“There's going to be some contraction and consolidation but I think that will benefit the environment as a lot of the quick shops that were set up to flood the market with panels will not make it through that wave,” Christopher Burghardt, vice president of the First Solar energy firm told EurActiv.
“It will lead to a much more mature industry instead of the Wild West growth which we've had in the last years,” he added. “When you have an explosive market somewhere, everybody rushes in and so it’s a gold rush.”
Demand for solar panels has mushroomed in recent years, particularly in Germany and Italy, where sales soared 87% last year.
The EU’s 2020 targets all but guaranteed a market for the panels and, as economies of scale led to a drop in manufacturing costs, prices also began to fall from an average panel price of $1.75 per watt at the beginning of 2011, to a predicted $1.10 by year’s end.
In 2011, there has been a corresponding fall in national subsidies known as "feed-in tariffs," as solar energy approaches market parity with other forms of electricity, so reducing demand.
This in turn has stoked a worldwide solar panel glut, as China entered the clean energy market at the same time, investing a mammoth $30 billion in its solar industry.
The result has been a huge over-supply of solar panels, with annual panel sales in Germany expected to fall by more than 30% and global demand for solar sales by around 10%.
Boom and bust scenario
Speaking at a Eurelectric conference last week, Reinhold Butgereit, the secretary general of the European Photovoltaic Industry Association (EPIA) said that the prospect of retrenchment did not keep him awake at night.
But “the most important thing is to find the most cost-effective and acceptable way of harmonising the [feed-in tariffs] system,” he said.
In America, the boom and bust scenario was highlighted when the Solyndra solar panel factory went bankrupt, and laid off 1,100 workers, after receiving $535 million in federal loan guarantees.
First Solar has also indirectly benefited from $3.073 billion in loan guarantees from the US Department of Energy, $1.46 billion of which was used for loans by a syndicate of lenders including Goldman Sachs, Lending Partners LLC, and Citigroup.
Burghardt said that the guarantees had been a “critical enabler” for First Solar projects, and that the firm was the lowest-cost maker of solar panels.
“The projects we’ve got loan guarantees for are solid,” Burghardt said. “They’ve been commercially vetted by banks and insurance companies. There is no question of the government taking risks, because they are secure.”
And with the cost of solar power dropping, its long-term competitiveness with fossil fuel energy sources can only improve.
Burghardt said that the industry’s current consolidation period would be “a very favourable thing” in the long-term because it would allow production below investment costs, with “risk tolerance” factored in.
China
In the meantime, solar energy enthusiasts note that despite the Solyndra collapse, solar power installations doubled in the US and the sector’s job base grew 6.8% last year, nearly 10 times faster than the economy as a whole.
David Nelson, a senior director at the Climate Policy Initiative told a Brussels policy meeting recently that cost reductions brought on by over-supply could be very positive if more panels were sold on the Chinese domestic market.
“Only China can soak up a lot of that,” he said, “and if China goes forward it could mean that the [solar industry] shake-out won’t be nearly as large as you might think.”
“The big question really is China,” he added.
COMMENTS
Whislt sitting here in Malta thinking about this issue, it is hardly surprising that the perceived rush for these Photo-Voltaic Panels has been rumbled as a folly of being too-expensive.
A collegiate company of mine - not my Company and not one I have any shares or within which i have any allegiance - has recently shown to us here in Malta the newest invention in Solar Cells and Photo-Voltaic products that will soon knowck out the total P-V system which we have seen grow over the past 10 years.
This Company has perfected a spray-on paint-style photo-voltaic system that can be applied to any surface or structure. The system can be applied to any existing building or roof or bridge or dam or structure using simple spraying plant and then be connected up using fine wire links to the substrate. This system was demonstrated in a simple expose and recorded better electrical trannsference than the current top-ended P-V systems which the Germans had been developing and refining over the past years and it can be installed at less than a third of the current costs per kiloWatt of electricity we now see being installed in Germany France the USA or China. This development is so advanced that they are proposing to build it in the Mediterranean Area (including Malta) in a free installation to generate 50 MW within the next two years.
THe interest has now come from major investors to see where is the best place to manufacture this the most simplest piece of technology and I can only hope that Malta (my current office location) could be that location.
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