US Solar Can Compete With China With A Little Innovation

Editor’s Note: EarthTechling is proud to repost this article courtesy of OilPrice.com. Author credit goes to Jen Alic.

The US solar industry is undergoing some serious growing pains, with bankruptcies and mergers a necessary part of that process; meanwhile, competition from Chinese solar panels has many believing that American solar simply cannot compete. Not so.

Solar’s track record is certainly not inspiring: The past couple of years have seen a number of high-profile bankruptcies, including Solyndra, Q-Cells, Evergreen Solar and Abound Solar. At the same time, while Chinese solar companies have managed to avoid bankruptcy, they are in trouble and are posting sharp losses, and debts are not government-owned as most might think. Perhaps the Chinese government will bail these heavily subsidized solar companies out, but not necessarily as such a move would further imbalance the solar market.

solar japan

image via Shutterstock

While solar installers have benefitted from the market, US solar manufacturers have taken a hit, with solar panel prices falling by some 47% over last year due to global oversupply.

Quite simply, competition means that solar companies will have be a bit more innovative in reducing costs and improving efficiency.

Not all solar companies are going under: First Solar is doing fine. First Solar has net debt, indeed, but it stands to have a positive cash flow for the next two years. Two other companies, SunPower and Trina Solar, are also projecting a return to profitability for 2013. By 2014, First Solar will be restructured into a utility-focused company, giving up the rooftop solar market. This is how it is adapting and changing with the market.

Solar companies will not be successful until they give up on markets in which their only recourse for competing is through government subsidies. This mindset is what is weeding out the future solar winners from the losers.

General Electric was hoping to produce thin-film solar panels which are less bulky and more efficient than conventional solar panels. GE was hoping to be able to produce these panels at a low enough price as to be attractive to the average homeowner. However, those plans have been delayed (not scrapped) because of the falling price of thin-film panels to the point that GE cannot cover the cost of producing them. Still, GE is not ready to throw in the towel. Instead, it’s planning to improve its technology in order to increase production efficiency to rival its Chinese competitors.  It’s called innovation and it is essential for competition—subsidies or no.

Things are not as bad as they seem. According to a recent report from GTM Research and the solar Energy Industries Association, the first quarter of 2012 was one of its best in terms of installation (506 mw to power over 350,000 homes).  Furthermore, installed solar power is forecast to increase 75% in 2012, adding another 3.3 gigawatts of solar power to the current 4.4 gigawatts already installed across the country. But the rooftop installation market will not be forging solar’s future in the US. The future will be in solar power installation by big utility companies. While this category saw installation decline sharply in late 2011, the scale and scope of these projects is vast and construction time-consuming, so quarterly figures are not as relevant.

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    • Tami Kennedy

      Oilprice.com using ‘subsidies’ with a straight face?

    • azjustin

      Apparently there are several people involved with this article that have never researched consumer solar panel prices in the US…

      If you have, you would know that the chinese brands are ALWAYS cheaper, unless it’s blemished 2nds from other countries.   Every once in a while a EU manufacturer will blow out prices to clear inventory or get their name recognized. 

      I can’t even recall a cheap panel in several years coming up on any of the wholesale companies sheets that was made in the US.  I’m not saying that are aren’t US companies selling panels, but the savvy shopper will never see them. 

      Maybe they’re screwing the consumers and catering to the massive buyers?  I wouldn’t be surprised considering where the subsidies come into play….

      Anyways, until china is curtailed, the US companies producing panels will continue to get hosed until they’re out of business.  Because that is the plan of the chinese!