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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.


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...