Failures in the Solar Market

The solar energy market in the United States is growing rapidly, with a 70% increase from 2009 to 2010 and expectations for continued growth in the future [1]. During this expansion many market players are emerging, some of which will be successful and some of which that will not be. One notable example of a company that was unsuccessful is Solyndra. Solyndra filed for bankruptcy last year after receiving federal loan guarantees, striking controversy about governmental involvement in energy investment [2, 3].

More recently, the Solar Trust of America filed for bankruptcy at the beginning of this month, following the collapse of their major financial backer, Solar Millennium, in Germany [4]. Solar Trust was developing the largest photovoltaic project in the world, the Blythe Solar Power Project, a 1000 MW plant in southern California. Recently, Solar Trust received an extension on their loans during bankruptcy proceedings to allow them more time to find potential buyers [5]. One of these potential buyers is the solar and wind company NextEra Energy Resources.

This is an example of both successful and unsuccessful companies. In particular, the Blythe project represents a huge potential for the solar industry, as it would single-handedly increase the total U.S. photovoltaic capacity, 2152.5 MW, by almost 50% [1]. This project, if successfully sold by Solar Trust and then completed, would provide a huge boost to whichever company is able to operate it, possibly NextEra. Operating nearly 1/3 of all photovoltaic systems in the U.S. would provide a platform for success for at least one U.S. based solar company.

As the market continues to expand, the winners of the solar world will begin to emerge. Just as the tech world had its boom and rapid expansion during the 90’s and 00’s, clean energy is beginning to expand. And while, as mentioned frequently by Dr. Webber, the energy sector needs significantly more capital for infrastructure than the tech industry, it will still be possible for large investors and even the U.S. government to help the solar industry continue its rapid growth. While the failure, and subsequent harsh criticism, of governmental aid to Solyndra will possibly make governmental aid slower to act in the future, the government is particularly good at facilitating building infrastructure. One current example of this is the construction of transmission lines in Texas for wind power [6].

A successful sale of the Blythe project will help to demonstrate the potential of solar power, helping to create at least one big success in the solar world. Maybe with this success the failures of Solyndra will fall out of the forefront of investor’s minds. The solar industry will find its leader in the coming years, possibly before this decade is out. Maybe even this year. I expect that by the end of the decade the big players in the solar game will have emerged. Further development of transmission lines to key areas as well as federal and state stimulus through tax credits and renewable mandates will help this growth. Any new technology will be fraught with pitfalls during its development, but leaders will surface. Despite the two high profile failures of Solyndra and Solar Trust of America, it will continue to grow. Soon we will see the successes as well.

[1] Sherwood, Larry. “U.S. Solar Market Trends 2010.” Interstate Renewable Energy Council. (June 2011).
[2] “Solyndra.” New York Times Business Day. (Nov. 17, 2011) Accessed April 28, 2012 from http://topics.nytimes.com/top/news/business/companies/solyndra/index.html
[3] Plumer, Brad. “Five Myths about the Solyndra Collapse.” The Washington Post Wonk Blog. Sept. 14, 2011. Accessed April 28, 2012 from http://www.washingtonpost.com/blogs/ezra-klein/post/five-myths-about-the-solyndra-collapse/2011/09/14/gIQAfkyvRK_blog.html
[4] Stempel, Jonathan. “Solar Trust of America Files for Bankruptcy.” Reuters. April 2, 2012 Accessed April 28, 2012 from http://www.reuters.com/article/2012/04/02/us-solartrust-bankruptcy-idUSBRE8310ZV20120402
[5] Herndon, Andrew. “Solar Trust of America gets Funding, More Time to Entertain Bids.” Bloomberg. April 26, 2012 Accessed April 28, 2012 from http://www.bloomberg.com/news/2012-04-26/solar-trust-of-america-gets-funding-more-time-to-entertain-bids.html
[6] Gerdes, Justin. “’Game-Changing’ Transmission Link would Deliver Texas Wind Power to the Southeast.” Forbes. Jan. 18, 2012 Accessed April 28, 2012 from http://www.forbes.com/sites/justingerdes/2012/01/18/game-changing-transmission-link-would-deliver-texas-wind-power-to-the-southeast/

