Solar Power: Sunshine's Cloudy Days

[OKIsItJustMe]

http://www.time.com/time/magazine/article/0,9171,1953629,00.html

Solar Power: Sunshine's Cloudy Days

By Mark Halper Monday, Jan. 25, 2010

Mike Ahearn, chairman of the world's largest manufacturer of solar panels, had every reason to party in September. That's when his company, First Solar, based in Tempe, Ariz., was picked by China to build what promises to be the world's biggest solar-electricity plant: a Manhattan-size facility in Inner Mongolia providing 2 gigawatts of power, about twice the size of a large coal plant or average nuclear power station. But the Chinese facility will take years to build, and the party buzz subsided pretty quickly. The next month, Wall Street analysts downgraded First Solar's stock after the company missed its third-quarter revenue target. "I think the Wall Street perspective is pretty short-term," says Ahearn.

That's true, but it's also true that, while photovoltaic cells that turn sunlight into electricity may play a potentially vital role in weaning the world from fossil fuels, a transition will take decades — and the business metrics surrounding the solar-power industry currently are anything but bright. After a period of rapid expansion, panel manufacturers today are reeling from a pronounced supply surplus, falling prices and stagnating sales. In 2009, industry revenue plunged by nearly 40% to about $25 billion from $40 billion the previous year, according to BankAmerica Merrill Lynch alternative-energy analyst Steven Milunovich. Solar-panel output far outstripped demand last year; manufacturers made 66% more product than they were able to sell, estimates research firm iSuppli located in El Segundo, Calif. Some analysts believe the dismal conditions will persist into 2011, setting up marginal players worldwide for failure. "A large number of manufacturers will not survive," says Paul Semenza, an analyst with research company DisplaySearch, based in San Jose, Calif.
http://www.time.com/time/video/player/0,32068,52417023001_1950038,00.html">(See a video of solar power combatting poverty in Guatemala.)

The global glut has been building for a number of years as hundreds of solar cell and panel start-ups, attracted by a potential boom in alternative energy as oil prices climbed and by government solar-energy-subsidy programs, swarmed into the market. Because the industry's barriers to entry are relatively low — crystalline solar cells are rudimentary semiconductors that are comparatively easy to make — the number of solar-panel and photovoltaic suppliers mushroomed nearly tenfold from 2002, when there were about 80 manufacturers, to somewhere between 500 and 800 today, according to iSuppli. In China and Taiwan, whole solar-energy sectors sprouted almost overnight. Stefan de Haan, an analyst for iSuppli, says industry profit margins, as high as 40% in 2008, have been devastated as a result, falling close to zero last year for many companies. "Everyone wanted 20% market share," says de Haan. "Oversupply was the consequence."

This burst in manufacturing capacity would have been tough to absorb even in the best of times, but the global recession has compounded the industry's growing pains as cash-starved customers shelved ambitious solar power plans. Another blow came early last year when Spain changed the way it subsidizes solar power projects. The country had been the world's biggest backer of "feed-in tariffs" that encourage the spread of green technology by requiring utilities to pay prices well above the commercial electricity rate for power generated by the sun. But a year ago, Spain slashed the amount of solar electricity eligible for such rates by about 80%, slamming manufacturers who had ramped up for Spanish growth. In 2008 the country accounted for 2,600 megawatts of the world's 5,362 megawatts of solar-electricity installations; last year it eked out 300 megawatts, according to iSuppli.
http://www.time.com/time/photogallery/0,29307,1869090,00.html">(See pictures of new ways to boost energy efficiency.)

…

[midnight]

1. This is wonderful technology that will be absorbed. Sounds like economic

hit men having been creating chaos..... Too bad it is here to stay...

[Vinnie From Indy]

2. It is folly to think that oil companies did not have a hand in this

Major oil companies are keenly aware that the game they must play is to grab as much money as possible by manipulating the market without allowing green energy a substantial foothold by overpricing for too long a period.

I think many of the clouds in the solar energy market could be alleviated by a SERIOUS and prolonged effort to subsidize and implement green energy in this country. We need the same committment that sent us to the moon and built our interstate highway system.

[TxRider]

3. Good news to me

Cheaper the panels get the better.

The market is just weeding out those that cannot produce quality panels cheaply enough.

[kristopher]

4. I agree. I'd say it's the impact of thin film.

Few want to pay the prices of etched panels and those making them are in for a rough ride.

I read a piece out of Germany on Nanosolar that had an internal document from the company for reference. I don't know if it was real but in the document they quoted a price of $.30/w as their out the door production cost.

[AdHocSolver]

5. Yes! Get rid of competition so one giant corporation can control the market for maximum profit. nt

[kristopher]

6. Yeah, like that damned company that controls the market for televisions,

and cars, and computers and...

Wait, isn't consumer electronics a market where it is really easy for new companies to enter the market and compete with established companies?
Isn't that why consumer electronics prices tend to plummet rapidly?

No oil wells to drill or oil to refine; no coal to mine or move by the trainload to burn in a huge wasteful thermal plant; no nuclear containment dome with a pond full of forever toxic waste...

I'll take my chances with solar, thanks.

[joshcryer]

7. This sort of thing happened in the computer electronics sector and didn't we discuss it before here?

[arachadillo]

8. PV Efficiency Improves at a Snail's Pace

http://greennature.com/article63.html">PV Efficiency Improves at a Snail's Pace

When you take into consideration the fact that current renewable energy consumption in the United States constitutes a only seven percent of total energy consumption, and solar power constitutes a meager one percent of the small renewable energy contribution, current PV production statistics lose a bit of luster.

[kristopher]

9. No they don't.

Your view doesn't take into account the relationship between the relevant variables.

Viability=Energy Output/Price

What has happened that has shaken the market up (and is resulting in the bankruptcy of many companies) is the huge drop in price associated with a new manufacturing technique producing a product called thin film solar.

Thin film panels are about 20-40% *worse* than the highest efficiency panels but they cost 1/3 (and by some reports 1/10th) of what those higher efficiency panels cost.

Result, much more economically attractive solar panels causing a shake out of the market.

[arachadillo]

10. The Cost of Solar Power

"Result, much more economically attractive solar panels causing a shake out of the market."

It's true that the http://greennature.com/article279.html">The Cost of Solar Power has decreased over time. And perhaps the next generation thin-film PV will help reduce costs even more.

What I did not make clear was the fact that the issue of the snail's pace efficiency dealt with the larger issue of solar being able to effectively help with reducing greenhouse gas (GHG) emissions on a scale large enough to deal with climate.

I'm a solar fan (both distributive and centralized, although I lean toward distributive). Perhaps because I am a solar fan, I looked at the issue of the pace of technology change hoping that the technological changes in solar (on the distributive side from chrystalline to thin film and on the centralized side with improvements in both solar thermal technologies and the concentrator PV technologies) could possibly be used as a GHG reduction tool.

My conclusion is that at the present time, the technology is not there. The issue is that even today's improved technologies are insufficient to compete in the mainstream distributive or centralized markets. Here's hoping they can, sooner rather than later.