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The Year In Solar Power: Prices Crash, Sales Soar, Industry Restructures, Saudis Leap In, CSP Suffers

By Climate Guest Contributor

"The Year In Solar Power: Prices Crash, Sales Soar, Industry Restructures, Saudis Leap In, CSP Suffers"

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by Vince Font, via Renewable Energy World

This year was a big year for solar, both domestically and globally, with some unlikely players throwing their hats into the ring and upping the ante on achievable power generating capacity. Here’s a wrap-up of some of the year’s most impactful events in the solar industry, with a little added perspective from some experts in the field.

Financial Innovation and Collaboration Takes the Solar Cake

If you ask Tom Kimbis what he thinks was one of the most important developments of 2012 for solar energy, he may tell you something you didn’t quite expect to hear. Kimbis, VP of External Affairs for the Solar Energy Industries Association (SEIA), says that much of the credit for what’s being seen as a landmark year for downstream solar growth belongs not to technical innovations, but financial innovations — the kind that are making it increasingly possible for people everywhere to be able to afford solar without having to take out a second mortgage on their homes.

“Innovation can take place throughout the entire value chain,” Kimbis said. “We’ve seen phenomenal innovation with the various leasing and third party ownership models that have driven the markets in the U.S. forward more than the increase in cell efficiency.”

According to the U.S. Solar Market Insight Report, which was released by SEIA and GTM Research, 2012 has seen total installed solar capacity in the United States reach 1,992 MW. This far exceeds the annual total capacity reached in 2011, which was 1,885 MW — a not inconsiderable accomplishment, considering that 2012 isn’t even over yet. There were 684 MW of solar capacity installation in the third quarter of 2012 alone, and in that same time frame the residential PV sector installed over 118 MW of capacity.

Kimbis credits the biggest quarterly growth yet for U.S. residential PV to an increase in third party solar leasing options for consumers, which he likens to financial options that car buyers have — where instead of having to pay cash, leasing or financing options help make ownership a possibility. “Overcoming that first cost issue is what the third party ownership’s all about,” Kimbis said.

Upstream financial collaborations also led to the green lighting of numerous global projects in 2012, including the Letsatsi and Lesedi solar farms in South Africa. Both were made possible by dollars from U.S. developer SolarReserve and two local companies, Intikon Energy and Kensani Capital. In Peru, OPIC came together with Latin America’s development bank CAF and investment firm Conduit Capital Partners for the funding of two solar projects that will result in a combined solar capacity of 40 MW.

Oversupply Goes Up, PV Cost Goes Down

Despite a boom in solar demand in the United States in 2012 and a growth rate which SEIA estimates will be at about 70 percent over last year (compared to 14 percent global market growth), the reality of global PV panel oversupply remains an issue of concern.

In 2012, that oversupply led to a showdown between Chinese solar manufacturers and the United States Department of Commerce. Chinese manufacturers were accused of dumping their oversupply into the U.S. market at such low prices that they injured the ability of US-based solar manufacturers to compete fairly. This ultimately led to a decision by the International Trade Administration to levy tariffs to levy tariffs on the importation of solar modules using cells manufactured in China. In the final ruling, it was announced that the tariffs would range from 24 percent to 36 percent.

Alas, the old adage about every cloud having a silver lining may be very true, especially if you look at it from a global perspective. In 2012, oversupply led to low cost, which in turn drove an increased global expansion in development among wealthy and developing nations alike, all eager to capitalize on the low cost of materials.

Marc Norman, lawyer for Chadbourne & Parke LLP and director of the Emirates Solar Industry Association (ESIA), called this a possible case of “creative destruction” that’s given developing countries an opportunity to enter the solar game.

Norman said that the low cost of solar PV could enable developing countries in particular to benefit from solar technology without even being connected to the power grid. “Solar technology can be applied off-grid,” Norman said. “For example, in rural areas where there’s a lack of infrastructure. There’s a golden opportunity for more bottom-up market evolution, as opposed to a more traditional top-down approach.”

