Chinese solar panel giant Suntech declared bankruptcy last week after it missed a $541 million payment to bondholders.
Suntech, once the world’s largest solar panel maker, previously received a $2.1 million tax credit from the Obama Administration to open a plant in Arizona. Now, the plant is closing and its 43 jobs are being terminated.
“Suntech’s problem was the same problem facing the whole industry: Materials costs are going up, and solar panel prices are going down,” writes Tim Carney. “The diagnosis is easy: overproduction. The cause is obvious: oversubsidization.”
Beyond the Obama Administration’s $2.1 million tax credit, Suntech received a $1.5 million Arizona tax credit, along with another $500,000 from the city of Goodyear, AZ for job training.
According to the Wall Street Journal, China’s State Council plans to stop subsidizing unprofitable domestic solar panel companies and “indicated it would bar local governments from supporting struggling companies and allow the market to determine who survives.”
During his 2013 State of the Union Address, President Barack Obama said, “As long as countries like China keep going all in on clean energy, so must we.”
Whether Suntech’s demise will change Obama’s view remains to be seen.
“Maybe Suntech’s collapse will cure Obama of his China envy,” says Carney, “and he will realize the solar race isn’t worth the entry fee.”