The solar power industry expected to end up installing more projects than it did 2010. A mature sector, its recent recruits include billionaire Warren Buffet who this month invested – twice – in a market virtually non-existent five years ago.
Biggest problem: Falling prices
As seen in the first months of 2011, a massive oversupply of solar power components continues to be the market’s biggest gripe.
Back in 2009, the industry suffered a collapse in demand when Spain-which accounted for 50 percent of worldwide installations in 2008- decided to reduce the premium rates they pay to solar power producers under feed-in tariff programs., Germany, Italy, Spain Britain all followed suit this year and have decided or panning to pull back the feed-in tariff rates by as much as 70 percent.
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These major policy changes primarily led to a massive build-up of inventory throughout the supply chain, from the raw material polysilicon it is made of to complete solar systems, causing prices to drop since companies were given less incentive to develop solar power projects
According to report from Ernst & Young in June, the average cost of solar photovoltaic panels has already dropped from more than $2 per watt in 2009 to about $1.50 in 2011. The report forecasts that those rates of decline will continue, with prices falling close to the $1 mark in 2013.
This was compounded when the world’s top 5 polysilicon producers nearly doubled their output, according to Bloomberg New Energy Finance. The companies, led by Hemlock Semiconductor Corp. and Wacker Chemie AG, produced 20 percent more polysilicon than was demanded this year and are expected to produce 28 percent more than demand in 2012.
The pace at which panel prices have been dropping has been putting increasing pressure on solar panel makers. It boils down to selling products cheaper in order to beat competitors. But this eventually hurts sales.
Three American solar companies – Evergreen Solar, SpectraWatt, and Solyndra -filed for Chapter 11 bankruptcy between August and September. Companies like MEMC Electronic Materials, Inc, laid off a fifth of its workers and consolidated two business units to lower operating costs.
Upside of sorts
However, a result of the price dive was that solar power became more accessible to more people and more profitable for project developers. Consumers stood to benefit as it translated into more solar projects for the same amount.
The United States, where the industry has been active in the past years after demand in Europe started to lose steam, managed to install 449 megawatts’ worth of solar PV projects in the third quarter of 2011, more capacity than all of those of the year 2009 combined, according to a report by GTM Research and the Solar Energy Industries Association.
A number of other trends were seen.
Falling panel prices led companies to offer financing arrangements that help people avoid the high upfront cost of owning solar. Companies like SunPower and SolarCity let customers pay a monthly fee either to purchase the electricity produced by the solar panels or lease the system these firms own.
Solar E.V. charging also emerged this year. The common collaborations are between residential solar developers and manufactures. Companies currently vying for the market include SolarCity, Inc., General Electric Company, Ford Motor Company and General Motors
Panel prices even affected utilities’ choice of technology. Solar Millennium decided in August to convert the first 500 MW of its 1,000 MW solar power plant being built in the Mojave Desert in California from solar troughs to solar PV panels.
Solar trade war
Evergreen’s chief executive Michael El-Hillow said the company, like most solar firms in the country, had been struggling against stiff competition from Chinese companies that sell solar panels at much lower prices. This was worsened by lowered demand in Italy and Germany after major policy changes in their feed-in tariff programs.
Complaints against China finally took on a more serious form when seven American solar companies filed a trade case against the country, complaining about its trade practices, last October. SolarWorld along with six other unnamed companies belonging to the Coalition for American Solar Manufacturing said the United States’ solar industry has been losing jobs because Chinese firms have been selling solar cells and panels at unfairly low prices with the help of generous financial support from the Chinese government.
Citing figures including China’s rapidly growing imports of solar panels into the U.S. – which grew more than 300 percent from 2008 to 2010 – the coalition requested action from the federal government which include duties on Chinese imports to offset the impact of the alleged trade practices.
Another view
But even as a steep drop in costs hurt the solar industry, many say it will help the sector to actually grow and haul in more customers. In response to the coalition’s antidumping petition, another group of solar companies was formed in November to protect the free trade of solar panels, saying low prices would only help the industry expand.
The Coalition for Affordable Solar Energy, comprising 25 companies that claim to represent 9 percent of the United States’ workforce in the industry, said the antidumping coalition sought to protect manufacturing jobs that supposedly are lost due to low-priced, heavily-subsidized solar products imported from China. But CASE said they missed the broader industry and its consumers.
«The vast majority of the existing 100,000 jobs in the solar industry are in sales, marketing, design, installation, and maintenance,» Mr. Shah said in a statement. «These jobs depend on affordably priced solar panels and companies would have to lay off workers if panel prices rose as a result of this petition. We urge policymakers to find a resolution to this petition in a manner that preserves the U.S. solar industry and solar investments,» he added.
But despite Mr. Shah’s plea, this month the United States trade panel said they were convinced that there is enough reason to believe that solar manufacturers in the United States have been harmed by unfairly priced Chinese solar cells and panels. All six commissioners from the U.S. International Trade Commission voted unanimously for the U.S. Commerce Department to move forward with a more thorough review to determine if there has been dumping of Chinese solar products, and what penalties should be imposed, if warranted.
The department may decide on preliminary remedies such as countervailing duties as early as January 12, 2012, and report the initial findings regarding the dumpling allegations by March 22.
Meanwhile, on November 25, China responded to the coalition’s allegations and said it will begin its own investigation into American state support for renewable energy. The commerce ministry will review six supportive policies and subsidy measures alleged to have violated World Trade Organization rules «and blocked and restrained the development of China’s renewable energy industry as a trade barrier,» according to a complaint cited on the ministry’s Web site.
Better efficiencies
The solar industry has a lot of innovation ahead of it. Arizona-based First Solar Inc., for instance, has developed a thin-film solar cell in July based on cadmium telluride that can convert 17.3 percent of sunlight it absorbs to electricity – a notable feat for a technology known to be less expensive to produce than silicon-based panels, but are said to be less efficient.
Some companies addressed the need for innovation by proposing novel designs big and small – sometimes even microscopic.
Instead of directly converting sunlight into power, Australia’s EnviroMission Ltd. thought of using it to heat air underneath a canopy roof installed at the base of a tall chimney. Heated air flows toward turbines installed at the base of the chimney, which generates electricity before being expelled from the chimney top.
Better design is not necessarily bigger for a team of researchers led by the University of Missouri. In May, they developed what is essentially a thin, flexible sheet of small antennas called «nantenna,» a solar sheet that can harvest heat from industrial processes and convert it into usable energy.