Kimbis agrees, noting the inherent irony: “Falling pricing is a double edged sword. It’s great for deployment, it’s great for the consumer, and it’s caused greater amounts of solar installation. On the other hand, falling prices have yielded smaller margins for manufacturers, making it tougher to survive in a very competitive climate.”

Industry Jobs and Widespread Bankruptcies

In the United States, 2012 showed evidence that growth in the solar industry occurred at a much faster rate than other industries. According to The Solar Foundation’s National Solar Jobs Census report, U.S. employment in the solar industry grew at a rate of 13.2 percent and the sector added 13,872 jobs in 2012, while Bureau of Labor statistics indicated that solar accounted for 1 out of every 230 jobs created.

This information may seem to fly in the face of the numerous solar company bankruptcies and consolidations that have taken place globally in the last year, but according to Kimbis, that’s par for the course in an emerging industry.

“It’s just like any other industry,” Kimbis said. “Competition is extreme. This is something that the industry has known about for awhile; companies have been bracing for global competition for the last several years. It’s a story which has repeated itself through everything from personal computing, to telecom, to the automobile industry.”

Job outlook, while encouraging within the United States, was not so rosy in China in 2012. In November, it was reported that Suntech Power Holdings (which is the world’s biggest maker of solar panels) would be shedding some 1,500 jobs in China to reduce operating costs and ratchet down on solar cell capacity.

Saudi Arabia: The Dark Horse

When discussing landmark events in solar, it’s impossible to ignore what took place in Saudi Arabia earlier in 2012. In May, the King Abdullah City for Atomic and Renewable Energy (also known as K.A.CARE) established the goal to develop 54,000 MW of renewable energy capacity by 2030.

Why is an oil-rich nation like Saudi Arabia concerned with adopting renewable energy? Quite simply, to limit the local consumption of oil so that exports can be increased. With low cost access to oil and unchecked usage, it’s believed that Saudi Arabia could find itself entirely out of the oil exportation business by 2030.

Under K.A.CARE’s proposed plan, 41,000 MW of the total 54,000 MW capacity will come whole from solar: 16,000 MW from photovoltaic (PV) projects and 25,000 from solar thermal projects. As a first phase, 700 MW of utility-scale projects are set to be undertaken by the end of 2013.

Norman calls the K.A.CARE program “a massive game changer for the global renewable energy industry, and particularly solar” and says that it could also have a beneficial impact on the local job market in Saudi. Unemployment is estimated at around 10 percent in the Kingdom. “The government sees this as an opportunity to create a global center of excellence for renewables, in addition to job creation.”

Norman explains that Saudi Arabia will require a certain percentage of local content on all renewables projects; this is seen as a means to stimulate the local job market.

2012’s Impact on CSP

With the low cost of solar PV panels, some may wonder what impact 2012 had on the solar thermal market, of which concentrated solar power (CSP) is a big part. Did CSP suffer due to the comparatively low cost of solar PV? It depends on who you ask, really.

The answer to that question, according to Norman, is obvious. “As a result of the reduction in PV prices, CSP has taken a hit in the last few years,” Norman said. “But they also have an advantage that can’t be overlooked, and that’s storage. Some developers have devised CSP plants that can store energy. That’s something that PV technology can’t measure up to at present.”

Not everyone sees 2012 as having been a good year for CSP. Jigar Shah, partner at Inerjys Ventures, predicted the death of CSP as far back as 2007 and calls it a technology that’s officially punched the big ticket. “I think in 2012, CSP basically died,” Shah said. “Siemens shut down their CSP plant. Areva is building one unit in Morocco,  but they shut down CSP plants in Australia and a few other places. BrightSource wasn’t able to go public, so they’ve got an existing utility contract they’re honoring with an existing DOE loan guarantee — and I don’t think anyone believes that they’re going to get a second contract. CSP is dead.”

While the aforementioned U.S. Solar Market Insight Report mentioned several large scale CSP projects underway in the United States, it was reported that the third quarter of 2012 saw no new capacity installed in that segment.

