Chinese solar manufacturer declares bankruptcy

It's no secret that the solar power industry has been hit hard lately as Chinese manufacturers flood the United States with inexpensive merchandise. It appears that glut of cheap solar panels and equipment has reached its peak, and Chinese solar giant Suntech has declared bankruptcy in its wake.

China ramped up production of inexpensive solar power a few years ago and it left many U.S. manufactures in a lurch as many of their contracts were given to Chinese competitors. While this was a boon for China at the time, it appears the solar gold rush has fallen flat. Suntech Power Holdings Ltd. asked Chinese courts for insolvency after missing a $541 million bond payment.

Chinese solar equipment manufacturers like Suntech have been hit hard by the simple law of supply and demand. The supply has skyrocketed while demand has slumped, leaving many companies with warehouses full of product and no one to sell it to. The company was also knocked by revelations that one of its business partners lied about $680 million in collateral for a loan, which Suntech guaranteed.

The company is down, but not out as they work with creditors to negotiate various payment arrangements. The glut in solar power was partially created by the Chinese government itself. The country has been growing dramatically and solar was thought to be the next great renewable fuel source and help curb its dependence on foreign oil. It also brought higher paying high-tech jobs.

Many companies have posted heavy losses recently and this may not be the last bankruptcy filing we see for a Chinese solar company. It's also having an impact in the U.S. where Suntech closed one of its U.S. manufacturing facilities and laid off 43 workers.

Renewables in general are down, as cheap natural gas has lead many to abandon the green energy bandwagon. Solar, wind and other renewable energy projects are down drastically from a few years ago.

Photo courtesy of USA Today