When Evergreen Solar Inc. filed for Chapter 11 bankruptcy Aug. 15, the company cited several market conditions that have impacted business, including a drop in silicon pricing, significant global capacity expansion and an end to industry subsidies in Germany and other key markets.
The company’s troubles could force it to give back money it received in the form of tax breaks from the state of Massachusetts, according to a National Public Radio report.
The news could cast further doubt on the usefulness subsidies provide to the renewable-energy market. Evergreen Solar’s string-ribbon technology requires them to use less polysilicon than conventional processes. When polysilicon prices were high, the company had a competitive advantage.
The industry is struggling with a supply glut created over the past two to three years when subsidies in key European markets, namely Germany and Italy, drove demand, says Gordon Johnson, an alternative-energy analyst with Axiom Capital Management Inc.
“If you were a solar panel manufacturer everything you produced you could effectively sell, and the economics on this stuff at the time were such that you were basically getting paid back for the equipment you were investing in a matter of three to four months,” Johnson says. “And you were getting return on capital of 200% to 300%.”
Evergreen Solar files for bankruptcy, plans asset sale – BostonHerald.com
The Massachusetts Republican Party called the Patrick administration’s $58 million financial aid package, which supported Evergreen’s $450 million factory, a “waste” of money.
“The bankruptcy of Evergreen Solar is another sad event for the Massachusetts company and highlights the folly of the Patrick-Murray Administration which has put government subsidies into their pet projects instead of offering broad based relief to all Bay State employers,” said Jennifer Nassour, head of the state GOP.
Greg Bialecki, Patrick’s economic development czar, defended the administration’s support for the once-promising Evergreen. The state is still trying to recoup about $4 million in cash from the Marlboro-based company.
“Not every company is going to be successful … but we still believe the approach of providing business incentives to create and maintain manufacturing jobs in Massachusetts is an important strategy,” he said.