Additional Solar Highlights from Around the World in 2012

  • In June, Chile brought its largest PV plant online. Although modest in comparison with the scope of other global projects, the 1 MW Calama Solar 3 was an important step that has since resulted in increased interest among developers and investors. There were other notable Latin American solar developments in 2012, including two Peruvian solar farms (the already operational Tacna solar farm and the still in production Panamericana solar farm) whose combined generating capacity will reach 40 MW.
  • In Germany, a 145 MW solar park in Neuhardenberg, Brandenberg, was constructed in a record-breaking five weeks. The solar park was finished just under the wire to beat the expiration of subsidies for PV installations greater than 10 MW in size. The construction of Neuhardenberg solar park, which is scheduled to be fully operational by the end of 2012, helped push Germany’s total installed solar capacity for the year to over 7,000 MW.
  • 8minuteenergy Renewables, a solar PV developer located in southern California, received the financial stamp of approval in November to proceed with construction on a project that, once in operation, will be the largest PV farm in the world. The Mount Signal solar farm, which is being constructed in Imperial Valley, will generate 800 MW (DC) of utility-scale energy.
  • The Charanka Solar Park in Gujarat, India, is home to numerous independent solar power stations, occupying approximately 2000-hectares of land. While many the park’s solar stations remain in production, 2012 saw its combined total output capacity reach nearly 700 MW.
  • In an effort to shore up their enormous oversupply of solar panels, China decided in 2012 to underwrite a $1.6B loan — through the China Development Bank (CDB), which is seen as the engine behind the country’s economic development — to essentially create downstream demand within its borders. The loan was given to Shanghai-headquartered Sky Solar, which earlier in 2012 broke ground on two PV projects in China: one 800-MW project in the Xinjiang Province, and another 50 MW plant in the Qinghai Province.

Vince Font is a professional freelance writer specializing in the fields of renewable energy, high tech, travel, and entertainment. Read his blog at www.vincefont.com or follow him on Twitter @vincefont. This piece was originally published at Renewable Energy World and was reprinted with permission.

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15 Responses to The Year In Solar Power: Prices Crash, Sales Soar, Industry Restructures, Saudis Leap In, CSP Suffers

  1. In Germany, a country that gets about as much sun as Alaska, the production of solar energy increased 1000-fold over twelve, mostly thanks to a feed-in tariff. Would such a tariff not be the most efficient (and effective) way of boosting renewable energy production?

    • Mulga Mumblebrain says:

      Not according to the morally deranged High Priests of the neo-liberal capitalist death-cult. Their maniacal nightmare world of ‘Invisible Hands’,'rational consumers’, ‘market infallibity’ etc has been tested to destruction in economics, social affairs and ecological matters, yet its acolytes still insist that its hideous nostrums must be followed to the bitter end. And an absolute article of faith is that all environmentalists are agents of the Devil and their ideas anathema.

  2. Omega Centauri says:

    Is there a language issue? In several of your bullet points statements like
    “While many the park’s solar stations remain in production” make me want to substitute “construction” for “production”.

  3. Paul Klinkman says:

    Only 24% to 36% tariffs on Chinese-made solar panels? Is that all? China regularly slaps a 25% tariff on every single product that the country imports.

    Now, China digs up an additional $1.6 billion dollar fund to sop up the oversupply in its government-made solar panel industry, that it recently created out of whole cloth with $30 billion in interest-free loans, plus goodies such as free subways to the factories, free land, no environmental controls on toxic dumping, free riot police to keep the peasant/workers from rioting, entire cities planned around manufacturing efficiency, on and on.

    Meanwhile, this story sees no connection between all of the U.S. bankruptcies and the Chinese obligatory cartel strangling the U.S. companies. What we have here is benign neglect on the part of the Exxon-owned U.S. Congress, such that both Chairman Mao and John D. Rockefeller are dancing together in some afterworld.

