(Andrew Follett, The Daily Caller News Foundation) – The major California-based solar company Sungevity declared Chapter 11 bankruptcy Monday.
Sungevity is laying off workers, auctioning off some assets, and agreeing to hand over control investors in exchange for $20 million in financing to keep the company’s operations going.
Sungevity was one of seven residential solar power companies, which Congress announced in September it would formally investigate for wrongfully receiving billions in tax credits from the government. The federal government likely handed out roughly $25 billion in cash grants and tax credits to these companies.
“The actions we have announced today will allow Sungevity to emerge as a stronger and more competitive company,” William Nettles, the company’s newly appointed Chief Administration Officer, said in a press statement. “With its market-leading software platform and its high-quality employees who provide unwavering commitment to customers and exceptional service, Sungevity intends to be at the forefront of the industry as solar continues on its growth trajectory in the years ahead.”
Sungevity cut 350 jobs last week, according to The Mercury News, as is expected to start selling assets at the end of April.
Another solar company called Beamreach went bust in January after it received $3 million in Department of Energy funding in 2008. The major solar company SunEdison also recently declared bankruptcy. Roughly five major solar companies closed up shop in 2015, which follows the historic tendency that solar power companies tend to go bankrupt as soon as the subsidies are cut off.
Solar power companies are heavily supported by financial invective from the government. Most subsidies go to residential installations payments called net metering or a 30 percent federal tax credit. Previously, solar subsidies were so lucrative that solar-leasing companies installed rooftop systems, which run at minimum $10,000, at no upfront cost to the consumer. This naturally favors relatively wealthy consumers.
Solar and wind power get 326 and 69 times more in subsidies than coal, oil, and natural gas, according to 2013 Department of Energy data collected by Forbes. Green energy in the U.S. received $13 billion in subsidies during 2013, compared to $3.4 billion in subsidies for conventional sources of energy and $1.7 billion in subsidies for nuclear, according to data from the Energy Information Administration.
Researchers found that expanding net metering or maintaining it for long periods of time will drive up power prices. Without government support, solar energy is non-viable, according to a 2015 study by the Massachusetts Institute of Technology.
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