In today’s world, energy is always in demand and this has led many companies in the energy sector to focus on new renewable forms of energy. Lately renewable energy, specifically solar, has experienced a multitude of issues that threaten many of the companies that specialize in solar power. From the high profile collapse of Solyndra to the free fall of prices around the world, many are left wondering what the future holds for this burgeoning industry.

With the dramatic fall in prices many around the globe companies have had to seek ways to deal with the diminishing revenues. Earlier this year Q-Cells SE, which is based in Germany, felt the crunch of falling prices as the world’s largest solar-cell producer filed for insolvency. Even solar companies from China that have been heavily subsidized by the government are beginning to show weaknesses stemming from the fall in prices. A 30% fall in value of Chinese solar exports occurred in first six months of 2012 compared to the same period in the previous year. This is due to the fact that margins are eroding due to the downward pressure on price while the wattage volume of solar shipments has increased. While companies in the United States and Germany such as Solyndra and Q-Cells SE have had to go into bankruptcy court, companies in China have taken on a massive load of debt to keep their doors open.

China’s top 10 listed solar companies have a combined $17.5 billion of debt. LDK, the world’s second largest solar-wafer manufacturer, has $2 billion dollars of debt that is due this year but after Q1 only $135.7 million of cash on hand. However, Chinese governments seem committed to the solar industry. "It appears as if they'll get [support] from the Xinyu and Jiangxi provincial governments," said Charles Yonts, an analyst at broker CLSA. Beyond government support Chinese banks are assisting by helping companies such as Suntech Power Holdings Co. who believe much of their $1.6 billion dollar debt due this year can be rolled over. They are also in negotiations over a new loan agreement and a local bond issuance.

Despite these setbacks, the solar industry is trying to remain competitive in the global energy market. The excess of supply has pushed down prices to the point that it is beginning to compete with traditional energy sources. This is good news for consumers and by reaching a broader base of people the solar industry may come out of this lull stronger than ever.

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