Solar Getting Burned Again

Ken Silverstein | Jul 05, 2012

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It was to be the country’s biggest solar equipment maker. Instead, it will be exhibited by critics of President Obama’s green energy plan. In the spotlight now is General Electric, which has said that it will delay by at least 18 months the construction of a facility to build solar panels.

GE was to make thin-film solar panels that could convert power from the sun to energy used for homes at a 12.5 percent efficiency rate. And while that is 4-7 percent less than those panels produced in China, GE said that its strong point would be cost -- to be so attractive that homeowners could not refuse. 

But that notion has been debunked, largely because the Chinese have churned out their conventional solar panels, forcing the price of thin-film panels to fall to such levels that companies here can’t cover their cost of production. GE’s plan is to now improve its technology over the next 18 months so that the efficiency rate of its technology would equal that of its Chinese competitors.

Adding salt to the wound, Abound Solar that acquired a $300 million federal loan guarantee just announced that it would enter into bankruptcy. However, the U.S. Department of Energy is saying that taxpayers will only be responsible for 10-15 percent of the $70 million that Abound had actually drawn down.

“Abound believes that, at scale, its USA-made (thin-film) panel technology has the ability to achieve lower cost per watt than competing (conventional) crystalline silicon technology made in China,” says the company in a statement. “However, aggressive pricing actions from Chinese solar panel companies have made it very difficult for an early stage startup company like Abound to scale in current market conditions.” The solar panel maker declared bankruptcy on June 28.

According to the U.S. Commerce Department, the U.S. solar market has seen the prices for panels drop by more than 50 percent in the past year at a time when the value of imports of Chinese-made solar cells nearly quadrupled from $639 million in 2009 to $3.1 billion in 2011. Abound says that it supports recent initiatives to enforce fair trade with import tariffs, but this action is unfortunately too late for it.

Fast Pace

Despite the troubles, solar power here still has huge potential. Altogether, the United States has 5,000 megawatts of solar installed and more is planned. All that is coming from 5,600 solar-related companies. As for GE: It still has more than 27,000 megawatts of wind and solar power installed around the world.

The Solar Energy Industries Association says that falling prices are good for consumers and that within two years, the United States is projected to be a key destination for a lot of new development. Those companies left standing will be providing superior products and services.

“Solar is one of the fastest growing industries in the United States, employing more than 100,000 Americans across all fifty states,” the trade group says. “In fact, a report released just two weeks ago shows the U.S. solar market grew 85 percent in the last year.” Since 2010, it adds that 59 new solar manufacturing facilities have begun operations in the United States.

Critics of the solar power industry don’t object to their fuel source. But they do oppose the swath of state and federal monies used to entice start-ups. Their argument is based on the fact that the United States is running large budget deficits and that solar power only works when the sun shines, which is unlike large base-load plants that run on coal, natural gas or nuclear.

Skeptics are also emphasizing that the cost of green projects relative to the jobs they are creating are soaking up scarce national resources. The money, they add, should either be returned to taxpayers or be used to produce energy forms that operate at greater efficiencies. 

Solyndra, of course, will be profiled during the upcoming election season. The company received a $535 million loan guarantee and failed, mainly because it could not compete with the Chinese technology. Then there’s also Evergreen Solar and SpectraWatt, all in addition to Abound. And while GE didn’t go bankrupt, critics will draw the same inferences from its delayed solar deal in Colorado.

“Taking office amidst the worst recession since the Great Depression, President Obama confronted an unemployment crisis by focusing on the promotion of 'green jobs,'”says a House Oversight Committee report on job creation. “Nearly three years and billions of taxpayer dollars later, Americans have received scant return from President Obama's investment.”

The Republicans are saying that the Obama administration’s practice is to pick winners and losers while the White House is arguing that green energy’s potential could be facilitated with a federal boost. GE and Abound have added fuel to the fire, giving the electorate plenty to think about before the November election.


EnergyBiz Insider is named a 2012 Finalist for Original Web Commentary presented by the American Society of Business Press Editors. The column is also the Winner of the 2011 Online Column category awarded by Media Industry News, MIN. Ken Silverstein has been named one of the Top Economics Journalists by Wall Street Economists.

