Solar

Solar Power has been hyped for years as one of the key growth industries in American manufacturing. Current events suggest otherwise.

Abound Solar announced its bankruptcy and ceased operation last week. Another in an incredible list of solar manufacturing failures. The Abound Solar plant closing will take 125 jobs out of the American economy. Germany’s Schott Solar closed it’s New Mexico plant laying off 250 workers. Solyndra, BP, GE, Evergreen and many more closings show that the renewable energy field is still not established.

The impact is significant in jobs, but more so in terms of what the future will bring. This is not a market that is growing, it is a market that appears to be imploding.

The argument has been that is we can just get the cost of solar low enough, we can achieve a sustainable market and manufacturing base. Well, exactly what is that cost? We have seen solar pricing fall in the last two years from $5/watt installed to $3/watt today in some large utility scale systems.

The rapid decline in pricing was not the result of massive investments resulting in a new breakthough technology. It was the result of low priced Chinese solar cells being dumped on the international market. The pricing was achieved by the Chinese government subsidizing the manufacturing costs directly.

This is not inconsistent with Europe’s and America’s approach. In Europe, the strategy was the Feed in Tariff through which the revenue paid for solar generated power is guaranteed at a level high enough above market to guarantee installations. In the US, we had the 1603 program that paid 30% of the project hardware cost to improve ROI for the project. Just different implementations to get to teh same effect.

China loaned money to its manufacturers to abruptly reduce cost and gain marketshare. Unfortunately, the Chinese strategy has backfired and now it’s own manufacturing is unable to keep its costs low.

Spain has reached and passed its limited solar market about two years ago. There were only so many projects they could afford to install.

Cost to the American taxpayer for this grand experiment in in the billions of dollars in defaulted loans to companies that have failed, and money paid into projects that were never capable of breaking even.

What we need is big dose of reality. Alternative energy is only an alternative if the cost is competitive. Based on electric power in the various states, California and New Jersey are the big targets at 23 and 22 cents per kilowatt hour. These are the only places solar makes sense. Yes, as costs continue to decline, the ROI will become short enough to make solar practical.

But its not there yet. And it has to get a lot lower cost before it will be self sustaining. I don’t know the exact answer, but what we have now isn’t working.