China’s Suntech Power, one of the world’s largest producers of solar panels, has recently declared bankruptcy. Suntech also announced the closure of its only U.S. factory in Goodyear, Arizona.
The bankruptcy of Wuxi Suntech, which supplies more than 95 percent of Suntech Power’s products, was reported by the official Xinhua news agency Wednesday.
Suntech Power, which is traded on the New York Stock Exchange, at its peak had a market capitalization of $16 billion. But the company was experiencing a drop in profits due to a global oversupply of solar panels, falling prices and anti-dumping tariffs imposed on China by the U.S. government.
Last Friday it failed to make payments on $541 million worth of convertible debt, the first time a major Chinese company had defaulted on its bonds.
Suntech, like many other green companies, received lucrative governmental incentives.
Suntech, a large Chinese firm whose Goodyear solar panel factory was hailed as proof that government economic planning works. Indeed, when Suntech announced its plant in 2010, Gov. Jan Brewer proclaimed it the result of “the right incentive program to make business sense.”
Three years later, Suntech is shuttering the Goodyear plant and laying off its 43 remaining workers. But not before it pocketed $1.5 million in tax breaks from the state, $2.1 million from the federal government, and $500,000 in job training from the city. Goodyear also waived its plan review requirements and permit fees. Not for all firms, mind you, just for this one particular Chinese company with its grandiose promises.
Suntech’s bankruptcy is another example of the market illusion that is “green” investments. The global free-market might be heavily constrained but it still will not suffer technology that perpetually operates in the red. Despite this plain economic knowledge, the Department of Energy (DOE) and the Internal Revenue Service (IRS) will give $150 million in manufacturing tax credits for green energy companies.
It has not worked before and will not to work. In the end, the American taxpayer is left standing holding the bag and our domestic energy prices are as expensive as ever.
Thank you, Obama.