Today in Cleantech

The troubles inflicting the solar industry seem poised to strike China. Wells Fargo dropped coverage on LDK Solar, which received a massive $8.9 billion credit line from the China Development Bank, arguing that its shares are not a viable investment. One of the unintended consequences of easy credit in China is that it has further driven down the price of solar panels by allowing solar manufacturers to sell below market. The problem is that credit must eventually tighten and when it does happen in China (likely by the end of next year), a credit spiral will begin in which solar companies will go to private markets for capital on worse terms, creating an inevitable shake out in the Chinese solar industry. The winners will be the companies that can scrape by and survive, since as solar gets cheaper, it also gets more competitive long term.