Why Did Evergreen Go Bankrupt?

Recently, Evergreen Solar, one of the first casualties in the U.S. solar manufacturing business, declared bankruptcy and has received approval from the courts to sell off all of its assets. Thinking about the company, how did they get here?

Evergreen made its claim to fame with its String Ribbon technology: basically, instead of traditional silicon wafers, Evergreen produced ribbons of silicon crystals which were then cut into lengths which are treated with traditional processes to form solar cells. String Ribbon technology offers a less expensive manufacturing technique, due to less silicon use, but is not capable of achieving the same electrical performance as wafer technology.

Many industry insiders blame Chinese competition. It is difficult to have over 300 businesses live in the solar panel marketplace and not look forward to some flopping. In its latest yearly report, Evergreen Solar quoted First Solar, BP Solar, Mitsubishi, Kyocera, Sharp, Sanyo, Trina Solar, SunPower, and Yingli. Even as a few of those rivals happen to be Chinese, the majority of them are not. Evergreen Solar was not hit solely by China groups, but businesses from around the planet too.

Extensive competition surely impacted Evergreen but the real reason for their demise is really the same reason that Solyndra declined. They produced a non-standard panel that frankly did not have market acceptance. Evergreen gambled that the cost of silicon would be the single largest driver of solar panel cost and developed a panel, that while less efficient than wafer solar panels, used less silicon in its production and as a result cost them less to produce. The problem was that silicon never dramatically rose in price and so Evergreen was left with a non-standard solar panel that performed below market levels. Shocker that they would have failed.

Evergreen also simply did not make cash. The net loss of Evergreen Solar for 2010 happened to be $465.4 million. In 2009, the business made a loss of $266.2 million. In 2008, the net loss made by Evergreen happened to be $228.6 million. In 2007, Evergreen made a loss of $16.5 million that happened to be a step up over the $26.7 million that was lost during 2006. Clearly, the profit inclinations were not in favor of Evergreen. Evergreen was also caught needing money in a time when it was difficult to raise cash. During the bull market, Evergreen Solar would have been able to raise cash by means of stock sales. So when the market turned sour on clean tech companies and went down in general, Evergreen was left with virtually no way to raise the money to survive.