SunEdison: from $10B to bankruptcy — the renewable energy bubble that burst

SunEdison began in 1959 as MEMC Electronic Materials, a silicon wafer manufacturer that survived the dot-com bust and was rescued by private equity for $1 in 2001. In 2009 it acquired SunEdison LLC and pivoted into renewable energy development. Under CEO Ahmad Chatila, the company grew explosively — buying solar and wind projects worldwide to become the largest renewable energy developer on the planet. By July 2015, SunEdison was worth nearly $10 billion.

The growth was built on financial engineering. SunEdison raised $24 billion in debt and equity and spent $18 billion on acquisitions in three years — including $2.4 billion for First Wind in 2014. It created two yieldcos (TerraForm Power and TerraForm Global) that held its projects and paid steady dividends, sustained by a continuous pipeline of new assets from the parent. The structure was opaque: the yieldcos depended on SunEdison to keep them supplied, and SunEdison depended on yieldco cash and new borrowing to fund further acquisitions.

The collapse was triggered by the failed $2.2 billion acquisition of Vivint Solar in 2015. The deal shocked investors, who finally recognized that SunEdison was overleveraged and the yieldco model was unsustainable. The stock collapsed from $33.44 to $0.34 in nine months. On April 21, 2016, SunEdison filed for Chapter 11 with over $11 billion in debt — the largest bankruptcy in the clean-energy industry. Shareholders received nothing. An internal board investigation later concluded that management had been 'overly optimistic' about the company's prospects.