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SunEdison bankruptcy highlights renewable energy problems

solar photovoltaic
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.

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Renewable energy giant SunEdison files Chap 11 bankruptcy

SunEdison stock price

It’s a sadly common story. A perfectly healthy company decides it must grow fast, probably to pump up the stock price so insiders get rich quick.. It goes billions in debt, buys lots of companies. Then, when the inevitable change in market conditions happens that no one could have predicted, finds it can no longer pay the debt. In the case of SunEdison, plunging oil prices made solar less attractive, causing their house of cards to topple.

So, a whole lot of people will lose their jobs. The resultant lawsuits will take years to resolve. And none of it needed to happen and was completely avoidable. But such greedy piggishness is what too often passes for capitalism now. Oh yes, I’m sure the tops execs at SunEdison will still walk away with millions.

SunEdison’s downward spiral was largely a result of the company’s overly ambitious vision and aggressive financing schemes. Much of SunEdison success was dependent upon a stable market environment, which of course turned out to be far more volatile than imagined. While SunEdison’s massive problems were far from evident when the company was flying high, they now appear obvious in hindsight.

There will lots of collateral damage too.

Potential legal damages stemming from deals SunEdison failed to close while its finances were deteriorating could total hundreds of millions of dollars, according to court filings and people familiar with the deals. Litigation over the failed deals could add to the company’s already lengthy list of creditors and possibly extend to its publicly traded subsidiaries.

Company description:

SunEdison is the largest global renewable energy development company and is transforming the way energy is generated, distributed, and owned around the globe. The company develops, finances, installs, owns and operates renewable power plants, delivering predictably priced electricity to its residential, commercial, government and utility customers. SunEdison is one of the world’s largest renewable energy asset managers and provides customers with asset management, operations and maintenance, monitoring and reporting services.

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Cummins plans plug-in hybrid systems for heavy trucks

Plug-in hybrid systems for Class 6 trucks could boost mileage 50%. This would be a seriously big deal. Cummins is developing the technology now using a $4.5 million grant from the Department of Energy. If successful and implemented widely, this would cut trucking costs sharply and help the environment too. Imagine the savings in fuel and money if millions of trucks got 9 mpg rather than 6 mpg. Partners in the project include PACCAR (Kenworth, Peterbilt and DAF), Ohio State University, National Renewable Energy Laboratory, and Argonne National Laboratory. This is a serious attempt by major players to increase mileage on heavy trucks. Excellent.

The reduction of fuel consumption will be accomplished using a range of drive cycles designed to meet the needs of commercial fleet operators. In addition to a plug-in hybrid powertrain, the trucks will feature other technologies, including intelligent transportation systems and electronic braking. Ultimately, the researchers aim to demonstrate improved fuel consumption and state-of-the-art drivability and performance regardless of environmental conditions.

A Class 6 truck has a gross vehicle weight of between 19,000 and 26,000 pounds. The category includes trucks with a single rear axle and school buses.

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Mr. Peabody’s coal mine might just go away


Peabody Energy, the biggest producer of coal in America, just missed an interest payment of $71 million and will almost certainly file Chapter 11 bankruptcy. Their auditor says there is uncertainty about Peabody continuing as a going concern. Their big problem is enormous amounts of debt. As of Dec. 31 they had total debt of $6.3 billion and cash equivalents of $261.3 million. Would someone please explain why such reckless amounts of borrowing is justifiable and why any lender would be stupid enough to give them money? Or is GAAP accounting only for the little people?

Many more energy companies are expected to default in the new six months on $40 billion in bonds, which means lots of jobs will go away and there will be unpredictable carnage in some areas of the bond market. Maybe you have a retirement fund and maybe it owns some of these now mostly worthless bonds. Or you or friends live in a town dependent of coal mines and which might now dry up and blow away when the mines shut down.

The company also said that in February 2016 it borrowed approximately $945 million under the 2013 Revolver, the maximum amount available, for general corporate purposes. The company’s lender banks will surely be excited that they are about to see another $1 billion in secured loans promptly impaired in one month when BTU has no choice but to file for bankruptcy.

Peabody, which flagged bankruptcy risk under the “risk factors” section of a regulatory filing on Wednesday, said it skipped a $71.1 million interest payment on its senior notes, kicking off a 30-day grace period. The company also raised “substantial doubt” about its ability to remain a going concern.

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Nextgen wind turbines could have blades 656 feet long

Segmented Ultralight Morphing Rotor with three blades

Segmented Ultralight Morphing Rotor with three blades folds up in heavy winds.

The longest blades on current wind turbines are 300+ feet. Engineers are working on prototypes for ginormous turbines with amazing new technology. The blades would be 656 feet long, more than two football fields, with towers taller than the Empire State Building. Each turbine could output a prodigious 50 MW. There will be two blades, not three, and they will face downwind. Blades will expand when wind speed is low and contract when high, allowing more energy to be generated at low-speed and protects the system during high winds.

At dangerous wind speeds, the blades are stowed and aligned with the wind direction, reducing the risk of damage. At lower wind speeds, the blades spread out more to maximize energy production.

Sandia’s previous work on 13-MW systems uses 100-meter blades (328 feet) on which the initial SUMR designs are based. While a 50-MW horizontal wind turbine is well beyond the size of any current design, studies show that load alignment can dramatically reduce peak stresses and fatigue on the rotor blades. This reduces costs and allows construction of blades big enough for a 50-MW system.

The blades are sectional, rather than one huge piece, and would be assembled on site. The segments are 130-160 feet long, making them relatively easy to transport.

The plan is to site them far out at sea away from grumpy NIMBYs and migratory paths of birds. Prototypes are being funded by the Department of Energy through its Advanced Research Projects Agency working with universities.

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