How Government Killed Solar

It looks like the solar bubble is about to burst.

Bringing an end to eight consecutive years of growth, global revenue for photovoltaic (PV) panels is expected to drop by nearly 20 per cent in 2009, as a massive oversupply causes prices to decline.

Worldwide revenue from shipments of panels will decline to $12.9 billion in 2009, down 19.1 per cent from $15.9 billion in 2008, according to iSuppli Corp. A drop of this magnitude has not occurred in the last 10 years and likely has not happened in the entire history of the solar industry.

Now here is where the story gets good.
"Supply and demand were already unbalanced in 2008 with 100 per cent more modules produced than installed," said Dr. Henning Wicht, senior director and principal analyst, photovoltaics for iSuppli. "The short-term boost in demand from Spain and Germany kept installation companies busy and solar orders and module prices high. But this boom is over. In 2009, average prices for panels for new installation contracts will collapse to the $2.50 to $2.75 per watt range by the end of 2009, down from the current level of $4.20 per watt. The average price for the year will be $3.10 per watt."

Ironically, the oversupply and resulting pricing and revenue declines are the consequence of the overwhelming success of the solar industry.

"Due to the political impetus to save fossil energy resources, both for carbon dioxide emissions and to prepare the future energy infrastructure, solar demand has been booming,"

Get that? Solar is not an energy market. It is a political market. And once the political capital is gone the money dries up. The only way to make solar a real market is to get the cost below that of alternatives or provide advantages that outweigh the extra cost. Take solar garden lights. Their advantage even if they cost more than the alternative is ease of installation. But to move massive quantities of solar they are going to have to come down to the $1 a watt range - installed. That means cells costing 50¢ a watt. We have a ways to go for that. The nice thing is that we are now in striking distance, in the home stretch. It is no longer several orders of magnitude of cost reductions required. Just a factor of four or five. We will probably cover that ground in 5 to 15 years. Depending on whether we have to grind out improvements or we get lucky.

Ah. But all is not lost. Maybe an American politician will come to the rescue.

U.S. President Barack Obama on Wednesday (Jan. 28) met with business leaders to discuss the economic stimulus bill.

One member of the group, Mike Splinter, president and CEO of Applied Materials Inc., urged Obama to move full speed ahead on a push towards a ''green economy.'' This includes incentives for solar energy adoption as a way to create new jobs as the new administration seeks to jumpstart the slumping U.S. economy.

The $825 billion stimulus bill is expected to move ahead in the House, but Republican support is unclear. Applied is urging quick action on Obama's American Recovery and Reinvestment Act, especially in clean technology. Applied is the world's largest supplier of fab gear, but it is seeing huge growth in the solar segment.

I think he should have said "saw". With production better than 2 1/2 times demand I can't see the need for a lot of new production capacity at this time. And why does the government need to pour money into this technology? Because at current prices it is an unsustainable industry.

Cross Posted at Power and Control

Why hasn't Polywell Fusion been funded by the Obama administration?
IEC Fusion Technology (Polywell Fusion) Explained

posted by Simon on 02.02.09 at 01:17 PM


Is this not the promise made, support for the unsustainable and increased tax for the sustainable.
One two three and we all fall down

hugh   ·  February 2, 2009 1:43 PM

Why hasn't the current occupant given any support to polywell fusion? Because fusion is NUCLEAR energy, and as we all know NUCLEAR energy is made by Sauron.

Trimegistus   ·  February 2, 2009 7:01 PM

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Can I take a picture from your blog?
Of course, i will place a backlink to source.
Yours SonyaSunny

SonyaSunny   ·  February 3, 2009 8:43 AM

I kinda cringe when I hear that we need to "do more" to support development of alternative energy. How much is enough?

Aren't we spending around 50 billion dollars a year on alternative energy subsidies? If the product were a "beer warmer" how much money would you spend on its development? I mean, the "perfect" beer warmer. Costs a nickel to produce and you can sell it for a dime. Warms beer from a chilly 33 degrees to 74 degrees in fifteen seconds. It's light, it's portable, it's durable.

The only problem is, nobody wants one. But in today's world, if you can sell it as a good idea, you'll get millions of dollars in federal support. If your beer warmer is powered by alternative energy.

Oregon is a "leader" in alternative energy. Here's a presser from our Unagovernor:

Just take a look at the massive investment in land and equipment to produce a mere smidgen of the power demanded. Could I have engineered a more cost effective solution? Sure. And it would have required three conductors. Cost? Thousands. Maintenance? Minimal. How many employees does it take to keep conductors conducting? Well, gee, in the first year I'd suppose that cost would be pretty close to zero. Same in years 2 to twenty. How much was the clean-up after our last winter storm? How much grime needs to be deposited before there's a ten percent reduction in output? Twenty? How many cells were damaged and replaced?

Or, three wires.

This is the new technology you want us to adopt? (Madness.)

Ring around the rosie, indeed.

OregonGuy   ·  February 3, 2009 1:11 PM

One shame is how Silicon Valley's venture capitalist have given up on market-pleasing innovation and now have descended into rant rent-seeking.

Lately, guys like Al Gore have joined the boards of some VC biggies and are pouring money into "alternative energy," all in the hopes of have government MANDATE a market for their investments.

Whitehall   ·  February 6, 2009 2:14 PM

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