03 January 2012
2011 was a year of turmoil in the solar industry and that turmoil, fortunately, was front and centre in the news. The demise of several companies, first Evergreen, then Solyndra, Solon, Solar Millenium , BP Solar… was not good news, but it elevated the discussion of solar energy to front page news, and that in itself is good. The discussion took a few different directions: costs and finance, technological approaches, the trade case against China and viability and sustainability for the future.
With the technology of solar having proven itself, customers know that solar “works” and is a smart investment.
With the technology of solar having proven itself, customers know that solar “works” and is a smart investment. PV prices have dropped but up-front costs remain high. Fortunately, various financing options are available through solar developers or through federal and regional incentives. In June, for example, Mage Solar announced that in addition to its residential financing program, the company offers a commercial financing option in partnership with CIT Vendor Finance. Other financing options are also springing up, such as Green Solar Finance LLC, which was founded by an investment banker in response to the need for financing sources for utility, municipal and commercial systems.
The power purchase agreement (PPA) is now the option of choice for commercial installations. It enables the customer to purchase solar energy at a set cost for a set amount of time without the burden of the upfront costs of the installation. In the Solar Novus Today article “Financing Commercial Solar Projects,” Chris Bailey, SunEdison’s vice president of Project Finance and Corporate Development in North America, describes the benefits and risks associated with PPAs.
Government support, or not
Changing feed-in tariffs and other support schemes has caused market stops and starts. At year’s end, a challenge to the sudden drop in the UK FiT was upheld by the High Court, and we have yet to see the result of the DECC’s appeal to the judge’s ruling. And the US solar industry is still nervously awaiting final vote on whether to extend the US Department of the Treasury’s 1603 program. The program was enacted to address the shortage of tax equity during the economic crisis in 2008. Proponents of the program say that ending it would shrink the financing available by more than 50% in 2012, stifle job creation and restrict access to capital from the private sector. With members of Congress embroiled in the payroll tax cut debate right before their holiday recess, the vote on extending the 1603 program may take place early in the new year, or possibly even be pushed off into a lame-duck session after the elections in November 2012.
With the cost of polysilicon dropping to about $25 per kilogram, investing in anything other than silicon PV may appear to be a risky proposition. First Solar is the leader in the the cadmium telluride (CdTe) thin-film industry, but has had a year of ups and downs. The company’s stock took a nosedive at the end of the year and the company announced shifts in management as well as a new focus on utility scale solar. Rumours abound about a possible First Solar acquisition with many pointing to GE as the most likely suitor. Despite the roller coaster ride in the solar industry this year, General Electric is betting big on CdTe thin film, with its plans to build a 400MW factory in Colorado.
In another arena, concentrated solar power (CSP) is being overshadowed by concentrated photovoltaics (CPV) primarily due to the latter’s small footprint and low demand on the environment. SolFocus, Soitec and Skyline are among the growing field of CPV makers who’ve met continued success in the past year.
Trade case against China
The trade case brought against China by SolarWorld Industries and the Coalition for American Solar Manufacturers has split the US industry into two groups: the Coalition for American Solar Manufacturers (CASM) and the Coalition for Affordable Solar Energy (CASE). The CASM side contends that the Chinese industry is dumping panels on the US market and it seeks tariffs of more than 100% of the wholesale import prices of the panels from China. The CASE side claims that the suit will harm more US companies than it will help, that it may lead to a retaliatory tariff on US exports and that it will cause uncertainty and potential price increases in a market that already suffers from oversupply. The US International Trade Commission ruled on 2 December that the imports have harmed American manufacturers. (See “SolarWorld Announces Ruling in Trade Case.”) A second determination of preliminary trade remedies may come by mid-January 2012.
The question is no longer why invest in solar, but when.
Undoubtedly, more turmoil will percolate through the industry, more companies will tumble and others will be acquired. But stability is on the horizon, especially as the world’s energy consumers realize that solar costs are in line with those of fossil fuels, that it is affordable and can be easily financed, and that it is an abundant and reliable source of energy. Investors will come to understand that solar is a strong, viable industry that is maturing rapidly, and that, despite its volatility, will be a smart prospect for the long-term. 2012 will be the year that solar takes a step into the mainstream. The question is no longer why invest in solar, but when.
Written by Anne Fischer, Managing Editor, Solar Novus Today. Follow me on Twitter @solarnovusanne.