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3 Comments

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3 responses to “Failures in the Solar Market

  1. yuki451

    Thank you for your posting interesting stories. For PV systems, their costs have been decreasing these days but it mostly attributes to competitive Chinese makers. Recently, large German solar maker Q-Cell filed for bankruptcy. The company suffered from severe competition in the market and failed to keep up with a decline in solar system price brought by Chinese makers. A cheap solar system will bring benefit to consumers, but on the other hand it might bring difficulties to US makers to thrive. Although I agree that we should expand solar market more, I understand that using US government budget to help Chinese solar makers to emerge is a controversial problem.

    http://www.dw.de/dw/article/0,,15855011,00.html

  2. mattawright

    I think it is important to note that one of the principal causes of Solyndra’s bankruptcy was the state of the solar market over the past couple of years. For its solar panels’ semiconductor material, Solyndra used copper iridium gallium diselenide (CIGS), an exotic material which took the place of the silicon that is used for most semiconductor applications [1]. The upside of this supply chain choice is that Solyndra was betting on continued high prices of polycrystalline silicon, which as recently as a few years ago seemed like a fairly safe bet due to projected high demand from projected future silicon demand, both for silicon-based solar cells and traditional silicon uses like electronics. However, starting in early 2011 silicon production ramped up in an attempt to meet this demand to such a degree that oversupply occurred and the price of silicon fell precipitously [2, 3]. The effect of this was that companies such as Solyndra that were with silicon-based panel manufacturers weren’t able to compete, and profit margins likely were completely eliminated, forcing these companies into bankruptcy.

    To illustrate this, a one-year chart of the spot price of a global polycrystalline silicon market tracked by Bloomberg is linked below: [4]

    Interestingly, some of the same market conditions that has been some less-mature solar cell manufacturers, or those focusing on cells using exotic semiconductor materials like Solyndra caused those in charge of the same Blythe project to shift from a 500 MW CSP (Concentrated Solar Power) design to one entirely based on photovoltaics [5]. In just a few years, the market conditions of plummeting silicon prices not only priced out alternatives like Solyndra’s CIGS cells, but CSP technology as a whole. As long as these conditions persist, we can expect that the solar industry will primarily expand toward silicon-based PV.

    [1]: http://www.solyndra.com/technology-products/
    [2]: http://www.forbes.com/sites/williampentland/2011/07/05/silicon-prices-plunge-as-solar-market-softens/
    [3]: http://www.metalbulletin.com/Article/3007639/COMMENT-Polysilicon-production-comes-out-from-under-a-cloud.html
    [4]: http://www.bloomberg.com/quote/SSPFPSNO:IND/chart
    [5]: http://www.businesswire.com/news/home/20110817006604/en/Solar-Trust-America-Chooses-Photovoltaic-Technology-World%E2%80%99s

  3. samwoelke

    First off – good blog, I found it quite informative. I really like to hear about the actual facts when it comes to renewable energy and not always just about its perks and how amazingly perfect it is. However, I do still believe that it is something that is on the rise and will be a major player in helping relieve the energy burden in the years to come. I agree that the situation we are in currently is not perfect and some people take for granted how much easier even the government is making it with aide and grants for solar programs yet they still fail. Due to the ongoing trend of solar technology becoming more affordable, though, predictions show that the cost of solar energy should cross the current average retail energy price by 2020 [1]. If this continued success should continue, maybe the solar energy will be able to leave the nest of government help and actually be able to emerge as a player in the energy field.

    [1] – http://blogs.scientificamerican.com/guest-blog/2011/03/16/smaller-cheaper-faster-does-moores-law-apply-to-solar-cells/

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