Recent solar industry bankruptcies like Solyndra and Evergreen Solar have some questioning government support for solar and the future of the solar industry as a whole. Closer examination reveals though that the opportunities in the solar industry are not one size fits all, and that the current problems for some solar companies are an opportunity for others.
First, let’s look at the solar companies in trouble and why.
Solyndra developed a novel cylindrical thin film photovoltaic for which it has been scaling up production. In the last few years Solyndra received over $500 million in Department of Energy loan guarantees and a billion dollars invested by high profile individuals including Richard Branson and the Walton family, as well as leading venture capital firms. The problem for Solyndra has been that while their technology was innovative, manufacturing their photovoltaics proved expensive. By avoiding the use of crystalline silicon they had hoped to have an advantage but the cost of silicon solar panels has fallen dramatically, making it hard to compete.
The price of solar panels, measured in dollars per watt of generating capacity, has fallen by as much as 30-42% just in the last year, driven in part by a surge in low cost Chinese solar panel imports. The Chinese manufacturers have benefited from not just low production costs and increasing scale, but also large subsidies from their own government.
A similar story played out in recent weeks with Evergreen Solar and Spectrawatt, caught off guard by the plunging price of photovoltaics.
Does this trend spell disaster for all solar businesses? No.
Solar producers will be hard pressed to reduce costs to be sure. There will be some that adapt and survive the current shakeout, and probably more that won’t. And while the recent decline in solar panel prices has been dramatic, declining prices are inevitable over the long run as solar grows and matures. While difficult for some panel producers today, declining costs will help solar to grow even as government subsidies are reduced.
While panel manufacturers deal with their challenges, the installation of solar grew 67% in the US in 2010, with rapid growth in Q1 2011 as described in the recent solar industry report from the Solar Energy Industries Association.
The price of solar power installation has not fallen as dramatically as the cost of panels for consumers or businesses – yet. The cost of solar installation is only partly based on materials so the cost of solar power for consumers so far as fallen only 12-17%. But with time the price of solar installation for businesses and homes will continue to fall as a result of the drop in the price of solar panels.
Even as Solyndra declares bankruptcy, solar installers like Sungevity and SolarCity are growing significantly, particularly where they can provide solutions like solar leases and power purchase agreements that help cash sensitive clients avoid the upfront costs of solar installation. A broad range of solar installers, solar lead generators, solar brokers, solar marketers, and other solar businesses will benefit from falling PV prices, helping solar to play a greater role in our energy supply, competitive with power from the grid in some markets. And we all benefit from the growth of cheap, clean solar power.
Glenn Croston is the author of “75 Green Businesses” and “Starting Green”, helping businesses in many fields including solar to make money and make a difference. You can reach him at Starting Up Green – glenn(dot)croston (at) startingupgreen(dot)com.