Renewable Energy Stumbles and Staggers Toward the Future

It was just last summer that SunEdison was a Wall Street darling, the very air around the fast-growing company seeming to shimmer with potential.

SunEdison was, after all, a red-hot company in a red-hot space — renewable energy. Its market capitalization reached nearly $10 billion, putting it on a par with the likes of Wynn Resorts of Las Vegas. Among the believers betting on its stock was the hedge-fund heavyweight David Einhorn of Greenlight Capital. With plans to buy Vivint Solar for $2.2 billion, SunEdison appeared unstoppable.

And then the company went supernova. Its shares fell from around $32 last summer to 34 cents this week. Mr. Einhorn furiously tried to dump his stake in recent weeks. In early March, Vivint said, “thanks, but no thanks” and exited the deal with SunEdison.

On Thursday, to the surprise of no one, SunEdison filed for bankruptcy — one of the largest in a series of recent green-energy failures.

There is a timeless element to SunEdison’s swift demise: an executive with an Icarus complex chasing a fast-growing market embarks on an aggressive strategy fueled by cheap debt. Soar. Crash. Burn. Repeat.

Yet the collapse raises a bigger question: Can renewable-energy companies be profitable? Can green make green?

The answer, of course, is yes. Just as soon as they cross over a fundamental hurdle: finding a strategy that actually works.

“We haven’t totally figured out exactly what the business models are going to look like, for who wins and who loses,” said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University.

Significantly, though, the sudden decline in oil prices isn’t largely to blame. The difficulties run much deeper, echoing industrial collapses of earlier eras — the telecom-industry boom and bust of the 1990s and early 2000s, and disruptive cycles before that.

On the surface, the various green-energy companies all seem to be pursuing different strategies. But there is a unifying problem they have yet to overcome: Finding enough customers to support the costly infrastructure they must first build.

SunEdison is far from being the only troubled green-energy business.

Abengoa, which grew from a small electrical equipment company in Seville, Spain, to a multinational solar and biofuel giant, is in restructuring proceedings in the United States and abroad. Solazyme, a once-promising maker of algae-based biofuels, has abandoned the energy markets and changed its name in favor of focusing on ingredients for personal care and food products for companies like Unilever and Hormel. And NRG has pulled back from its headlong rush into alternative energy as it restructures to focus on its conventional operations after the ouster of its chief executive, David Crane.

Learn more: Renewable Energy Stumbles Toward the Future

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