was expected to take over Wuxi Suntech. On March 20, a former senior executive of Guolian was assigned to be the new president of Suntech Power. This marked the official entry of local government into the restructuring process for the suffering Chinese solar company.

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China, finance, green economy, manufacturing, photovoltaics, renewable energy, solar industry, solar power, Suntech

A skyrocketing PV market in Italy. Will it soon find its right flying altitude?

Feed-in tariffs (FiTs) have spurred impressive growth in renewable power installations over the last decade. In Europe, 77 percent of all new electricity generation capacity from renewable sources installed between 1997 and 2008 occurred in countries using FiTs, making the continent the world’s largest renewables market. FiTs have also proven to be relatively popular: since 2005, 38 countries worldwide have adopted the measures (which reward renewable electricity producers with a determined tariff for the electricity they feed into the grid), whereas only 12 have introduced renewable portfolio standards (regulations requiring that a specified share of electricity come from renewable energy sources).

Yet while FiTs can create incentives for renewable energy deployment, proper design is critical. As some governments have already discovered, inflexible and overly high feed-in tariffs can cause renewable energy markets to overheat.

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Czech, feed-in tariffs, FiT, Germany, Italy, market, photovoltaics, renewable energy, solar power, Spain