Invented here, sold there.


The United States created the solar cell industry and literally launched it into space 50 years ago.   And, yes, solar PV is going to be one of the largest job-creating industries of the century, projected to grow “from a $20 billion industry in 2007 to $74 billion by 2017.”

But while conservatives  work hard to kill the clean  air, clean water, clean energy jobs bill that is America’s  only real hope of remaining globally competitive, the rest of the world eats our lunch, a lunch we  were kind enough to cook for them using on our own no-longer-secret recipe.  As Tom Friedman explains:

Applied Materials is one of the most important U.S. companies you’ve probably never heard of. It makes the machines that make the microchips that go inside your computer. The chip business, though, is volatile, so in 2004 Mike Splinter, Applied Materials’s C.E.O., decided to add a new business line to take advantage of the company’s nanotechnology capabilities “” making the machines that make solar panels. The other day, Splinter gave me a tour of the company’s Silicon Valley facility, culminating with a visit to its “war room,” where Applied maintains a real-time global interaction with all 14 solar panel factories it’s built around the world in the last two years. I could only laugh because crying would have been too embarrassing.

Not a single one is in America.

Let’s see: five are in Germany, four are in China, one is in Spain, one is in India, one is in Italy, one is in Taiwan and one is even in Abu Dhabi. I suggested a new company motto for Applied Materials’s solar business: “Invented here, sold there.”

As the National Renewable Energy Laboratory documents, “From 1980 to 1985, the U.S. industry dominated the world market contributing 50% or more of world production.”  But then President Reagan gutted Jimmy Carter’s renewable energy program (see “Who got us in this energy mess? Start with Ronald Reagan“).  President Clinton began to increase federal efforts and incentives, so our  market share began to increase.  Then the Gingrich Congress started to roll back Clinton programs, especially those aimed at clean energy deployment or those aimed at increasing the competitiveness of US solar manufacturers.  Finally, the Cheney-Bush administration came in and started a major effort to gut all clean energy deployment programs, just as our competitors were seriously ramping up their efforts.

And so our market share in solar has plummeted in the past decade, as the NREL figure below makes all too painfully clear:

Graph illustrating the relative portion the United States has contributed to annual world production. The world shipments increased to a record high of 1194 MW during 2004, more than a 35-fold increase since 1989. The largest annual increase in U.S. production since data has been collected, a 60% increase, occurred between 2003 and 2004.  U.S. production reached a record of more than 139 MW in 2004.

But don’t get all friggin’ sentimental on me. Think of the few billion dollars U.S. taxpayers saved that went to cut taxes on the wealthiest 1%.

The fundamental tenets of conservative ideology say that if countries like China and Taiwan and Spain make most of the PV cells, it must be because they have an inherent “comparative” advantage over us. You gotta start reading your Ricardo, people.

Any card-carrying conservative knows that if other countries manage to get millions of their workers’ hands dirty actually making stuff, it’s only because they are better at it. We’re still the brainiacs who invent the technologies first and then wisely save a few pennies of the taxpayer dollars not promoting American technologies into billion-dollar American industries. We’ve still got all those Internet-related jobs, and it’s not like the government had anything to do with that.

So please, all you progressives and enviros out there, stop your whining. The plan is unfolding as it should, indeed as it must. Do not argue with the invisible hand. People will think you’re crazy.

Sure those thin films look cool. They seem like something that could generate a lot of jobs for a high-tech, high wage economy.


More seriously, it will be interesting to see whether significant incentives and real requirements for renewable energy at a national level can restore some semblance of US leadership (see EIA projects wind at 5% of U.S. electricity in 2012, all renewables at 14%, thanks to Obama stimulus).   But for a sustained revival we need to pass the climate and clean energy bill, since it is the only way to bring a steadily rising carbon price and massive state and federal clean energy funding — as I (and Friedman) argued last week.  Returning to Friedman’s new piece:

The reason that all these other countries are building solar-panel industries today is because most of their governments have put in place the three prerequisites for growing a renewable energy industry: 1) any business or homeowner can generate solar energy; 2) if they decide to do so, the power utility has to connect them to the grid; and 3) the utility has to buy the power for a predictable period at a price that is a no-brainer good deal for the family or business putting the solar panels on their rooftop.

Regulatory, price and connectivity certainty, that is what Germany put in place, and that explains why Germany now generates almost half the solar power in the world today and, as a byproduct, is making itself the world-center for solar research, engineering, manufacturing and installation. With more than 50,000 new jobs, the renewable energy industry in Germany is now second only to its auto industry. One thing that has never existed in America “” with our fragmented, stop-start solar subsidies “” is certainty of price, connectivity and regulation on a national basis.

That is why, although consumer demand for solar power has incrementally increased here, it has not been enough for anyone to have Applied Materials “” the world’s biggest solar equipment manufacturer “” build them a new factory in America yet. So, right now, our federal and state subsidies for installing solar systems are largely paying for the cost of importing solar panels made in China, by Chinese workers, using hi-tech manufacturing equipment invented in America.

Have a nice day.

“About 95 percent of our solar business is outside the U.S.,” said Splinter. “Our biggest U.S. customer is a German-owned company in Oregon. We sell them pieces of equipment.”

