More and More Solar Companies Feel the Pinch
American Solar Direct joins a growing list of solar panel companies that have had to declare bankruptcy as both the government and customers prove unkind to solar.
In the first quarter, data shows that the national residential market declined by 17% year-over-year. California proved to be the biggest source of flagging demand for solar panels, as the state with the largest market for solar panels slowed down its purchasing and interest in the renewable energy generators. (Source: “American Solar Direct swerves into chapter 7 bankruptcy,” PV Magazine, June 9, 2017.)
And American Solar Direct went one step further in its bankruptcy, filing for chapter 7 bankruptcy protection, which usually involves liquidation of assets versus restructuring.
American Solar Direct, like many solar panel makers, was heavily dependent on California. As that state has slowed its solar panel buys recently, companies that have made strong sales in the past within California are now finding themselves strapped for cash.
American Solar Direct was also unique in that its financials were out of hand. It found itself with $10.0 million-$15.0 million in liabilities, while the company’s assets totaled a mere $50,000 in comparison. This represented a massive disparity between assets and liabilities, and probably played an outsized role in the decision for the company to close down.
American Solar Direct used to be one of the hotter solar producers on the market, at one point earning $36.0 million in revenue in 2014. At the time, it had 417 employees, the remainder of which will likely be looking for new jobs as the company makes it layoffs public. (Source: Ibid.)
The company is also suffering—like much of the industry—after losing a friend in the White House who was sympathetic to their plight (Barack Obama) versus the current president who has, at times, claimed that climate change is a hoax orchestrated by the Chinese and that the U.S. was better served revitalizing the Rust Belt and looking into oil and gas. This type of back-facing investment has not been met with praise among most solar panel enthusiasts.