The solar sector vultures circling over SunPower’s remains #NewsMarket

I have been learning a lot about corporate bankruptcy proceedings this year.

First, there was Enviva, which made wood pellets to replace coal for fuel. It went up in smoke in March. Ambri, a battery maker with backing from Bill Gates, went down in May. Fisker, the US electric vehicle maker, filed for bankruptcy in June. And now SunPower, a big residential solar provider, has bitten the dust. Below I have the story of its demise, and the aftermath.

Also, Lee has a look at how the new vice-presidential nominees might benefit the US nuclear power sector. — Patrick Temple-West

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solar power

The demise of a one-time solar energy darling

SunPower, a one-time darling of the renewable energy sector, declared bankruptcy earlier this week, leaving other solar companies fighting over its remains.

The bankruptcy marks a shake-up in the solar sector as well as a dramatic fall for SunPower. The company enjoyed a surging share price and a $9bn market capitalisation in January 2021 when Joe Biden entered the White House and renewable energy was back in vogue.

Back in 2011, French oil company Total bought a majority stake in SunPower worth about $1.4bn at the time, as fossil fuel companies fretted about the transition towards clean energy.

But the company’s sunny days ended when the Federal Reserve rushed to raise interest rates, starting in 2022. Solar providers rely heavily on debt to finance panel installation, and expensive borrowing costs crimped growth. Problems mounted this year when SunPower disclosed that EY resigned as its accounting firm and that the company was under investigation by the Securities and Exchange Commission.

“Eighty per cent of SunPower’s problems were of their own making,” Joe Osha, a managing director at Guggenheim Securities, told me. Now, SunPower’s problems presented a “competitive opportunity” for other residential solar providers, Osha added.

On Tuesday, Sunrun said it hired two industry veterans from SunPower and said the disruption could be a benefit. Sunrun’s share price jumped 11 per cent on Wednesday and is now up 10 per cent over the past 12 months.

Brett Castelli, an analyst at Morningstar, told me that SunPower was particularly strong in solar for new homes (California requires new homes to have solar panels). Now, Sunrun was likely to benefit from this demand, he said.

But TJ Rodgers, chief executive of Complete Solaria, is eager to fight for the SunPower carcass, too. “I’m 76 years old and the world left a crying CEO-less baby on my doorstep,” Rodgers said in a statement on Tuesday. The solar market was “intriguingly combined with bare-knuckle, cash flow, live-or-die economics. I’m in,” he said.

Complete Solaria is a small California-based residential solar provider that went public via a blank cheque company in 2023 — and counts former Credit Suisse chief Tidjane Thiam as one of its board directors. Thiam owns more than 7 per cent of Complete Solaria, which also secured an investment from venture capitalist John Doerr last year.

Rodgers made the transition to solar after decades in the technology industry. He was chief executive of Cypress Semiconductor before it was sold to a German rival in 2019.

“It would not be an understatement to describe him as one of the fathers of Silicon Valley,” Osha said.

Notably, he was chair of SunPower from 2005 to 2011. He is also on the board of Enphase Energy, another solar company. SunPower’s bankruptcy documents show it owes Enphase at least $4mn. Rodgers helped rescue Enphase in 2017 when its stock dropped below $1 (it traded at $107 on Thursday).

For solar companies, the Federal Reserve’s looming interest rate cuts would be closely watched by investors, Castelli told me.

“We are seeing a move toward more disciplined growth as opposed to [when] the industry was more growth at all costs,” Castelli said. “Now, we are seeing more of a focus on cash generation.” (Patrick Temple-West)

Nuclear energy

US nuclear energy proponents welcome VP picks — in both parties

US presidential nominee Kamala Harris’s pick of Minnesota governor Tim Walz as her running mate looks like an encouraging sign for the nuclear energy sector and its investors.

Walz has long made the case for repealing a moratorium on new nuclear power plant development in Minnesota, which is one of a dozen US states run by Democrats that have similar restrictions.

“Energy policy is climate policy, is job policy and is national security policy,” Walz said of his support for nuclear power, as early as 2009. Last year, he threw his weight behind state legislation to study the potential costs and benefits of advanced nuclear reactors.

But Democrats remain split on the issue, and Walz is not the only atomic power booster on the ballot in 2024.

Republican vice-presidential nominee JD Vance is known by industry insiders as “extremely pro-nuclear”. Mark Nelson, of consultancy Radiant Energy Group, told me. For that reason, he said, “anybody with a lot of money on the line for nuclear projects right now is likely to be waiting to see what the choice of the American people is, before wading in”.

President Joe Biden’s administration has championed small modular reactors — in June, the Department of Energy committed almost $1bn to support deployment of the technology — as well as conventional large-scale reactors. The White House hopes to tackle high costs and long delays on commercial-scale nuclear power in order to “reestablish US leadership” in the industry, it said earlier this year.

It could face competition. At last year’s COP28 climate conference in Dubai, more than 20 countries including the US, UK, France and the United Arab Emirates signed a pledge to triple nuclear energy capacity globally by 2050.

There are clear ways to frame nuclear energy as a winning issue for both the leading US political parties.

“Republicans love nuclear because they see it as an antidote to problems of Democratic energy policy,” Nelson said, citing concerns about energy reliability and affordability amid a rapid switch to renewables.

In Democrat-led Minnesota, Walz set a goal for his state to achieve carbon-free electricity by 2040. Unions in Minnesota have argued that nuclear power could help the state achieve that ambitious timeline.

“I’m not going to say anyone had given up on nuclear, but the prospects suddenly look real,” Kevin Pranis, campaign manager for the Laborers’ International Union in Minnesota and North Dakota, told me. The construction workers’ union appreciated that Walz was “not overly prescriptive on the type of energy you have to use” to decarbonise, he said, and also set goals aggressive enough that they were likely to trigger a green jobs boom for Minnesota construction workers.

An increasingly influential flank of the Democratic party has argued that nuclear energy could be popular with organised labour nationally, since it can create high-paying, skilled jobs, as opposed to the gig labour that has become the norm across much of the US solar industry.

Nuclear energy has been a beneficiary of a recent spate of venture investments in clean tech, with Bill Gates-backed TerraPower raising $830mn in 2022. Radiant’s Nelson is an adviser to The Nuclear Company, a new project developer, which last month announced ambitions to build 6 gigawatts of what it calls “fleet-scale” nuclear. A gigawatt can supply electricity for roughly 1mn homes.

As funding for nuclear projects grows alongside the appearance of more vocal proponents — on both sides of the political aisle — the nuclear energy sector looks primed for a boost. (Lee Harris)

Smart read

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