While some analysts have declared Wuxi Suntech “too big to fail,” the company has already filed for bankruptcy and defaulted on a half a billion dollar bond. This bankruptcy could be the test of the national Chinese government’s willingness to continue to subsidize photovoltaic manufacturers in a market that is already flooded with an oversupply of cheap panels. Meanwhile, local government officials in Wuxi may push for a bailout, fearing the loss of 10,000 jobs and social unrest. They say they will “restructure” the company so that it can continue production.

Meanwhile, an Arizona Suntech plant that installed frames and junction boxes on modules in order to qualify Chinese panels for “Buy American” status, has closed, laying off 43 workers.

Over the past five years, Chinese subsidies for solar manufacturing have encouraged hundreds of companies to enter the market there. From 2008 to 2012, Chinese solar manufacturing capacity expanded ten-fold, pushing prices down 75 percent, to as low as 65 cents per watt ― so low that even Chinese companies cannot make a profit. Prices fell below the cost to manufacture, driving dozens of European and U.S. factories out of business. The list of politically-prominent failures includes Solyndra and Abound; General Electric delayed the opening of a large factory for its Primestar thin-film subsidiary, and is said to be investigating partnership possibilities with Chinese factories. In response to claims of illegal subsidies and dumping, the United States imposed stiff tariffs on Chinese-made solar cells and panels. Europe is considering similar penalties.

While low PV prices have been a boon for consumers and installers, the glut of PV panels, amounting to more than twice worldwide demand equivalent of 30 gigwatts this year, threatens the health of the PV industry overall. Analysts say that by preventing a  necessary correction in the market and allowing PV prices to rise, artificially low prices are stalling the incorporation of new technologies that would improve cell efficiency and further reduce costs of manufacturing.

A Suntech failure, if allowed, may be just the first of a series of Chinese solar business failures. Even business analysts in China say that two-thirds of the PV manufacturers currently operating in China may have to go out of business in order to restore the health of the industry worldwide. But China’s state capitalism system, which encourages government-owned banks to underwrite local production, may make it difficult to decide who the winners and losers will be.

Wuxi Suntech’s parent company, Suntech Power, is not going bankrupt and the company says it will stand behind the warranties on its panels. But Suntech stock, which once traded on the New York Stock Exchange for $85, has fallen to an all-time low of 30 cents.

In an indication of the jockeying that is going on over Suntech’s future in China, two executives have just been barred from leaving the country. Founder Shi Zhengrong, once China’s richest man and now an Australian citizen, has been prevented from leaving the country, as has Suntech CEO David King, while the Chinese government investigates the company’s finances.

Suntech photo.

(From SEIA news releases) The solar industry has initiated a voluntary Solar Industry Commitment to Environmental and Social Responsibility (Solar Commitment). The Solar Commitment is the work of SEIA’s Environment, Health and Safety Committee and is based on the Electronic Industry Citizenship Coalition’s Code of Conduct, with the addition of solar-specific provisions. It’s designed to evolve as the industry grows.

Founding Participants of the Solar Commitment include Dow Solar, SunEdison, SunPower, Suntech, Trina Solar, and Yingli Solar.

The groundwork for the Solar Commitment began in 2010, with the creation of the SEIA Environment, Health & Safety (EHS) Committee, comprised of more than 40 industry representatives from almost every part of the global solar value chain, including both U.S. and foreign-based companies and organizations. The EHS Committee addresses a wide range of topics, including PV recycling, installer safety, fire safety, building codes, and product standards.

In a related development, a new report from As You Sow, a nonprofit promoting environmental and social corporate responsibility, finds that the global solar photovoltaic (PV) manufacturing industry is setting best practices for sustainable growth.

The report, titled “Clean & Green: Best Practices in Photovoltaics,” is based on a survey of more than 100 solar PV manufacturers. It found that “many PV manufacturers beat standards set for emissions, are reducing water use and reusing water on their own initiatives, and are participating in voluntary international programs related to worker safety.” Additionally, several respondents indicated they are shifting production practices to use safer materials, reduce waste and use renewable energy for energy-intensive processes.

“This report confirms that solar PV manufacturers take their responsibility as members of our communities seriously,” said John Smirnow, Vice President of Trade and Competitiveness for SEIA. “SEIA will continue to work with companies throughout the solar supply-chain to establish standards that allow companies to compete in an environmentally and socially responsible way.”

The report is the first in As You Sow’s Cleantech Initiative, which operates to ensure sustainability within renewable energy technologies, and highlights companies who implement sustainable manufacturing, green chemistry, and transparency in sourcing, procurement, and governance. The Cleantech Initiative was built upon As You Sow’s prior work in electronics manufacturing and energy industries, and will be continued with additional research into other renewable energy technologies, such as wind energy.

“Solar is the cleanest, safest source of energy and the solar industry is committed to ensuring social and environmental responsibility for our supply chain,” said Rhone Resch, president and CEO of SEIA. “The release of SEIA’s Solar Commitment marks an important, proactive step toward a sustainable future for solar.”