Despite the spate of solar bankruptcies in August 2011, rumors of the demise of the U.S. solar industry are entirely unfounded. Far from being dead, solar power is the fastest-growing industry in America. The bankruptcies of Solyndra, Evergreen Solar and SpectraWatt are not evidence of the end of solar, they are evidence of a new beginning.
According to a Guardian article titled, “Reports of the Death of Solar Power are Greatly Exaggerated,” Solyndra’s bankruptcy should not be interpreted as ending the US solar industry. “This is like saying there is no future for the internet because Netscape went out of business.”
The bankruptcy filing at Solyndra is due to a decrease in the price of silicon. The competition’s lower raw material costs hurt Solyndra’s more expensive silicon-free technology, making its $2 per watt no longer competitive.
As stated in a press release from Solyndra, “Global economic and solar industry market conditions have forced the company to suspend its manufacturing operations.” When Evergreen filed for bankruptcy, they cited heavy competition from China and intense competition in the industry.
The New York Times quoted Joshua Lamont, a Labor Department spokesman, as saying that SpectraWatt and Evergreen Solar are the victims of two different circumstances. SpectraWatt’s workers lost their jobs because of a decline in export sales, he said, while Evergreen Solar “acquired from a foreign country articles like or directly competitive with articles produced by the workers.”
Solyndra Does Not Reflect the Clean Energy Sector as A Whole
In response to Solyndra’s bankruptcy, prominent venture capitalist John Doerr was quoted in the New York Times as saying, “one failed solar company does not mean the entire clean energy industry is doomed.”
Independent of how Solyndra secured a loan guarantee, their approach offered promise. Given the previous shortages and high prices associated with silicon, their technology offered a viable strategy for the time.
Falling solar panel prices have caused a supply glut and sliced company revenues. However, the drop in the cost of solar power is a positive sign for the industry because it indicates that solar is becoming increasingly competitive with other forms of energy.
Between October 2008 and June 2011, the average price of solar modules fell from $4.20 per watt to as little as $1.20 per watt. As of June 2011, California utilities had signed over eight gigawatts of solar contracts. Most strikingly, half of these contracts are below the price of new natural gas generation.
Innovation, market pressures, and government investment have driven down the price of manufacturing crystalline silicon panels. The DOE’s Lawrence Berkeley National Lab analysis reveals record-setting price declines. The pre-incentive price of solar in the U.S. fell 17 percent last year and another 11 percent in the first half of 2011. The Berkeley Lab report indicates that federal and state market-building policies have been instrumental to those gains. The report also suggests that government policy has helped to build scale, bring down costs, and deliver strong economic returns.
A US Solar Market Insights Report from the Solar Energy Industries Association (SEIA) and GTM Research showed that 314MW were fitted in the U.S. from April to June, an increase of 17 percent in the first three months of the year. U.S. photovoltaic installations were 69 percent higher in the second quarter of 2011 than last year. The rate of growth points to a total of 1,750MW of PV capacity installed in 2011, which is double last year’s total.
“The dynamic second-quarter growth is a result of increased competition in the solar market that drove down the price of solar panels by 30 percent since the beginning of 2010,” said Rhone Resch, president and chief executive of the SEIA. “This is good news for residential and business customers as solar becomes more affordable every day.”
According to the SEIA/GTM study, the U.S. exports more photovoltaic-related components than it imports (USD5.6 billion in 2010, compared with USD3.7 billion in imports).
The 6.8 percent growth in the U.S. solar sector in 2010 is remarkable, particularly compared to other sectors’ performance. As reported by Reuters, the U.S. was a net exporter of solar energy products in 2010, thanks to strong demand from China, Germany, and Japan for U.S.-made polysilicon and capital equipment used to make solar panels.
On March 29th, 2011, Pew Charitable Trusts released a report stating that G-20 private finance and investment into the solar sector grew 53 percent in 2010 to USD 79 billion as part of private investments in clean energy technologies worth USD 243 billion for the year.
Solar Sector Jobs and Investment
On August 10th, 2011, the U.S. Army announced planning to build large-scale renewable energy projects. Solar is an important part of the Army’s ambitious plans to generate 2.1 megawatt-hours of renewable energy each year. A provision in the fiscal 2011 defense authorization will ensure that American companies receive these contracts.
On September 13th, 2011, Energy Secretary Steven Chu announced that the Energy Department had finalized a USD 1.2 billion loan guarantee to Mojave Solar LLC to develop the Mojave Solar Project (MSP). The 250MW solar generation project in California will increase the nation’s currently installed concentrating solar power capacity by approximately 50 percent. Abengoa Solar Inc., the project sponsor, estimates it will fund more than 900 construction and permanent operations jobs.
Despite the recent failures of Solyndra, Evergreen Solar, and SpectraWatt, more than twice as many Americans are now employed in the solar sector as in 2009. According to a report titled The 2011 National Solar Jobs Census, the solar industry employs over 100,000 people and added over 6,700 jobs in the last 12 months alone.
Shayle Kann, the managing director of solar at GTM Research, said, “We anticipate that the US market share of global installations will triple over the next four years.”
Despite the optimistic projections, the Treasury grant program, which will conclude on December 31, 2011, could cause some trouble. While 2012 may be more problematic, inferring that the entire U.S. solar industry is on the verge of collapse is absurd.
However, the U.S. share of the worldwide solar panel market has fallen from a peak of 43 percent in 1995 to just 7 percent in 2010. With Asian competitors dominating the market, government support is more critical than ever.
As Secretary Chu said, “Investments in solar generation facilities…are critical to our effort to create good, clean energy jobs in America and compete with countries like China in the global clean energy race.”
In 2010, the U.S. was a net exporter of solar energy products, but in the same year, it was a net importer of solar modules. (The U.S. imported USD2.4 billion of modules and exported just USD1.2 billion, mostly from China.)
Speaking about the dual importance of government financing and private investors, Doerr stressed the need for America to be competitive in energy technology. The country cannot afford to outsource the “energy future to the rest of the world.”
Solyndra, Evergreen Solar, and SpectraWatt may no longer be with us, but solar’s future in America is bright with the support of the private sector and the right government policy.
