Yingli Solar has stumbled hard.

Once the largest solar panel manufacturer in the world, the Chinese company reportedly ended 2015 with debts of close to $2 billion. According to a filing yesterday notifying the Securities and Exchange Commission of its delayed annual report, Yingli had a net loss of about RMB 5.9 billion ($903 million), a huge increase from its RMB 1.3 billion ($199 million) net loss in 2014.

Yingli also saw its module shipments decrease from 3,101 megawatts in 2014 to 2,357 megawatts last year due to “the lower utilization rate of the company’s production capacity in certain quarters of 2015 due to tight cash flow, as well as the decline of selling price of PV modules around the world, especially in China.”

Observers are now asking if Yingli’s woes are an indicator of widespread problems at Chinese panel manufacturers, or if these are self-inflicted wounds brought on by a combination of bad decisions and unfortunate timing.

There’s reason for concern. Bloomberg calculates that Chinese renewable energy companies will need to pay back $4.4 billion in debt this year, the result of years of zealous expansion designed to grab as much global market share as possible.

A mess of its own making

Over the course of a decade as a solar analyst, Jenny Chase has seen plenty of solar company carnage. Many of the panel manufacturers she covered at the beginning of her career are now gone, which helps explain why she’s not inclined to read too much into Yingli’s financial struggles.

“I don’t think it’s time to publish a 'solar industry is dead and going bankrupt' story,” said Chase, who is manager of solar insight for Bloomberg New Energy Finance.

In fact, most manufacturers are faring well. GTM Research’s recent Global Solar Demand Monitor estimates the worldwide solar market to be 66 gigawatts this year, meaning there’s plenty of need for modules.

“To put it simply, it’s a really good time to be a manufacturer,” said Jade Jones, a senior analyst of solar markets for GTM Research. “I would say a lot of other [manufacturers] are benefiting from global demand growth while Yingli has to focus its attention on its financial situation.”

In other words, while other panel makers are scrambling to meet demand (Jones says some have even had to turn to OEM suppliers because their own factories can’t crank out enough modules), Yingli must use its cash to try to pay its debts.

“Yingli had to lower utilization because it needed to focus its capital more efficiently than other suppliers,” said Jones.

Even compared to other Chinese manufacturers, Yingli’s debt is crushing. While the company ended 2015 with debts of around $2 billion, GTM Research reports the Q4 2015 net debt of Jinko Solar to be around $653 million and JA Solar to be $273 million.

“Most of these companies didn’t take on such a debt load,” said Bloomberg’s Chase. “Companies that aren’t Yingli, like Jinko and Trina and JA Solar and Canadian Solar, they’re actually improving [debt-wise].”

Strategic decisions by Yingli help explain the company’s current predicament. Large expenditures on marketing -- like sponsoring the World Cup -- contributed. And Jones said the company’s decision to produce its own polysilicon has not helped.

“When you’re talking about Chinese manufacturers and vertical integration, you usually think wafer, cell, module, not polysilicon,” she said. “It’s not like a module fab where you can reduce utilization and have minimal effects on the total cost of your product. If you reduce utilization at a poly fab, then your costs are going to go up a lot.”

In Yingli’s recent SEC filing, the company noted that its polysilicon producing subsidiary, Fine Silicon, had sold its land-use rights and expected the sale to garner RMB 1.2 billion ($184 million) to help it pay off its debts.

Chase said Yingli’s decision to sign long-term contracts when polysilicon prices were sky-high has also contributed to its problems. “They signed long-term contracts with silicon at 2007 and 2008 prices, and that just ate away at their balance sheet.”

Bad timing is also a factor because Yingli expanded its capacity and bought new production equipment at a time when prices and demand were low. “You need to not expand at the wrong time when nobody wants to buy your modules,” said Chase.   

What’s next?

In its press release on May 12 announcing a delay in repaying notes that had come due, Yingli said that none of its creditors had yet taken any action against the company. Founder Liansheng Miao said Yingli will work with creditors to seek some resolution.

Yingli also said it was exploring financing options to pay off its creditors, including finding new investors and creditors while selling off more assets. There’s also the possibility that Yingli could follow in the path of Suntech, another debt-saddled manufacturer that was taken over by the municipal government holding company in Wuxi, China in 2013.

If that were to happen, at least someone would benefit from Yingli’s substantial marketing efforts. “They have a great brand name,” said GTM Research’s Jones. “Suppliers can benefit off that brand name and keep using it.”  

Still, Yingli’s own filing with the SEC makes plain that the company’s situation is dire. “There is substantial doubt as to its ability to continue as a growing concern,” it states.