Twitter: @Ken_Silverstein

energybizinsider@energycentral.com


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Comments

It is tragic that we have had

It is tragic that we have had the opportunity for four decades to free ourselves from dependence on foreign oil, drilling in dangerous or pristine locations, or causing disastrous environmental catastrophes, by encouraging solar and other energy technologies, but have repeatedly chosen to foster technologies that destroy our beautiful planet and put the lives of it's inhabitants in mortal danger. When the blackouts grind everything to a halt in the good ole USA, the Germans and the Danes will still be living in relative comfort and shaking their heads at us... Install solar on your roof, get a battery back up, and buy an electric car. But don't flaunt it unless you want your electricity/gas hogging neighbors banging down your door for air conditioning on the repeatedly 100+ degree days. The public, the government and the corporations are all to blame for this debacle we are in. The Chinese won't fare any better. They just sell the solar. They aren't running around installing massive amounts of it in their country. When will we decide to clean up this mess?

Re: Solar Costs

Perhaps the way forward is to ply the TVA with even more than the extra 2 billion they need to fire-up their 80's vintage nuc plant.  I find it amazing that there is no good cost comparison between Republican efforts to re-start nuclear power, and our puny efforts to assit American companies to compete with the Chinese in the arena of PV.  It is perhaps useful to the global economy that we no longer run it, and can no longer dictate what emerging technologies will be allowed to flourish.  So I reckon that Chinese PV will be yet another energy import.  Too bad about that.  Maybe the NRC can look into this sad state of affairs.  They are radiation geniouses.

I'm not a huge fan of

I'm not a huge fan of governement planned economies and I agree an industry should be able to stand on it's own. However, when the competition, mainly China, provides extraordinary state support to the solar industry it is no wonder we can't compete. Don't forget that China does not have labor or environmental laws that come anywhere near a western society. China's solar industry profits by using state resources to undercut the competion. Instead of subsidies to American industry how about a simple tariff on chinese imports. I find it hard to believe that the Chinese technology is that much better than what we can produce here. They just have extremely lower operating costs and much higher governement support.

Amen

Well, I was going to comment, but the two previous posters pretty much said it all.  Amen is all I can add.

Fossil Fuels Need to say thanks

So much of the federal wealth has supported coal and natural gas. Coal wants billions from the federal govt for carbon capture and sequestration technology. The govt supported the oil and gas industry with subsidies to help them learn how to better drill. These things may pay off. Why not help green sectors? Why complain about federal monies going to the compeition?

Federal wealth supported coal and natural gas?

IF one were to equate a production tax credit to a tax deduction for expenses, there is still a major difference in the amount of energy delivered per "subsidy dollar".  There is also to be considered the fact that coal and gas produce energy when needed, rain or shine, windy or calm.  Look at the amount of subsidy per MWh if you want to continue with the subsidy argument.

Oil and gas producers have to spend capital money to buy land and equipment and erect facilities just like wind and solar but that is where the comparison pretty much ends.  To get its tax deductions coal, oil, and gas producers must spend money--lots of it.  That money creates jobs within the producing companies and their suppliers and contractors.  The difference with wind and solar is that once the capital is spent, there is not nearly as much activity involved therefore fewer jobs to generate income taxes and fewer transactions to generate sales taxes for local and state governments.  Wind and solar get very favorable treatment when it comes to depreciation just the same as oil and gas do.

Lastly, wind and solar do not compete against coal and gas producers.  They compete against other electricity generators.  Those firms are the ones facing unfair competition from government subsidized firms whether the subsidies result from PTCs, cash grants, renewable portfolio standards (which raise electricity prices), or feed-in-tariffs (which raise electricity prices).  Even net metering is a subsidy because it puts all other consumers paying for the transmission and distribution costs the net metering customer/producer should have to pay.  Net metering should be done at the wholesale electric price not the delivered retail price.

The coal industry is not asking for subsidies for CCS.  The people asking for the subsidies are the giant engineering and construction firms that want feed out of the DOE hog trough filled with taxpayer dollars.

