NCPA - National Center for Policy Analysis

Solar Getting Burned Again

July 19, 2012

Critics of the solar power industry don't object to their fuel source. But they do oppose the swath of state and federal monies used to entice start-ups. Their argument is based largely on the fact that the United States is running large budget deficits and that solar power has hardly produced results that warrant favoring it over large base-load plants that run on coal, natural gas or nuclear power, says

Indeed, the flurry of spending promulgated by the Obama administration that was earmarked for the solar industry has produced few of the promised green jobs, and instead has resulted in production delays and disappointment. This can be seen most recently in General Electric's solar operations.

  • GE was to make thin-film solar panels that could convert power from the sun to energy used for homes at a 12.5 percent efficiency rate.
  • While that is 4 to 7 percent less than those panels produced in China, GE said that its strong point would be price -- its panels would be so cost-effective that homeowners could not refuse.
  • However, after the Chinese managed to churn out enormous numbers of cheap, efficient panels, the price for solar panels dropped dramatically and undercut the profit margin for most American competitors, including GE.
  • GE's plan now is to delay production and improve its technology over the next 18 months so that the efficiency rate of its technology would equal that of its Chinese competitors.

GE's operations were upset by a sudden influx of Chinese goods. According to the U.S. Commerce Department, the U.S. solar market has seen the prices for panels drop by more than 50 percent in the past year at a time when the value of imports of Chinese-made solar cells nearly quadrupled from $639 million in 2009 to $3.1 billion in 2011.

GE is not the only victim of cheap Chinese panels.

  • Abound Solar, a firm that acquired a $300 million federal loan guarantee, only recently announced that it would enter into bankruptcy.
  • Abound will join Evergreen Solar, SpectraWatt, and Solyndra as government-backed firms that couldn't stand up to market pressures from abroad.
  • In the case of Abound, taxpayers will be on the hook for only 10 to 15 percent of its loan guarantee; of course, this still amounts to roughly $70 million.

Source: Ken Silverstein, "Solar Getting Burned Again,", July 5, 2012.

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