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SunEdison: Is Bankruptcy Possible?

Without a doubt, SunEdison (NYSE:SUNE) is one of the world's largest renewable energy companies. Despite its prominent position in the industry, I am extremely worried about the sustainability of its business model. I truly believe that renewable energy is the future for developed countries. On the other hand, it is important to remember that cash is king in any business.

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The picture above represents the Amanecer solar project in Chile. It was developed and built by SunEdison. The 100-megawatt project was inaugurated in 2014. The plant has around 310,000 photovoltaic modules spread over 280 hectares. It is also important to mention that it costs over $250 million to build. So, it is possible to calculate a cost of grossly $2.5 million per megawatt.

For comparison, the Russian company Inter RAO is studying the possibility of building the world's largest coal-fired power plant. It would have a capacity of 8,000 megawatt and analysts have estimated it would cost about $12 billion to build. Consequently, the cost per megawatt should be around $1.5 million. This coal-fired power plant alone would generate more carbon dioxide than the entire nation of Switzerland. This is not a big news. Coal is much more economical and much more dirty. However, I firmly believe that cash is king.

The first reason why I am worried about SunEdison is because of its negative cash flow from operations. Over the last four quarters, the firm burned $1.5 billion and this metric...


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