Anybody reading headlines in the business press will have noticed that in photovoltaics, there's a whole lot of shaking out going on. Three significant U.S. manufacturers have gone under in the last month: Solyndra, Evergreen Solar, and SpectraWatt. Solyndra, a major beneficiary of U.S. government support, suffered the added indignity of having its offices raided by the FBI shortly after it announced bankruptcy.
The difficulties facing solar companies are not hard to identify. Heavily subsidized, low-cost Chinese producers have penetrated global markets in a big way, driving prices for basic polysilicon modules sharply down. That translates into problems not only for North American and European makers of basic polysilicon cells, but also competing technologies.
Solyndra, which was developing a novel tube technology, just couldn't get it to market at low enough prices to compete. The U.S. and German developers of what's to be a really major concentrating solar power project in Blythe, California, have announced that the first half gigawatt of installed solar will be generic polysilicon rather than high-end concentrating PV cells. First Solar, which has boasted a breakthrough thin-film technology, has seen its share prices drop more than 60 percent in the last three years and now is getting into project development and engineering, procurement and construction.
Vertically integrated companies like California's SPI Solar and China's Yingli Solar are doing well--but often under conditions that send eyebrows jumping.
SPI, working with KDC Solar and LDK Solar, announced in August that it would build a 9.7 MW photovoltaic generator for the New Jersey subsidiary of a major pharmaceutical company; Yingli said it would supply 10 MW of PV generation for a New Jersey installation that will be "the largest non-utility owned solar intallation east of the MIssissippi River."
Solar projects in New Jersey, as it happens, boast the highest rates of return of any such projects in the world. Analysts at Lux Research found that because of New Jersey's hugely generous Renewable Energy Credit prices, solar rates of return are 40 percent and above in the so-called Garden State. Next comes Portugal, followed by Australia, Italy, and India. In Germany, with China and the United States a major solar producer, rates of return will be in the vicinity of 22 percent out to 2016, Lux predicts.
In light of the unsustainable subsidies benefiting solar energy, instabilities in the industry, and the steep learning curve it has to climb, projections of profitability are to be taken with big grains of salt. (I beg the reader's pardon: In a situation so riddled with what economists call "market distortions," resort to business journalism cliches is unavoidable.) Only in the last couple of years, as solar construction has boomed, have people begun to notice things you might have thought would be obvious.
Two years ago, Google issued a report on solar module performance, based on operation from 2007 of a California PV installation that at that time was the largest single one in the world. Among the findings: large solar arrays tend to get dirty and sometimes need to be cleaned; specifically, tilted arrays get washed pretty well by rains, but horizontal arrays do not; in the arrays that need washing, cleaning can double their electrical output.
With the industry still digesting rudimentary lessons like that, obviously there is a great deal more to be worked through. Meanwhile, in countries like Germany, Spain and the United States, the domestic solar industries that were meant to benefit from government subsidies will continue to see Chinese competitors eat their lunch--at least until their remarkably slow-witted political leaders do something about it.