The biggest problem renewable energy faces is greedhead, reckless management taking on huge debt for the company in a delusional attempt to grow-or-die. This is aided and abetted by Wall Street and hedge funds who, at least initially, profit handsomely from underwriting the debt or buying it. Company executives get juicy stock options, so it’s in their personal self-interest to do whatever they can to boost the stock price. However, little or any of this is healthy for the long-term prospects of the company.
The latest renewable energy company to disintegrate is SunEdison because no one could ever have predicted that ginormous debt, questionable and opaque accounting practices, and a relentless focus on short-term goals like goosing the stock price to pay for mor acquisitions, could ever lead to disaster. Until it does. SunEdison stock has dropped from $32 last summer to 34 cents. Lots of the blameless employees will no doubt lose their jobs and vendors may go under too.
Renewable energy has a bright future, as long as the companies grow slowly and sanely. It can be done. It must be done.
There is a timeless element to SunEdison’s swift demise: an executive with an Icarus complex chasing a fast-growing market embarks on an aggressive strategy fueled by cheap debt. Soar. Crash. Burn. Repeat.
Yet the collapse raises a bigger question: Can renewable-energy companies be profitable? Can green make green?
The answer, of course, is yes. Just as soon as they cross over a fundamental hurdle: finding a strategy that actually works.