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Shi Zhengrong, once China’s richest man, saw his fortune further unravel last week as the solar company he founded allowed its main unit to tip into insolvency.

Shi’s stake in Suntech Power Holdings was valued at $1.7 billion when he emerged at the top of The Wall Street Journal’s rich list for China in 2006. His roughly 30 percent stake today is down to about $32 million, if shareholders get anything out of the Chinese bankruptcy process.

Suntech was once the world’s biggest solar company and Shi, 50, set his sights on growing as big as BP or Royal Dutch Shell. The decline of China’s first solar billionaire shows how the industry built itself with cash from Wall Street and Chinese authorities, creating a boom in factory expansions that ultimately drove down prices.

“Being in the solar-manufacturing industry over the past eight years has been an excellent way to turn a big fortune into a small one,” said Jenny Chase, lead solar analyst at Bloomberg New Energy Finance in Zurich.

Suntech had debt of $2 billion at the end of August and defaulted on a $541 million bond that matured last week. That prompted eight Chinese banks to ask a court in Wuxi, where Suntech is based, to start bankruptcy proceedings on its main manufacturing unit.

Shi was ousted as chairman March 4, and spoke out about the company’s inability to restructure the debt. “The problem is they don’t have a solution,” he said in an interview. “They need a viable business plan.”

The company had about $1.44 billion of bank credit and a $50 million loan from the International Finance Corp., according to regulatory filings. It raised a total of $743 million from Wall Street in two separate stock offerings in 2005 and 2009.

Shi started Suntech in 2001 after serving as research director at another solar company in Australia, Pacific Solar. He received a bachelor’s degree in optical science from Changchun University of Science and Technology in 1983 and a master’s in laser physics from the Shanghai Institute of Optics and Fine Mechanics in 1986.

After moving to Australia in the late 1980s, he earned his doctorate in electrical engineering at the University of New South Wales in Sydney in 1992.

The native of Jiangsu province was one of the fastest to finish the program at UNSW’s School of Photovoltaic and Renewable Energy Engineering, according to Martin Green, a professor at the university.

“He was the type of student to get a result at just about anything he did,” Green said by phone in October. “Something about the way he tackled problems. He was able to overcome difficulties that might emerge and see his way through.”

The Chinese engineer went to work for Pacific Solar, a university spinoff, in 1995 and became an Australian citizen.

When Shi decided to return to China in 2001 to start the solar-power company, lured by $6 million in funding from a regional government in Wuxi in eastern China, his fellow researchers in Sydney tried to talk him out of it.

Green, known by some in the solar industry as the “father of photovoltaics,” reminded Shi of their unsuccessful trip to China seven years earlier to find a partner and open a manufacturing facility in the country, Green said. They had hoped to commercialize the university’s solar technology.

“We thought the situation was pretty hopeless,” Green recalled. “The companies weren’t operating very efficiently or effectively. So I was pretty pessimistic about his chances based on how difficult I perceived it to be.”

David Hogg, who worked with Shi at Pacific Solar and again at Suntech as chief operating officer for two years until 2011, said Shi helped attract Chinese researchers and eased communication with their Australian peers.

“He was able to get the best out of people,” Hogg said in an interview in October. “While he was of Chinese origin, he was quite a Western guy in many ways.”

Four years after Shi left Australia, Suntech began trading on the New York Stock Exchange. The Chinese company won a contract to supply the solar-power system for the stadium at the 2008 Beijing Olympics, opened its first U.S. factory in 2010 in Arizona, and reached 2 gigawatts of production the next year.

The company’s American depositary receipts, each worth one ordinary share, climbed to a high of $88.35 on Dec. 26, 2007, from an initial price of $15 in 2005. The stock closed at 58.6 cents on March 19, valuing the company at $105.6 million.

“Dr. Shi was very popular with investors and clients, and was one of the most sought-after speakers on the conference circuit from 2005,” said Chase, the New Energy Finance analyst in Zurich. “Then, the supply balance flipped from undersupply to oversupply in late 2008.”

Shi set his targets on rivaling Big Oil in scale. He told the Guardian that year that Suntech within a decade may be as big as BP or Shell.

Suntech’s capacity to make solar modules more than quadrupled to 2,400 megawatts in 2011 from 540 megawatts in 2007, part of China’s effort to wrest control of the industry away from German and Japanese companies.

In November 2010, Shi joined Oscar-winning actress Cate Blanchett at the Sydney Theatre Co. to mark the start of a rooftop solar-power system using Suntech panels. The company was the world’s biggest cell-maker that year and the next.

Giving a speech on a wharf overlooking Sydney Harbor, Shi, who donated $2.08 million to the project, called the effort to replace fossil fuels with renewable energy the “challenge of our generation.”

“Even 10 years ago skeptics would ask, ‘Do you really believe solar technology will be economically competitive with fossil fuels?’ ”

It was the scale of the industry’s expansion that undid Shi’s ambitions. Solar cell prices that as recently as October 2010 were $1.50 a watt are now less than a third of that price, costing about 38 cents.

Suntech last reported a profit in the first quarter of 2011 and in July disclosed that it was a victim of accounting fraud involving an affiliated company in Europe. It hired UBS to help restructure debt payments, then the unit succumbed to insolvency after failing to retire its bonds on schedule this month.