Solar eclipsed?

As the green utopian clouds obscuring the real cost of ‘free’ solar power clear, it’s easy to see why the industry is in eclipse

Grey skies for solar power?
Peter C. Glover
On 13 September 2012 09:24

The global solar power industry is in crisis. The industry blames widespread national subsidy cuts and over productivity; China, in particular, is widely vilified on the second count. From an independent perspective, however, the real cause of the solar industry’s malaise runs deeper, rooted, as it is, in the inescapable fact that, in terms of current technology, commercial scale solar energy remains a commercially non-viable proposition.

Wherever you look the solar power industry is mired in financial problems, all of which lead back to the (life support) of public subsidy, the impact of market-skewing regulations (creating the appearance of commercial viability) and, ultimately, protectionist trade wars (US and Europe v China).

In economic good-times, three natural consequences of government-sponsored global industries that can be obfuscated by a network of feed-in tariffs, levies, and other ‘green’ taxes to pay for them. But in leaner economic climes, the real cost of ‘free’ energy becomes all too clear.

Germany’s solar industry has led the way in Europe. Until recently the country was the world leader in manufacturing solar cells. Half of the world’s total solar power generating capacity is installed in Germany. But, according to Klaus Dieter Maubach, Technology Chairman at the country’s power major EON, Germany’s solar industry is in a death spiral.

Speaking to Focus magazine, Maubach states that “not a single company is in the black” and that the entire German solar industry “will disappear within five years”. His bleak prediction merely echoed the view of investment consultants Citigroup who warned in March that Germany’s subsidy cuts would “nearly kill Germany’s solar industry”.

Widespread complaints of Chinese solar companies dumping cut price solar panels on the European market have merely added to the malaise. In early September, the European Commission announced a formal inquiry into this allegation that could well trigger a cut-throat solar trade war with China.

But as EON’s Klaus Maubach points out with regard to the international solar market, China itself is suffering from precisely the same market problems as all its competitors. While Beijing will attempt to stave off decline through government stimulus, it is only a question of time before the loss of European and US markets for cheap Chinese goods, including solar panels, causes an economic downturn there, too.

In fact, the threat of a Europe v China solar ‘war’ is little more than a replay of last year’s dust up between the United States and China. In the wake of the infamous Solyndra scandal (Solyndra execs blamed cheap Chinese imports), the U.S. imposed savage protectionist anti-dumping tariffs. These ranged from 31 percent to as high as 250 percent on imported Chinese-made panels.

No surprise then that the Chinese companies should turn their attention to key European markets to offload a product they are unable to sell domestically. The problems for U.S. solar cannot be laid at the door of Chinese competition alone. Once the massive infusion of government stimulus cash ran out and subsidies slowed in early 2011, U.S. solar companies had already begun filing for bankruptcy. And Solyndra wasn’t the only company desperate for more cash. One heavily-subsidized firm, First Solar, was even caught using the U.S. taxpayer loan guarantee to sell solar panels to itself.

So are the Chinese really the chief villains of the global solar piece? Depends how you look at it.

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