Solar and wind power are here to stay

by Ernie Hernandez on March 14, 2012

Wind power near Copenhagen

Wind power installation off the coast of Copenhagen, Denmark

Alternative power growing despite Solyndra

We read a really interesting article in USA Today this morning. Despite Solyndra’s high profile belly flop, the alternative power industry is growing across the country.

According to the Solar Energy Industries Association (SEIA), installation of photovoltaic (PV) solar panels in 2011 grew by 109 percent over 2010 installations – itself a record setting year. U.S. solar power installations in 2011 alone provide a maximum capacity of 1,855 megawatts. Cumulative installed solar energy production capacity is over 4,000 megawatts in the U.S., enough to power nearly a million households. One significant contributing factor is the ongoing reduction in the production cost of the photovoltaic panels themselves. Even with this rapid growth the solar energy production in the U.S. amounts to less than one percent of all U.S. electricity production. The president of SEIA expects solar power to provide 10 percent of all energy needs by 2020. One reason for this bold expectation is that the cost of solar power has dropped 60 percent since 1995, and will continue to drop into the future.

As impressive as those numbers may sound, the wind power industry outlook is even stronger. According to the American Wind Energy Association (AWEA), 2011 saw the addition of 6,810 megawatts of additional capacity – more than the entire solar capacity installed to date. Cumulative wind power generation capacity in the U.S. totals 46,919 megawatts of capacity. Currently U.S. wind power capacity is more than 20% of the world’s installed wind power. Perhaps most surprisingly, wind power has contributed 35 percent of all new electricity production in the United States over the last four years, surpassed only by natural gas.

As solar power and wind power capacity expands, more equipment will be required to meet this demand. These industries’ growth could provide some of the fuel to drive the economy forward as additional jobs are created to meet these equipment demands. Granted, we will see the occasional mis-step as progress is made in these ever changing technological areas. But at the end of the day, if we takes two steps forward and one step back, the net of it is that we gained a step. How does one eat an elephant? One bite at a time.

Source: USA Today

{ 3 comments… read them below or add one }

Sasparilla March 15, 2012 at 8:26 am

Well USA Today isn’t quite looking at the whole picture – there’s alot more here than meets the eye and its important.

Of course solar installations is one part of the solar industry (nailing them on rooftops and creating solar power generating stations), but I think most folks would consider the solar manufacturing section (designing and building the solar cells and panels) the real heart of the solar industry (especially since solar cells & panels were created here in the U.S.) – that part of the industry is dying at this point in the US – and it is dying because Chinese manufacturers are dumping solar panels in the US market way below their manufacturing costs (presumably with the intention of destroying competitors who aren’t government subsidized and owning the market in the future – much as they did with the rare earths industry during the last decade).

While its great to bolt the panels in place, its even better (maybe even important) to also be designing and building the panels in the first place and that part of the industry is at serious risk of extinction in the U.S..

3 years ago the Chinese had virtually no market-share in the US solar panel industry (the Chinese didn’t make many panels as they don’t have a big domestic market for these expensive panels) – in 2011 they had more than 50% of U.S. market-share with most of that growth in 2011 – and this isn’t an industry that benefits greatly from the slave wage levels that Chinese workers earn (most of the production costs are in the automated clean room production of the solar cells).

What’s going on here is a reasonable question. Basically every so often the Chinese government looks to the future, picks out industries that they see will be “the future” and guide / subsidize their industries to be big players (or as in the case of the rare earths industry actually gain 100% world market-share – rare earths are used magnets in high efficiency electric motors like the Leaf uses, cell phones, NiMH batteries etc.). In the case of the rare earths industry which the US was the biggest player, the Chinese subsidized their companies who dumped all other rare earth producers in the world out of the market over the last decade – after achieving 100% market-share they raised export pricing (but not domestic pricing) for rare earths by orders of magnitude (they also restricted exports to Japan, which hits them hard with their hybrid & EV auto business, because of a trade dispute on another issue).

Several years ago the Chinese designated the solar panel industry and wind power industries as industries of the future and has been guiding and subsidizing those industries with massive amounts of capital. Nearly all of the growth in the industry is exported. While US multi-year subsidies for the solar industry amounted to about $1.4 billion (most of which came from the one time stimulus package of several years ago) the Chinese subsidies amounted to $34 billion in 2010 alone (according to the U.S. Department of Energy).

As a consequence you have the Chinese manufacturers who don’t use the latest most efficient production processes selling panels for less than half of what its estimated it costs them to produce the panels. In the long run, if they destroy their competitors they will own the market and the short term losses funded by the Chinese government will be worth it (as it has been for the Chinese with the Rare Earths Industry).

The lowest cost producer of solar cells in the world is First Solar – a US company – using a different cell technology that is much cheaper but less efficient than the polysilicon cells the Chinese make. But even FSLR cannot cope with the dumping. You can see what has happened to their stock price as the Chinese dumping has hit its stride (set the chart to 1 year – you need flash enabled to see it): http://www.marketwatch.com/investing/stock/fslr

Politically there has been an anti-dumping complaint filed by solar manufacturers producing in the US. The GOP seems content to cede this industry to the Chinese while enjoying the mirage of short term dumping prices as they let the federal US solar support expire. Things are somewhat better with the administration but not alot – the administration is dragging its feet on action for the solar dumping and the DOE has recently taken down its chart showing the Chinese government support of its industry (not a good sign). Here’s a great quote from a NYTimes article the other day:

The United States…”postponed acting on the solar panel trade dispute until March to avoid colliding with the Chinese official’s Valentine’s Day visit to the White House.”

Always good to know the administration has their priorities in order there. At some point we will be getting off fossil fuels and solar will be a huge part of that (with their constantly declining prices), but we’re very close to becoming totally dependent on China for that future industry (the Chinese are obviously lobbying our government furiously to delay action on the dumping issue and allow this eventuality to happen). Several other US manufacturers besides Solyndra have already gone out of business as a result – pretty much all other US manufacturers are going downhill fast.

Not sure what the Chinese have done with the Wind Industry here in the US yet.

Here’s some links for the details talked about here.

http://seekingalpha.com/article/422341-subsidy-disputes-cloud-solar-industry-s-future

http://cleantechnica.com/2012/03/07/china-swallows-u-s-solar-trade-surplus-grows-a-big-one-in-1-year/

http://www.americansolarmanufacturing.org/news-releases/11-9-11-casm-us-solar-industry-coalition-commends-department-of-commerce.htm

http://www.nytimes.com/2012/03/13/business/global/trade-tensions-with-china-heating-up-again.html?_r=1&hp

Reply

Ernie Hernandez (LEAFguy) March 16, 2012 at 12:23 pm

Sasparilla – thanks for your well presented case.

Reply

Sasparilla March 16, 2012 at 6:53 pm

You’re very welcome, I apologize for the length – its going almost completely under the radar for the most part and would be unfortunate for us to have to depend on foreign nations for this vital future technology just because of our own dumb decisions.

It’s a tough situation, the folks who put the panels up love that mirage of those dumping prices… Hopefully we’ll keep some of the industry here in the US.

Reply

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