Will The Solar Industry Survive?

Manufacturers of Solar Panels

Since the demise of the German solar panel industry, the major solar panel manufacturers are mostly Chinese. There are others such as Sunpower (French) and First Solar (American).   Sunpower, formerly an American firm, is now owned by TOTAL, the French petroleum giant.  Sunpower, formed in 1985, had stopped producing solar cells last year.  They were nearing bankruptcy having lost some $600 million.  However, they were able to restructure when TOTAL bought 60% of the company.  While the company has survived, the market does not have much confidence in its future.  In October, 2009 Sunpower shares sold for about $32.  Those shares now sell for $5.   Across the World, the subsidies that have been doled out for solar energy projects are diminished or have vanished altogether.  As of September, none of these firms are making a profit. 

Why Are The Solar Panels Makers Not Making a Profit?

A posting by the Telegraph (UK) reports on the Chinese solar panel makers’ financials: ”China’s big five firms are all reporting disastrous trading and heavily indebted balance sheets. At the end of the first quarter, JA Solar listed debt and liabilities of $1.5 billion, Trina Solar had debts of $1.08 billion, and Yingli had debts of $3.44 billion.  Suntech, once held up as a model company, could have to pay $690m in collateral related to a possible fraud, and it also has a $541m convertible bond payment in early 2013. Its total debts are $3.58 billion.  In the first quarter, LDK lost $185.2m as sales dropped by nearly 75pc.”

The manufacturers, particularly in China are increasing their production capacity so that it far exceeds solar panel demand and ironically, at a time when demand is slowing due to reduced or eliminated US and European government subsidies given to builders of solar farms. Further acerbating the profit problem is that some of the Chinese manufacturers are reported to be selling below the cost of manufacture (this is Dumping). The US has imposed a tariff on imported Chinese solar panels. The Europeans are charging the Chinese with “Dumping” and the result will be that the Chinese will lose that market too.  

China seems to be of two minds here.  The government is supporting these expansions because the government needs new jobs to contain China’s huge, annual increase of job seekers. Many believe that they will continue to build solar farms for the same reason. The competitiveness of all this is often secondary in a government run economy. Remember that the Soviet Union did this before they went broke.  Our government is not too far off of that track themselves when it comes to “renewable energy”.

Are Solar Farms Competitive?

Solar farms are the least competitive form of renewable energy.    

The US Department of Energy’s Energy Information Administration (EIA) says that solar projects provide the most expensive power.   The EIA estimated levelized cost of new generation resources coming on line in 2017 are:

Solar is 2.3 times more expensive than natural gas.   The only reason anyone builds solar farms is because the Federal government loans the crony capitalists the money at basically no risk to the borrowers and then the States require the utilities pass on the cost on the their customers. The consumer pays at least 50% more for this form of electricity.  

The on-line German “Focus” posted an interview with Klaus Dieter Maubach, the Technology Chairman of E.On a major German power company and Maubach said:  (This quote is a translation from the German by Google translator)  “Germany’s solar industry will disappear in the next five years in the face of competition from China. Not a single worker is still working at the German solar companies, as the latter are then all broke, it cited the Bloomberg news agency.”  The English also are becoming tired of supporting renewable solar.  The Spanish and Italian governments are reducing subsidies dramatically.   My guess that no matter which man, Obama or Romney, is elected President, the US government subsidies for solar will not be renew.  

Perhaps more money should be directed toward the development of Thorium reactors. We need to talk about these reactors in a posting.

cbdakota