HONG KONG — It was the Icarus of the solar power industry. And, on Wednesday, it fell to earth.

The main subsidiary of Suntech Power, one of the world’s largest makers of solar panels, collapsed into bankruptcy in a remarkable reversal for what had been part of a huge Chinese government effort to dominate renewable energy industries.

The bankruptcy is a sign of the worldwide consolidation of the solar industry, which has been crippled by a glut of products on world markets and Western tariffs on Chinese products. It also signals China’s unwillingness to continue to subsidize struggling manufacturers in the industry, which is contributing to the steep decline of its green energy pursuits.

More than any other country, China had leaned heavily on renewable energy to solve its problems of severe air pollution and dependence on energy imports from politically unstable countries in the Middle East and Africa.

Suntech, a centerpiece of the country’s efforts, had grown to 10,000 employees in its hometown, Wuxi, on China’s east coast, and even set up a small factory in Arizona to assemble panels. But a tenfold expansion of Chinese solar panel manufacturing capacity from 2008 to 2012 pushed down the price of solar panels about 75 percent, undermining the economics of the business.

The rapid expansion of natural gas production in the United States and a curtailment of subsidies in the European Union also hurt prices, as did the United States’s imposition of import tariffs totaling about 40 percent after an antidumping and antisubsidy investigation last year.

The European Union is completing its own trade investigation of Chinese solar panel shipments that could lead to steep tariffs there as well.

After Suntech grew spectacularly, with production that soared year after year on heavy investment, and after Western investors bought up its New York-traded shares and its international debt issues, the company was battered by plummeting prices as the overall manufacturing industry sank.

Ocean Yuan, the president of Grape Solar, an importer of solar panels based in Eugene, Ore., said he foresaw a series of bankruptcies by big Chinese solar panel manufacturers, some of which, like Suntech, have very high debt. Chinese manufacturers lost as much as $1 for every $3 of sales last year as they struggled to keep factories open despite falling prices.

“They are bleeding every day,” Mr. Yuan wrote in an e-mail. “The more they sell, the more they lose money.”

He predicted that solar panel manufacturers in Europe and the United States would also face crippling financial pressures and that the long-term survivors in the industry would be manufacturers in Taiwan, who have low costs and are not subject to the American import tariffs or the likely European tariffs.

Chinese banks quietly asked a court in Wuxi on Monday to declare the operating subsidiary, Wuxi Suntech, insolvent and begin reorganizing it. The subsidiary notified the court on Wednesday that it did not object to the insolvency petition.

Suntech Power, the parent, said that it was not filing for bankruptcy and would continue to honor warranties on the company’s solar panels.

The bankruptcy filing is widely expected to lead to a takeover of the Wuxi operations by Wuxi Guolian Development Group, a financial conglomerate controlled by the city government of Wuxi.

A woman who answered the phone at Wuxi Guolian’s headquarters on March 13 said that her company was involved in a Suntech acquisition but declined to provide details or her name.

On Tuesday, Suntech Power announced the appointment of a new president, Weiping Zhou, a longtime Wuxi Guolian executive who had been the chairman of that company’s futures trading subsidiary.

In its statement announcing the bankruptcy of Wuxi Suntech, Suntech Power did not mention any immediate role for Wuxi Guolian. David W. King, the chief executive of Suntech Power, said the company would “continue to work closely with all of our stakeholders and take the necessary steps to put Suntech back on track for growth.”

Article source: http://www.nytimes.com/2013/03/21/business/energy-environment/chinese-solar-companys-operating-unit-declares-bankruptcy.html?partner=rss&emc=rss