The solar energy industry is in crisis and I keep reading that it is because subsidies are being reduced or eliminated. As if subsidies come for free. I don’t believe subsidies work and the current crisis only proves that the fundamental issue is not subsidies but that solar energy is not (yet ?) commercially viable. It surely has a place in some very particular situations and the best use of solar energy remains with some isolated users or as a “support” for other energy sources. But for base-load power generation it is just not viable.
The global solar power industry is in crisis. The industry blames widespread national subsidy cuts and over productivity; China, in particular, being widely vilified on the second count. However, the real cause of the solar industry’s malaise runs deeper, rooted, as it is, in the inescapable fact that, in terms of current technology, commercial scale solar energy remains a non-viable proposition.
Wherever you look the solar power industry is mired in financial problems, all of which lead back to the (life support) of public subsidy, the impact of market-skewing regulations (creating the appearance of commercial viability) and, ultimately, protectionist trade wars (US and Europe v China). In economic good-times, three natural consequences of government-sponsored global industries that can be obfuscated by a network of feed-in tariffs, levies and other ‘green’ taxes to pay for them. But in leaner economic climes, the real cost of ‘free’ energy becomes all too clear.
Germany’s solar industry has led the way in Europe. Until recently the country was the world leader in manufacturing solar cells. Half of the world’s total solar power generating capacity is installed in Germany. But, according to Klaus Dieter Maubach, Technology Chairman at the country’s power major EON, Germany’s solar industry is in a death spiral. Speaking to Focus magazine, Maubach states that “not a single company is in the black” and that the entire German solar industry “will disappear within five years”. His bleak prediction merely echoed the view of investment consultants Citigroup who warned in March that Germany’s subsidy cuts would “nearly kill Germany’s solar industry”. Widespread complaints of Chinese solar companies dumping cut price solar panels on the European market have merely added to the malaise. In early September, the European Commission announced a formal inquiry into this allegation that could well trigger a cut-throat solar trade war with China.
But as Eon’s Maubach points out with regard to the international solar market, China itself is suffering from precisely the same market problems as all its competitors. While Beijing will attempt to stave off decline through government stimulus, it is only a question of time before the loss of European and US markets for cheap Chinese goods, including solar panels, causes an economic downturn there, too. ……..
In January, Spain’s economic crisis forced it to cut its renewable subsidy regime entirely. In April, a near-bankrupt Italian government estimated that its subsidy regime left it facing a $60 billion bill to photovoltaic generators over the next 20 years. In The Great British Solar Scam I wrote about how the UK’s bid to cuts its ludicrously generous solar subsidy regime saw it prevented from making subsidy cuts by a European court after the UK solar industry inevitably claimed widespread bankruptcies would result. (At the micro-level, I often have to explain to those taken in by the ‘free’ solar power myth: “It might be a good deal for you, given massive government subsidy, but it’s a decidedly bad deal for the country as a whole and for taxpayers in general. In particular, it’s a rotten deal for those forced into fuel poverty as their energy bills rise to help pay for solar installations for better off households.” The sleight-of-hand being achieved first, through feed-in tariffs, then again, via the government’s Renewables Obligation Certificate that obliges power companies to buy renewably-sourced electricity at inflated market prices, a cost that will always be passed on to the end user). ….
…… As the green utopian clouds obscuring the real cost of ‘free’ solar power clear, it’s easy to see why the industry is in eclipse.