The money wasted on federal subsidies would have been put to much better use building newer, more efficient, ultra-supercritical coal fired plants complete with SCRs, scrubbers and other toxic pollution control devices.  These plants have an efficiency close to 45% as compared to about 32% for older coal-fired plants--which translates to a reduction of about 30% in the amount of CO2 emitted per MWh.  Or, the money could have been put into gas turbine combined cycle plants which reduce CO2 emissions by almost 60% compared to an older coal-fired power plant without having to worry about SOx, mercury, ash disposal.  At the same time, these plants produce reliable, dispatchable power and require more personnel to operate between operating and maintaining the plants, supplying the plants with fuel, water, lubricants, and services.

Solar Can't/Shouldn't Compete with Fossil

By nature of the relatively weak energy concentration of its source, electricity from solar cannot compete head-to-head with electricity from fossil. Only through government mandated renewable standards, company (tax-payer) subsidies, and tax rebates can it come close. Fossil is concentrated, stored up energy that is easy to release. Solar is diffuse in comparison because it is no more powerful than what is hitting the small area of collection at the moment. The good Lord put fossil fuel in the ground for our convenience to improve our lives, enjoy His earth, and bring Him glory. Forcing the equation away from that is not natural and so more expensive and inefficient, costing everyone more and leaving less money for economic development and real jobs. Its driver of replacing a dwindling supply of fossil fuel is proven false by new fossil fuel discoveries. The other driver of saving the earth from global warming has also being shown to be false as the actual climate data and incorrect model results have proven. So why solar? If some individuals want to pay for it to make them feel good about themselves, let the entrepreneurs take advantage of this misplaced feeling, as this has always been part of business. But it is an error to force everyone to pay for this "red herring" of an electric energy source.

Brian P.

Solar Can't/Shouldn't Compete with Fossil

By nature of the relatively weak energy concentration of its source, electricity from solar cannot compete head-to-head with electricity from fossil. Only through government mandated renewable standards, company (tax-payer) subsidies, and tax rebates can it come close. Fossil is concentrated, stored up energy that is easy to release. Solar is diffuse in comparison because it is no more powerful than what is hitting the small area of collection at the moment. The good Lord put fossil fuel in the ground for our convenience to improve our lives, enjoy His earth, and bring Him glory. Forcing the equation away from that is not natural and so more expensive and inefficient, costing everyone more and leaving less money for economic development and real jobs. Its driver of replacing a dwindling supply of fossil fuel is proven false by new fossil fuel discoveries. The other driver of saving the earth from global warming has also being shown to be false as the actual climate data and incorrect model results have proven. So why solar? If some individuals want to pay for it to make them feel good about themselves, let the entrepreneurs take advantage of this misplaced feeling, as this has always been part of business. But it is an error to force everyone to pay for this "red herring" of an electric energy source.

Brian P.

Economics

Yes, the Obama administration did make the recession worse by misallocating resources.  The left can never get Soviet "Five Year Plan" top down thinking out of their minds.

Added together, the waste is astounding.  Jobs disappeared and the Obama administration's response was to make even more disappear by throwing away taspayer money.  A better analogy is burning up taxpayer money.  Yet, putting it in a big pile and igniting it.  The money is borrowed from the Chinese who are simultaneously continuing their domination of these markets.  This is a DOUBLE economic whammy.  We are subsidizing Chinese industries while at the same time burning money that has to be repaid to the Chinese with interest by future generations.

I am discouraged at the incredible ignorance about economics from the Federal Government.  It starts with fundamentals.  The government does not keep an honest set of books.  A CEO of a private enterprise would be in prison using our government's accounting methods.  Where is the outcry from the public?

I do not object to encouraging domestic production of green energy, but as the ancient Greeks noted, nothing in excess, everything in proportion.  Although the R&D requires brain power, the manufacturing part is not particularly high tech and is easily accomplished using relatively low skill and low pay personnel in places like China.  That the administration thinks otherwise demonstrates their incredible misunderstanding of the technology and its potential for manufacturing jobs in the USA.

Dollars lost by government misallocation of resources is opportunity lost.  There is an efficient investment frontier for capital that creates wealth, jobs and happiness.  Government misallocation that strays too far from this efficient frontier creates the opposite results.

Currently, here are the tradeoffs:  Real jobs and tax revenues with solid commercial growth prospects OR Soviet Five Year Plans put together by Ivy League Tsars where the only discernable "benefit" is kickbacks to the ruling regime.  Which would you pick?