New proposed EPA requirements for the renewable fuel standard program, combined with challenging sugarcane harvests in South America, could increase demand for biodiesel, creating opportunity in a struggling energy sector. In this interview with The Energy Report, Piper Jaffray Analyst Brett Wong names a growing company that could profit from government mandates.
The Energy Report: A large number of photovoltaic (PV) manufacturing firms went bankrupt during the past year. What is the outlook for solar energy firms?
Pavel Molchanov: Most of the solar bankruptcies that took place in the U.S., Europe and China have occurred among companies that manufacture solar modules. But it's important to note that a bankrupt company does not necessarily shut down production. About 75% of these companies, as measured by production capacity, have continued to operate, either on a stand-alone basis during bankruptcy or following an acquisition by a strategic partner.
Take, for example, China's Suntech Power Holdings (STP:NYSE). It was the largest solar manufacturer in the world as recently as 2011. It declared bankruptcy in March, and continues to operate and generate revenue. Solyndra, of course, has been wiped off the face of the earth. But such liquidation is a very rare outcome for large solar companies that take temporary refuge in bankruptcy.