March 20, 2016

Low energy prices and China's drive for a smaller and more efficient coal industry is killing solar power and coal companies

US based Peabody Energy, the world’s largest private coal company, is on the verge of bankruptcy as the commodity crash claims its biggest victim, crippled by fierce competition from cheap gas and a radical policy shift by China.

The US-based group Peabody Energy missed interest payments on two sets of bonds worth $1.6bn, stunning markets with a warning that it may be forced to invoke Chapter 11 protection under US insolvency law.

China aims to lay off 5-6 million state workers over the next two to three years as part of efforts to curb industrial overcapacity and pollution, two reliable sources said, Beijing's boldest retrenchment program in almost two decades.

China's Coal companies shifting to solar, wind, ultra-efficient coal and nuclear energy

China's leadership, obsessed with maintaining stability and making sure redundancies do not lead to unrest, will spend nearly 150 billion yuan ($23 billion) to cover layoffs in just the coal and steel sectors in the next 2-3 years. The hugely inefficient state sector employed around 37 million people in 2013 and accounts for about 40 percent of the country's industrial output and nearly half of its bank lending.

According to a plan by the National Development and Reform Commission, the top economic planner, the coal mining sector will slash capacity by 500 million metric tons over the next five years.

Higher temperature coal plants will be more efficient and have lower pollution but not as good as nuclear and other energy with virtually no emissions

China's biggest coal producer by volume — China Shenhua Energy Co Ltd, which has vowed to focus on clean-coal production, renewable energy and nuclear power to address the national shift of consumption-driven economy, according to its Chairman Steve Zhang Yuzhuo.

The coal producer expects renewable energy output to account for more than 20 percent of profits by 2025 as it plans to become a leading clean-energy provider.

Such transformational moves come as China plans to increase the share of non-fossil energy to 15 percent by 2020 and 20 percent by 2030, as well as capping coal's contribution to total energy consumption at 62 percent within five years.

Coal accounted for 64 percent of energy use last year, down 4.5 percentage points from 2012, when supply gluts and weak demand led to a drop in coal prices.

This means long term pressure on solar power and coal companies. Solar because of increased supply and competition and low energy prices and coal because of less demand

The largest bankruptcy in Spanish corporate history might be solar power company Abengoa

The Spanish company, Abengoa, has built two American plants, in Arizona and California, supplying electricity to more than 160,000 homes. It is the world leader in a technology known as solar thermal, with operations from Algeria to Latin America.

But Abengoa’s global ambitions are now the source of its troubles.

Saddled with debt from its expansion, the company is scrambling to avoid what would be the largest bankruptcy in Spanish corporate history. Creditors and shareholders are taking the company to court as losses mount and crucial financial support disappears.

In Abengoa’s case, its signature American projects still have around $2 billion in outstanding loans guaranteed by the United States government, and the company benefited heavily from subsidies in Spain.

SunEdison has lost $10 billion in market value and is the biggest biggest corporate implosion in U.S. solar history

SunEdison, which has seen $10 billion in market value evaporate over the last year, has been justifiably called “the biggest corporate implosion in U.S. solar history,” as its strategy of acquiring seemingly every solar power company in sight hasn’t panned out. Under CEO Ahmad Chatila, the company has spent billions to acquire solar developers around the world, piling up nearly $12 billion in debt.

$2.2 billion Solar power facility at risk of forced shutdown

The $2.2 billion Ivanpah concentrated solar power facility in California has fallen well short of its expected power output and now has a year to get itself back on track, or it risks being forced to shut down.

The power it produces has been much more expensive than electricity from solar plants that get their energy from photovoltaic cells, to say nothing of power from natural gas.

Even Tesla misstep and discontinue 10 kWh powerwall home battery product

Tesla has quietly removed all references to its 10-kilowatt-hour residential battery from the Powerwall website, as well as the company’s press kit. The company's smaller battery designed for daily cycling is all that remains. A Tesla representative confirmed the 10-kilowatt-hour option has been discontinued. Telsa has decided to focus entirely on building and deploying the 7-kilowatt-hour Daily Powerwall at this time.

Even at Tesla’s low wholesale price, a 500-cycle battery just doesn’t pencil out against the alternatives, especially once the inverter and other system costs are included. State-of-the-art backup generators from companies like Generac and Cummins sell for $5,000 or less.

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