A 24-minute, $19 billion wipeout threatens a Chinese company's solar dream


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Chinese workers manufacture solar panels at the plant of Zhejiang Changxing Hanergy Solar PV Co., Ltd. in Huzhou city, east China's Zhejiang province. Source: Imaginechina Chinese workers manufacture solar panels at the plant of Zhejiang Changxing Hanergy Solar PV Co., Ltd. in Huzhou city, east China's Zhejiang province. Source: Imaginechina


Where’s Li Hejun?
That’s the question many were asking when the founder, chairman and principal owner of Hanergy Thin Film Power Group Ltd. failed to show up at his company’s annual meeting Wednesday -- the same day the company’s stock price tanked 47 percent, wiping out $19 billion in market value in 24 minutes.
Li’s absence was all the more noteworthy because over the past year he has tirelessly championed his vision of a new era of mobile energy: thin, flexible solar cells. They would soon, he promised, be plastered on just about everything: cars, backpacks, phones, tents, satellites, flashlights, buildings, lamps, drones and clothing.
Under his stewardship, the company’s stock had surged more than sixfold in the past year, making it the world’s most valuable solar company worth more than HK$300 billion ($38.7 billion). That’s larger than Sony Corp. and seven times the size of First Solar Inc., the biggest U.S. solar manufacturer.
Then on Wednesday, trading was suspended after the shares spectacularly plunged amid speculation of market manipulation and questions about the viability of the company’s core technology.


“The bulk of Hanergy’s technology portfolio remains unproven,” said Jenny Chase, lead solar industry analyst at Bloomberg New Energy Finance.
Technology aside, for months analysts and investors have raised questions about the company’s revenue source: more than 60 percent of Hanergy Thin Film’s sales come from Beijing-based parent Hanergy Holding Group, a solar panel and hydroelectric company. And Hong Kong’s Securities and Futures Commission has been probing market manipulation in Hanergy’s shares for several weeks, Reuters reported Wednesday, citing an unidentified person. Ernest Kong, a spokesman for the regulator declined to comment to Bloomberg.
Electric cars
“It’s an adjustment that the market has been waiting to happen, as Hanergy’s earnings and business performance didn’t support such a high stock price or valuation,” said Gong Siwen, an analyst in China for Northeast Securities Co.
An even more fundamental investor concern, though, is whether the company’s technology actually works and how big the market for it will be.
Li has big plans. Among them, Hanergy Thin Film has said it will begin commercially producing by October automobiles that will be totally powered by the sun. The vehicles would be able to drive 80 kilometers to 100 kilometers (50 miles to 62 miles) on a four-hour charge from six square meters of thin film. Yet the industry is full of examples of companies that have developed the kind of thin-film solar cells Hanergy is banking on, yet have ended up in bankruptcy.
A Hanergy spokesperson declined to comment other than to say Li was at a clean energy center in Beijing at the time of the company’s annual meeting. In an interview in March, Li called the company’s investments cautious and said the earlier run-up in the stock was validation of the solar-maker’s focus on a new era of mobile energy.
NASA satellites
No one would argue that the technology lacks promise. Because its thin-film cells can be flexible, they’ve found their way into applications such as the solar panels for satellites developed by NASA, backpacks and windows. Solar calculators were some of the first devices to use them. Mass production, however, has proven costly. One early flop: Solyndra LLC went bankrupt in 2011 after getting $528 million from the U.S. government.
Hanergy said in April it will build a factory to make the world’s most efficient solar cells, using gallium arsenide that captures more energy from the sun. But experts caution that technology is years away from gaining mass appeal for the only solar market that really counts today: rooftop and utility-scale installations, an established $24 billion market.
“It will take many years, decades maybe, for gallium arsenide to go head to head against crystalline silicon for rooftop solar,” said Sarah Kurtz, a research fellow at the National Renewable Energy Laboratory in Golden, Colorado. “The best Hanergy can do is carve a niche in consumer products.”
Piecemeal technology
That leaves the company’s fortunes entirely dependent on an as yet unproven technology which it has acquired piecemeal through acquisitions. Hanergy entered thin film through a buying spree. The first purchase was Solibro GmbH, a subsidiary of Germany’s Q-Cells SE. That was followed by MiaSole, a California-based manufacturer, Global Solar Energy Inc. based in Tucson, Arizona, and Alta Devices Inc.
It was the Alta purchase, completed in August 2014, that gave Hanergy a toehold in gallium arsenide. Hanergy vowed to use Alta’s products in a broad range of consumer products such as mobile phones and in automobiles.
“The advantage is going to be where things have to be flexible and light,” said Isik Kizilyalli, a former Alta senior scientist. “I think that’s where the value of what Alta will end up being until they can bring the price down,” said Kizilyalli, who is the founder and chief technology officer at Avogy Inc., an energy-efficiency electronics company.
Catering trucks
In April, Hanergy’s Li unveiled partnerships to develop catering trucks and recreational vehicles that would draw on the solar-maker’s panels for energy.
The catering vehicles would generate 6 kilowatt-hours of electricity in normal sunlight for electronics such as light and refrigeration. The touring vehicle would use six 75-watt panels from MiaSole to generate 2 kilowatt-hours a day of electricity in normal light.
BNEF’s Chase wrote in a March report that she’s “skeptical that any thin-film technology unproven in bulk production will revolutionize the solar industry.
‘‘While technological black swans can never be ruled out, the history of thin film has largely been one of losses and disappointments,’’ she wrote.

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