For Explosive Growth in Solar Energy Industry, Prices Must Come Down
I was delighted when someone sent me this Time Science piece on The Coming US-China Solar War because it finally lays bare the conflicting arithmetic confronting the US solar industry — arithmetic that typically gets lost in all the hype and rhetoric that afflicts commentary on the US renewable energy industry. What the article says, in essence, is that we cannot have our cake (in the form of affordable solar energy in the US) and eat it, too (in the form of a vibrant solar energy equipment manufacturing industry).
US manufacturers struggling with the collapsing prices of PV panels and other solar kit (think Solyndra and Evergreen) are complaining of unfair dumping by Chinese manufacturers and lobbying the government to consider slapping tariffs on Chinese imports. At the same time, the costs of solar kit has not yet come down to the point where most consumers will consider buying it – even with generous rebates and tax credits from local governments and utilities faced with renewable energy portfolio standards – because the payback period is only just this side of the second coming of the Lord. So, if we’re going to have the explosive growth of solar energy generation in the US that we all hope for – and that we must have eventually if we’re to get off carbon based energy – costs must come down even further, especially since our massively indebted government simply cannot afford to extend the present subsidies indefinitely (or even beyond next week) realistically.
Sticking import tariffs on Chinese panels and other solar gear would, of course, push prices up, which means that, even if it made US manufacturers competitive, they’d still go out of business because we’d be even less willing to buy it unless even more subsidies are shoveled into the equation, clearly a road to madness. Under that scenario, everyone loses, including the many tens of thousands employed in the solar installation industry.
This awkward situation is really no different from that faced by, say, US machine tool manufacturers in the 1970s when low cost Japanese imports were decimating Cincinnati Milacron. It’s no use complaining that emerging economies (as Japan was then and China is now) have hugely lowered labor costs and employ unfair tactics in the form of government subsidies: it’s how emerging economies emerge. It’s always been that way – it’s how the US captured the cotton textile industry from Britain in the late 19th century.
We’re perfectly happy to make use of computers and other electronic equipment that used to be made in California and Texas 25 years ago and is now made largely in China. And those who install and maintain said computing equipment are pleased to have their jobs. We need to get used to the idea that the same situation is going to prevail in the solar industry and the notion that renewable energy is going to be the springboard for a massive renaissance in US manufacturing is a pipedream. The final paragraph of the Time item sums up this situation beautifully and should be recommended reading for everyone interested in the growth of solar energy generation in the US.
A side benefit of a more comprehensive and realistic assessment of the prospects for solar energy (and other cleantech) in the US is that our government might be tempted not to continue playing VC at the taxpayers’ expense in the clean energy industry. I notice that Ener1, Inc., a lithium ion car battery company funded in part by a $118 million DOE grant in 2010, filed for bankruptcy last week, following another stimulus funded battery company, Beacon Power, which filed in November.
Graham Russell is founder and principal at Trupoint Advisors, which helps companies achieve strategic success through sustainable business initiatives. www.trupointadvisors.com. Russell writes and speaks on the subject of sustainable business and teaches sustainability in the University of Colorado Denver MBA program.
Energy Manager News
- Put Safety First in LED Installations
- Microsoft: Data Centers to Use 50% Renewables by 2018
- Solar Installation Dedicated in Brooklyn
- Duke Energy SC Customers Have Reaped $5M in Solar Rebates Since Last October
- BidEnergy Launches Its ‘Source-to-Pay’ Process for Energy in U.S. Market
- Garden State Residential, Commercial Customers Will Pay Less for Gas This Winter
- Better Buildings, Better Plants: 12 Success Stories
- CA Governor Signs Bill Clarifying PACE Disclosures