If you read some of the anti-green commentary today, you’ll often see sneering references to “green jobs.” The phrase is usually in quotation marks as if it is some kind of liberal fantasy or closet welfare program (and as if coal, oil and nuclear don’t get all kinds of subsidies). Nonsense. In 2008, more silicon was consumed globally making solar panels than microchips, said Splinter.

“We are seeing the industrialization of the solar business,” he added. “In the last 12 months, it has brought us $1.3 billion in revenues. It is hard to build a billion-dollar business.”

Applied sells its solar-panel factories for $200 million each. Solar panels can be made from many different semiconductors, including thin film coated onto glass with nanotechnology and from crystalline silicon. At Applied, making these complex machines requires America’s best, high-paid talent “” people who can work at the intersection of chemistry, physics and nanotechnology.

If we want to launch a solar industry here, big-time, we need to offer the kind of long-term certainty that Germany does or impose the national requirement on our utilities to generate solar power as China does or have the government build giant solar farms, the way it built the Hoover Dam, and sell the electricity.

China … no longer believes it can pollute its way to prosperity because it would choke to death. That is the most important shift in the world in the last 18 months. China has decided that clean-tech is going to be the next great global industry and is now creating a massive domestic market for solar and wind, which will give it a great export platform.

In October, Applied will be opening the world’s largest solar research center “” in Xian, China. Gotta go where the customers are. So, if you like importing oil from Saudi Arabia, you’re going to love importing solar panels from China.

Well, conservatives must love importing oil from Saudi Arabia, since they’ve blocked every effort to promote efficiency and alternatives, so I guess they will love importing solar panels.

The rest of us need to fight for the clean energy jobs bill.

5 Responses to Invented here, sold there.

  1. FYI: Veeco Instruments has received an order from GroupSat for equipment needed to fabricate state-of-the-art solar energy panels.

  2. Barry says:

    Conservative economic strategy these days seems focused primarily on whatever it takes to make PRICES low in the short term…not on whether we all have decent JOBS here so we can keep buying even cheap things.

    Of course that has led to lower prices and fewer good jobs.

    Now to afford to buy even the cheap stuff we have to borrow the money. Apparently the conservative goal is to borrow more money from China to buy slightly cheaper solar panels from China.

    Like all ponzi schemes it works great for awhile…and then it doesn’t. Then it fails spectacularly.

    “Invented here, jobs and profits over there”.

  3. Ken Johnson says:

    Re “the climate and clean energy bill … is the only way to bring a steadily rising carbon price”:

    This is something that the cap-and-traders (e.g. Romm) and carbon tax advocates (Hansen et al) have in common, the belief that a carbon price needs to be “steadily rising”. What is really needed is an initially high carbon price, which can overcome market barriers and get economies of scale to the point where the renewable energy industry becomes self-sustaining. As grid parity is approached and surpassed, the industry will be less reliant on price support, and the carbon price can steadily decline.

    So what we need is $100/ton right now — not 10 or 20 or 40 years in the future. For coal-generated electricity that translates to around $100/MWh. But what Romm, Hansen and others (e.g. Friedman) do not seem to understand is that $100/MWh does not necessarily mean that you impose a $100/MWh fee on coal power. A $100/MWh subsidy for renewable sources would give them the same price advantage and commercialization incentive as a $100/MWh fee on coal power. If the subsidy is focused on new sources, it could be funded from carbon fees that would initially be zero and would increase steadily as renewables gain market share. The carbon fees would be “steadily rising”, but the $100/ton effective price incentive would remain stable from day 1.

  4. paulm says:

    Slow down on Sunday…

    Slow Sunday: The simple solution to global warming

    Using Sunday as a day of rest and renewal would be good for our personal health as well as the health of the planet

    At a stroke, we can reduce 10% of our carbon emissions into the atmosphere by making Sunday a low-carbon day and at the same time make ourselves healthier and happier. So, let us make Sunday a day of rest and renewal rather than a day of travel and toil.

  5. Dr. Matania Ginosar says:

    The fixation on photovoltaic is amazing. Even smart, well educated people can not see how wasteful is PV and why we should not use it when we are connected to the grid. Do the math and see the true cost to society and compare it to what can be achieved by energy efficiency and conservation, 30 times more reduction in greenhouse gases per dollar! And if you tell me we should use all of them, realize that we do not have all the resources needed to do just the critical things, we certainly should not waste money on “attractive technologies” and concentrate were we actually can reduce global warming. Focus on the critical issue: reduction of global temperatures by reduction of greenhouse gases and related elements such as black carbon. And do it ASAP
    Clear example: Germany that every one is talking about, put all it political support, public support and money behind photovoltaic for over a decade. Now, after all the immense support and spending over $60 billion dollar on it they are producing just 0.3% from PV. Again, just a third of a percent!. In the back door, there are now in Germany some 50 new coal powerplants in various stages of construction. Germany produce a lot of PV beacuse they have low cost coal-generated electricity. And since it takes some 7 to 10 years to payback the energy PV generate in Germany, just 750 kW a year!, the coal powerplants are working very hard, emitting a lot of CO2 to create this PV that every one admires.
    Be careful to see the total picture and focus on the reduction of global warming and not on specific technology. We must drop the emotions and use the intelligence and brain we have to solve our crucial problems of GW.
    We can not afford mistakes of this magnitude. We must cut greenhouse gases at the maximum rate we can. We do not have another Earth to escape to.