SunPower Corp., a once-prominent player in the US solar industry, has filed for bankruptcy in Delaware.
This marks the end of a company that has been in business for nearly four decades. Let’s break down what’s happening and why it matters.
SunPower’s Chapter 11 petition, filed in the US Bankruptcy Court for the District of Delaware, reveals a company facing significant financial challenges.
The firm listed both its assets and liabilities in the range of $1 billion to $10 billion.
One of the major shareholders affected by this development is TotalEnergies SE, a French energy giant.
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Asset Sale and Future Plans
As part of its bankruptcy process, SunPower isn’t just closing up shop.
The company has agreed to sell some of its key assets:
1. Blue Raven Solar installation unit
2. New homes businesses
These assets are set to be acquired by Complete Solaria Inc. for $45 million.
This type of sale in bankruptcy is known as a “stalking horse” bid, which sets a minimum price for the assets.
SunPower has asked the court to approve this deal by the end of September.
ENERGY TRANSITION: SunPower, once a venerated name in the US solar industry, has filed for bankruptcy.
TotalEnergies is the majority shareholder.
In 2021, at the peak of the ESG bubble, SunPower was worth >9 billion; yesterday, it was ~$200 million.https://t.co/bzO6WPEpwy
— Javier Blas (@JavierBlas) August 6, 2024
Tom Werner, SunPower’s executive chairman, commented on the proposed transaction:
“The proposed transaction offers a significant opportunity for key parts of our business to continue our legacy under new ownership. We are working to secure long-term solutions for the remaining areas of our business, while maintaining our focus on supporting our valued employees, customers, dealers, builders, and partners.”
This statement suggests that while SunPower as we know it is ending, parts of its business may continue under new ownership.
Industry Challenges
SunPower’s troubles aren’t happening in isolation. The entire US solar industry has been facing headwinds:
1. High interest rates: This makes it more expensive for consumers to finance solar installations.
2. Changes in California subsidies: California is the largest market for solar in the US, and changes in its subsidy structure have impacted the industry.
These factors have created a challenging environment, even as the industry expected growth from President Biden’s 2022 climate law.
SunPower’s Specific Issues
Beyond industry-wide challenges, SunPower has faced its own set of problems:
1. Defaulted on a credit agreement in 2023
2. Had to restate earnings
3. Replaced its CEO this year
4. Restructured operations
5. Lost its accountant
These issues point to deeper organizational and financial problems within the company.
A Bit of History
SunPower, founded in 1985, was known for producing high-quality solar panels.
In 2020, the company made a strategic shift, spinning off its manufacturing operations to focus on rooftop installations.
This decision was based on the surging demand for residential solar at the time.
SunPower, once a venerated name in the US solar industry, has filed for bankruptcy in Delaware https://t.co/LC8PCQrCJw
— Bloomberg (@business) August 6, 2024
However, this bet didn’t pay off as expected.
Rising inflation and high interest rates made solar installations more expensive for consumers, hurting demand.
At the same time, SunPower’s internal issues made it harder for the company to navigate these market challenges.
The Final Days
The writing was on the wall by mid-July 2023.
On July 17, SunPower notified its dealers that it was halting new installations and shipments.
This move was seen by industry analysts as a sign that the company was ceasing operations.
As a result, some analysts suspended their coverage of SunPower or lowered their share-price targets to $0.
In conclusion, SunPower’s bankruptcy represents a significant shift in the US solar industry landscape.
It serves as a reminder of the challenges facing renewable energy companies, even as the world pushes for cleaner energy solutions.
The outcome of this bankruptcy process, including the proposed asset sales, will be closely watched by industry observers and could have implications for the broader solar market.