SunEdison Layoffs Pose Questions About Clean Energy’s Future
Despite the low prices of fossil fuels, the clean energy industry is still growing, with utility-scale wind power projects and residential solar installations catching on worldwide. And despite the oil and gas industry’s stranglehold on political power — evident in fossil fuel subsidies across the globe — clean energy companies overall still very much have the wind at their backs. Even stodgy organizations such as the International Monetary Fund (IMF) and the International Energy Agency (IEA) are bullish on the future prospects for renewables.
Nevertheless, the industry is still enduring its share of growing pains, as SunEdison’s current struggles demonstrate.
SunEdison had been riding high this year, with a market capitalization soaring to almost $10 billion just three months ago. But investors’ confidence had been wavering long before SunEdison reached what was a historic milestone for the company. Acquisitions of firms including First Wind and Vivant Solar worried analysts who saw that $4.6 billion buying spree create a sudden spike in SunEdison’s debt-to-equity ratio.
Not everyone was worried: The company attracted copious amounts of praise for becoming the world’s largest clean energy development company, and the MIT Technology Review, in fact, listed SunEdison as sixth in its rankings of the 50 Smartest Companies. But Wall Street became skittish over SunEdison’s fundamentals, and as July turned into August, its stock lurched into a rapid tumble.
In July, SunEdison’s stock price had hit an all-time high of $31.84 a share. It had fallen as low as $6.56 a share in late September before hovering at its current price of about $9; in turn, the company’s market capitalization has taken a steep nosedive to what is now an estimated $2.6 billion.
Meanwhile, SunEdison’s transactions hardly slowed the company’s spending, whether it was to fund its countless divisions or to wow attendees at signature clean energy industry events. In addition to the financial strains, this newly assembled company also faced its share of work culture challenges as evident in the Vivant acquisition. Too many on the outside had become nervous about the rapid changes ongoing at SunEdison.