Second only to the flame-out of oft-maligned Solyndra, the bankruptcy filing this month of once high-flying SunEdison has gotten a great deal of press, particularly by those who follow the financial side of the solar industry closely. But what does it really mean for residential, non-profit, and small commercial solar clients? In a word - nothing, and here's why.
SunEdison, is a developer of utility-scale solar projects, that is, projects that sell energy directly to a utility rather than offsetting the energy loads of a local customer.
SunEdison Alamosa PV Plant
In recent years SunEdison expanded aggressively, creating two captive subsidiaries known as yieldcos to purchase the parent's projects at a premium, sell the energy and pay investors dividends from those projects - thereby enticing more investors, which provided more capital to purchase more projects, thus paying more dividends and on, and on.
Until it didn't.
Possibly the straw that broke the investors' back, however, was the deal that SunEdison announced last July to purchase Vivint Solar at a 52% premium. To a lot of folks this seemed like an odd move - Vivint is a major player in the residential solar space where it competes against SolarCity (and us!) - not a real fit with a developer of mostly utility scale projects. That deal spooked investors, liquidity became an issue, and the Vivint deal dissolved into litigation in March.
With the demise of the Vivint deal, rumors of bankruptcy grew, culminating in its filing for Chapter 11 reorganization on April 21. The announcement - ironically one week after coal giant Peabody Energy did the same thing - generated some pretty scathing coverage:
While certainly not the level of vitriol directed at the failure of Solyndra, those are still tough headlines (and interesting articles, should you be inclined to dive deeper).
Meanwhile, back on your roof...
So while there is a great deal of buzz about the problems facing SunEdison, they really have nothing to do with the markets that our clients occupy. We, along with the other local, independent solar installers out there, are still doing just fine, thank you! We have never purchased products from SunEdison, so none of our product warranties are affected.
In the end, this story does highlight one consideration for potential clients to consider as you mull over the trade-offs between a smaller, local company and a large, national chain. If even the biggest firm can fail, as SunEdison has shown, so can the other giants out there. So if there is no guarantee that either the large or the small company will still be around in ten years, where would you rather place your bet: with the small company that takes the time to get the job done right, or with the giant that is bragging to its investors how it takes a day or less to install a system?
At the end of the day, size may matter, just not in the way you would originally think!