Chinese thin-film solar panel maker Hanergy was a high-flying stock
this year, with its price soaring six-fold to a valuation of $37 billion
despite what should have been numerous warning signs, including the
brand being built on the CEO’s charisma, the often-careless promotion of
Cleantech for its green character, and wishful thinking about a
too-expensive technology. Sounds all too familiar.
Think Solyndra or Israeli electric car company Better Place.
Both were much ballyhooed by Cleantech proponents, raised lots of money
(from the government in the first instance), and seemed much more
focused on technical accomplishments than economics. Hanergy claims it
was chosen by MIT’s Technology Review as the only Chinese company on
the list of 50 smartest companies, but it doesn’t seem to have passed
muster on the business end.
Go to Hanergy’s website and the numbers provided primarily involve
the stock value and the potential efficiency of its gallium arsenide
thin-film solar cells. For a backroom startup, that wouldn’t be
surprising but a company worth $37 billion should have some financial
info, in my estimation. A brief survey of the Internet finds lots of
stories about the company spending money—on acquisitions and store
openings—but not so many on income. The company claims to have 60
“flagship” stores, yet now we hear that nearly all its revenue was from
sales to its parent company, which sounds like the kind of financial
manipulation another high-flying stock, Enron, engaged in.
Actually, this reminds me of Energy Conversion Devices, which in the
1980s was certain it could market thin-film solar panels using its
amorphous silicon technology. The company, and its brilliant founder,
were heralded as innovators and its purchase by ARCO was said to
validate its approach. But it failed, and the technology is not viable
over three decades later.
There’s a huge difference between government support and commercial
success, which Cleantech entrepreneurs often blur and which advocates
carelessly ignore. There is a persistent myth that the barrier to a
viable solar product is the need for a bigger factory, and that this, or
the magical Chinese ability to make products cheaper, will solve the
decades long challenge of being able to convert extremely diffuse energy
into power at a competitive price.
Fuddy Duddies like me are often accused of looking to the past rather
than the future. Unfortunately, investors who put their money into
promises of returns someday are all too often not being visionary, but
imprudent. One has to wonder how many other Cleantech companies might
suffer from the fallout of this implosion.
http://www.forbes.com/sites/michaellynch/2015/05/21/hanergy-solar-collapse-looks-like-a-tale-of-irrational-exuberance/?ss=energy