Scottsdale, Arizona based Solar-power equipment manufacturer Stirling Energy Systems Inc. recently filed for Chapter 7 bankruptcy, adding to U.S. solar industry woes including soft demand, falling prices and difficulty raising money. In the case of Chapter 11 bankruptcy, the company could reorganize and attempt to become profitable; however, under Chapter 7 of the U.S. bankruptcy code, the company is forced to discontinue all operations and liquidate its asset portfolio.
Stirling Energy, maker of the SunCatcher, a 25-kW solar-powered stirling engine designed specifically for the utility market,developed equipment for two solar power plants designed to convert heat from the sun into electricity using concentrated solar power (CSP) technology, as opposed to more conventional photovoltaic (PV) solar panels. Neither of the plants were able to obtain U.S. Department of Energy loan guarantees, even though both were sited on public land in California and received fast-track construction permits from the Obama administration.
Stirling had deployed a pilot project using its stirling engines in early 2010 with the 1.5MW Maricopa Solar Power Plant in Arizona associated with local power utility- SRP. In 2008, the company agreed to supply its dish-engine technology to a massive 850-MW power plant in San Bernadino County, California. However, the project developer Tessera Solar, sold the project to K Road Power Holdings in late December 2010 shortly after receiving approvals from the California Energy Commission. Thereafter, K-Road announced that 750MW of the 850-MW project would be developed using less expensive PV instead of CSP, with only the last 100 MW phase of the project using Stirling solar power systems. CSP, once considered the preferred solar power technology in sunny Southern California and other desert areas, is becoming increasingly squeezed out of that position to cheaper PV solar. As Stirling lost these primary customer contracts, without additional future projects on tap, coupled with difficult capital financing and cheaper solar alternatives, there was little for Stirling to do other than to file for Chapter 7 bankruptcy.
This bankruptcy filing is one of the latest in a series of U.S. solar company bankruptcies, as soft global demand for solar power, falling prices and a glut of solar panels from Asia have severely affected domestic manufacturers. First and foremost, California solar-panel maker Solyndra Inc. filed for bankruptcy after receiving over $500 million in U.S. government loans associated with the Stimulus or Recovery Act program. In August, Massachusetts-based Evergreen Solar Inc. also filed for bankruptcy. These two companies had similar business models, which were based on less mainstream technologies whose competitiveness depended on the use of less polycrystalline silicon, the main material for the majority of solar panels on the market. As polysilicon prices have fallen dramatically in the last three years, which was formerly an issue for market adoption, there was less advantage and demand for these products.
On top of that, an Intel spin-off company formed in 2008, SpectraWatt, which had facilities in New York and Oregon, filed in August for Chapter 11 bankruptcy after raising over $90 million in private investment and receiving state aid in New York.
All of this spells disaster for U.S. solar manufacturing competitiveness globally and especially in the clean energy race versus China, which is increasing its dominant market share in this sector. In addition, there is superior government support for solar manufacturing in China including loans at very low rates from state-owned banks in Beijing and cheap or free land from local and provincial governments that are set to capitalize on low labor manufacturing cost advantages. The U.S. lacks a comprehensive clean energy policy that includes both on-going support for domestic research and development, manufacturing, and deployment, since the U.S. Congress was unable to pass related legislation in 2009 including carbon cap-and-trade policies and manufacturing tax breaks. Moreover, global energy demand has lessened in recent years due to global economic declines causing a shakeout of weaker clean energy market players.