  4. Merrelyn Emery says:

    Wouldn’t it be possible, just this once, to stop counting the $s, stop the competition with China, and come to an international agreement to produce, supply and deploy whatever form of solar is most appropriate in every place it can be used? ME

    • Mulga Mumblebrain says:

      According to my ‘Economic Rationalist’ encyclopedia (one page, two paragraphs-no big words)ideas such as these make you , pardon my language, a ‘Communist’ of the ‘water-melon’ variety.

    • Captbilly says:

      The problem with your idea is that we do not live in a totally benign world. The reason that dumping is considered such a big issue is that it allows a country to take over an industry. Once that country has taken over that industry they no longer have any competitors and they can charge what they want. Many people suggest that China is doing this very thing in a whole host of industries. For example, a number of years ago China became a huge supplier of rare earth metals, and essentially put the other suppliers out of business. Now that they have no competitors they are jacking up the prices and tightening the supply because they know that users have no place else to go. Eventually the US could start mining rare earths again, but the mining companies are worried that as soon as they spend the money to reopen their US mines the Chinese will once again start dumping.

      It is entirely possible that Solyndra went bankrupt because of the Chinese dumping of solar panels in the US. Essentially Solyndra found itself in the position of not being able to make a profit selling it’s panels at the same price as the Chinese, but it now turns out that the Chinese couldn’t make a profit either. In the end, Solyndra is gone and the Chinese are still there.

  5. Zech says:

    Why does Saudia Arabia plan to get off oil? Simple. Dealers don’t use.

    • Addicted says:

      Exactly! They don’t want to be caught wrong footed when the day of reckoning arrives, and we have to, as a nation, get off our fossil fuel addiction within a drastically short period of time.

      • Dennis Tomlinson says:

        And when the day of reckoning arrives – visualizing Kevin Anderson’s curves of decreasing fossil fuel usage vs. time vs. starting date – will there be enough alternative methadone available to prevent a precipitous fall or a thunderous crash?

        • Merrelyn Emery says:

          I see the addiction metaphor is catching on. You are misleading yourselves and others – your waste of resources has nothing to do with addiction, ME

  6. “But they also have an advantage that can’t be overlooked, and that’s storage. Some developers have devised CSP plants that can store energy. That’s something that PV technology can’t measure up to at present.”

    There are some additional problems with PV, and this is a bit of a takeoff on Merrleyn’s post (#3), above. First, PV panels are made using some pretty nasty chemicals. Even if those chemicals are disposed of or re-purified in an environmentally-beneficial way, that raises the embodied energy of the panels.

    More important, PV panels only last about 20 years, at which time they must be disposed of, or, at best, reconditioned, and the chemical issues come up again. (Also, to get back to the bean counting that Merrelyn protests, 20 years is about the payoff life of the panels, so there is not much net economic benefit, as I understand it.)

    CSP, on the other hand, not only provides 24/7 electric generation, it does so by storing heat in benign salts such as saltpeter. Also, in principle at least, the viable life of a CSP plant can be can be extended for many decades. Parts will need replacing, of course, but they are benign in their basic nature — pipes, storage tanks, wires and the like. Even if the steam turbines that produce the electricity need replacing in a couple of generations, that’s just ordinary electric plant maintenance, not the distributed-source disaster that billions of deteriorating solar panels on abandoned buildings and in city dumps could become.

    So if society is to invest in solar energy, to get back to Merrelyn’s point, we should look at more than just the short term, up front cost of the investment and see if it’s a good fit with the overall objective of providing energy which is both clean and plentiful.

  7. We wish 2013 would be a better year for renewable energies

  8. John Ward says:

    There is a serious misstatement in the article: it is not true that “2012 has seen total installed solar capacity in the United States reach 1,992 MW” compared to a total installed capacity of 1885 MW in 2011. 1992 MW was only the total solar capacity installed in the first three quarters of 2012 and 1885 MW was the capacity installed in 2011. The total installed capacity in the US is, of course, the sum of the amount installed in those and all previous years that is still operating. See the chart here: http://www.greentechmedia.com/research/ussmi