The Rough Patch For Solar Manufacturers Should End Within Three Years

(Credit: Michael Felletter)

The latest report from NPD Solarbuzz — a market research firm based out of Santa Clara, California — projects that global revenues for the solar photovoltaic (PV) module industry will drop from $25.5 billion last year to $20.5 billion for this year. That 20 percent plunge, according to Solarbuzz, is a simple matter of overproduction.

The supply of potential solar PV capacity shot all the way up to 45 gigawatts by 2012, while end-market demand only reached 29 gigawatts. The cause was a precipitous drop of 50 percent in the average selling price of the modules, which is great for anyone who wants to buy, install, or use solar energy, but not so great for firms that supply it.

So now there’s an ongoing drop in revenues, and a lot of backtracking amongst firms to bring supply back into line with demand, according to NPD Solarbuzz Senior Analyst Michael Barker:

Share values of several publicly listed PV companies have been falling close to delisting levels, operating losses have been reported in the hundreds of millions of dollars per quarter, and many manufacturers are continuing to file for insolvency.

As CleanTechnica noted, the recent bankruptcy of then Chinese solar manufacturer Suntech Power is only the most high-profile example of the problem. (Though it looks like Suntech’s troubles also had a lot to do with bad financial management outside of any question of market fundamentals.) The good news is that the reckoning should be short. NPD Solarbuzz also projects revenues will start climbing again in 2014, and should clear 2012’s level by 2016.

Solar PV Module Supplier Revenues Forecast To 2017

Source: NPD Solarbuzz Marketbuzz 2013

There’s an argument to be made that the short-term culprit here is the contest between the United States and China, to see who can subsidize their respective solar industries the most (Hint: China is winning). On the other hand, finding the most economically efficient way to deliver energy — or finding the best “comparative advantage” roles for the U.S. and China in the solar market — is only the second most important goal of promoting renewables.

The most important goal is preventing worldwide ecological and civilizational catastrophe. And the entire way we currently conceptualize and measure economic activity doesn’t grapple with the damage we’re doing on that account.

Admittedly, tax and grant subsidies for renewable energy technology are an imperfect response to that problem. Building prices into the energy we get from fossil fuels that actually account for the ecological and social risks of carbon emissions would be far more elegant — and might help avoid some of these annoying overshoots and busts in the renewable energy market. But getting a price on carbon is proving to be a difficult political lift.

And in the meantime, simply sitting on our hands isn’t an option.

(h/t: CleanTechnica)

11 Responses to The Rough Patch For Solar Manufacturers Should End Within Three Years

  1. fj says:

    In the short term there might be some perception that some win and others lose. Actually, that might be minimal because if you haven’t noticed, time is getting extremely compressed.

    In the long term . . .

    “The most important goal is preventing worldwide ecological and civilizational catastrophe.”

  2. Paul Klinkman says:

    In the 1870s John D. Rockefeller could see that the oil industry would grow wildly, so he set about to form a monopolistic cartel, then a monopoly company. China will be back soon enough, building out excess gigawatts of solar panels again in a further attempt to monopolize world energy production. Unlike Rockefeller, the ruling party in China is probably a bunch of bunglers who will soon completely tick off the rest of the world with their monopolistic tactics, except for the United States Congress which shall say “Moo” because they are always good for being milked by anyone rich.

  3. fj says:

    There are a lot of external benefits: environment, infrastructure, health, resilience, life . . . and solar should be heavily subsidized way beyond fossil fuels.

    Of course, life is not fair.

  4. Merrelyn Emery says:

    Paul, I usually think your comments are insightful and intelligent so am surprised by this one. China is doing her very best to provide affordable renewables to meet the climate challenge, something the USA could had done if it had chosen to use its wealth to help with the global struggle, ME

  5. Ed Leaver says:

    Except for the “except for” part, you are being a trifle simpliste. Like most monopolists, John D. acted with purist intent and goodness of heart. Watch Episode One of The Prize to see how your mischaracterization is soooo uncharitably misplaced.
    Similarly, I wouldn’t bet on the professional oligarchs running China to continue to make an ecological hash of us just because they’ve done such a smashing job in the past. They are pros…

  6. Mulga Mumblebrain says:

    Exactly! The drop in prices is fantastic and a gap between production and ‘demand’ insane. If the things are being built they should be installed, and to Hell with ‘business plans’ and any other capitalist mambo-jambo. When neo-liberal capitalist priorities and drives enter a sphere of action, humanity, decency and sanity are replaced by greed and the search for profit. To build a global system based on a crude calculus of profit and loss, expressed in monetary terms only, to the exclusion (often forcible) of all other values, is moral insanity, and, as we can see every day, it reduces everything to a lowest common denominator, a moral and spiritual grey sludge of undifferentiated sewage.

  7. Mulga Mumblebrain says:

    It doesn’t have to be morally insane, however. That’s not life-that’s the actions of the tiny ruling elite, members of the distinct species Homo monstrum at work. They are the cuckoos in the human nest.

  8. Paul Klinkman says:

    I try to see both the childish and the altruistic, the competent and the incompetent in the same people.

    The Chinese government wants to talk a great game. They wanted a 300 mph train so they built it. They wanted an entire ecological city so they planned it, but last I heard the funding fell through.

    Then there’s the reality on the street. Beijing’s air pollution can be terrible. The country had a ten day traffic jam. I saw a program segment where, in one place, all of the pollinators had been wiped out. Human farmers pollinated their crops with Q-tips. There’s another tale circulating that China graduates half a million engineers a year, except that in one factory, college diplomas were being handed out to factory workers on payday.

  9. Paul Klinkman says:

    Again, I see the Christian upbringing in John D. Rockefeller, and how he brought his kids up to be stewards of the wealth. He still strangled his competitors by colluding with a railroad to gouge his competitors and then the railroad had to pay him the difference. He still carried out the entire cartel operation in code, with code books. His name in the code book was “chowder”, I believe. He knew that these actions were possibly illegal and that they could at the least prompt a massive consumer boycott against his company. Standard Oil was vilified by the American public, and in the end Teddy Roosevelt took antitrust action to break Standard Oil up into seven companies all with the name Standard Oil in their names.

  10. Jake says:

    I’d like to point out a problem I see that could happen: All of these solar panel companies collapsing, their assets being sold off. These assets include patents for their technology. What’s to stop these patents from ending up in the hands of oil companies or non-practicing entities (Read: Companies that sue for a living) that will serve to hinder the industry? It’s a real threat – Google “software patent apocalypse” – We’re in the middle of that right now. Also, remember the Cobrasys NiMH debacle that popped up near the end of the GM EV1’s life.

  11. Merrelyn Emery says:

    Tianjin Eco city is partly built and has people living in it already. Others such as Chendu are being either planned or built. I’d forget the bungling bit if I were you, ME