LDK Solar Co., Ltd (ADR) (NYSE:LDK) will miss an interest payment that’s due today because it doesn’t have the money on hand to pay it. While its losses were reduced by a third in the latest quarterly numbers released on Monday, its revenues were cut in half.
Unfortunately for the panel maker, while rivals ReneSola Ltd. (ADR) (NYSE:SOL) and Suntech Power Holdings Co., Ltd. (ADR) (NYSE:STP) were thrown lifeline loans earlier this year by the government-controlled China Development Bank, Beijing no longer seems willing to extend a helping hand to its solar sector. LDK Solar Co., Ltd (ADR) (NYSE:LDK) will have to fend for itself. It’s probably no coincidence that Suntech Power Holdings Co., Ltd. (ADR) (NYSE:STP) defaulted on its bond interest payments and declared bankruptcy for one of its subsidiaries in March despite the cash infusion.
Like many of its solar brethren, LDK Solar Co., Ltd (ADR) (NYSE:LDK) can’t operate without government subsidies, and though industry advocates like to say oil companies are subsidized so why shouldn’t we do the same with solar shops — President Obama has made that same argument saying we should take the subsidies from Big Oil and give them to Big Solar — the fact remains solar power is already subsidized at greater cost than any other form of energy based on the amount of electricity generated.
Apparently China has finally learned that subsidies don’t guarantee success, just as U.S. taxpayers learned that lesson with the bankruptcy of Solyndra, Evergreen Solar, Abound Solar, and a host of other solar shops along with so-called “green tech” companies like lithium-ion battery makers A123 Systems and Ener1 that all got government handouts. We’re also still paying a heavy price for the government’s “investment” in General Motors Company (NYSE:GM) and its heavily subsidized-but-still-losing-money Chevy Volt.
A Wall Street Journal article last year showed that while oil and gas companies received subsidies amounting to $0.64 per megawatt hour produced, solar’s subsidies topped a whopping $776 per megawatt hour. For the amount of money spent, we’re getting very little return on our investment, although the Energy Dept. says those numbers might be off because a lot of the solar projects were still under construction at the time. Yet with just $654 million spent underwriting oil and gas (compared to $968 million with solar), we’re getting the best bang for our buck there.
This country is broke and going broker by the day. We can’t afford to keep solar companies on the payroll any longer and other countries around the globe have realized the same thing. That even China realizes this now suggests we could see many more solar shops falling by the wayside.