Wednesday, October 20, 2010


We're spotlighting an interesting October 10th article from the NYT here, "Silicon Valley’s Solar Innovators Retool to Catch Up to China", which briefly chronicles the progress of emerging solar panel manufacturers in Silicon Valley. From the article:

"...But as the companies finally begin mass production — Solyndra just flipped the switch on a $733 million factory here last month — they are finding that the economics of the industry have already been transformed, by the Chinese. Chinese manufacturers, heavily subsidized by their own government and relying on vast economies of scale, have helped send the price of conventional solar panels plunging and grabbed market share far more quickly than anyone anticipated."

Now by all appearances, due to a burgening domestic demand for clean energy products, Solyndra is probably going to remain viable for the immediate future. But as for the future of the industry in this country as a whole, well, things don't look too good. As far as clean energy is concerned, we've fallen far behind the world's major players - and the gap is widening at a frightening pace. Tellingly, the article goes on to say:

"In the third quarter of 2010, venture capital investment in solar companies plummeted to $144 million from $451 million in the year-ago quarter, according to the Cleantech Group, a San Francisco research firm.

The paucity of capital and the sheer size of Chinese solar panel makers have proved particularly problematic for companies like Solyndra and MiaSolé, which make photovoltaic cells using a material called copper indium gallium selenide, or CIGS.

...While Silicon Valley companies were working on the problem, silicon prices fell and Chinese companies like JA Solar, Suntech and Yingli Green Energy rapidly expanded production of conventional solar panels, supported by tens of billions of dollars in inexpensive credit from the Chinese government as well as other subsidies like cheap land.

...Chinese solar panel makers now supply about 40 percent of the California market, the largest in the United States, and the bulk of the European market, according to Bloomberg New Energy Finance, a research and consulting firm."

Now let's stop here for a minute and reconsider the post I put up a few moons back on Deutsche Bank. Elsewhere in the blogosphere, I've seen a few denialist reactions to the article on which that post was based. JoNova's is here. At SPPI, Ross McKitrick actually went to the trouble of composing an entire pamphlet: "Response to Misinformation from Deutsche Bank"!

I wasn't particularly suprised to find the denialist reaction would be so predictable. According to denialists, investors like Deutsche Bank - and for that matter, anyone else interested in investing in companies like Solyndra - are just making the science up as they go along. AGW really isn't happening, as the theory goes, and private companies, as well as governments, are more or less betting on a losing horse. Sooner or later AGW will be exposed as the hoax it really is and all that investment in clean energy is going to go right down the tubes.

In an incredible act of irresponsibility, the current crop of Republican candidates for congress have cynically judged the political winds, decided to deny the findings their own country's scientific establishment, and assert that global warming isn't happening. Nothing to see here folks, move right along...

What this means in real terms is that the U.S. public, as well as companies like Solyndra and investors like Deutsche Bank, are going to have to wait at least a few more years for a U.S. Government capable of developing a coherent, effective energy policy which addresses climate change and encourages the growth of the domestic clean energy industry. None of that is going to happen so long as we're stuck in denial of the very problem itself. And if a problem doesn't exist, what possible reason could we have for investing in a solution?

Now I doubt if the rest of the world is going to sit on their hands and wait for us to smarten up. The Europeans have already put in place a crude, often abused, yet nevertheless functional system of cap and trade - which has created an environment most favorable for advances in clean energy. Spain for instance already supplies over 13% of its energy needs from renewables - whereas that percentage has actually been declining here almost every year over the last 60 years, and now stands at 10% (down from over 20% in 1959). England has just finished building the world's largest off shore windfarm, (turbines courtesy of Vestas, Denmark). Most European nations are aiming at producing a minimum of 20% of their energy from renewables within the next ten years - which (incredibly) would put them where we were 60 years ago. Apparently the Europeans get it.

Over on the other side of the world, China has now become the largest manufacturer on Earth of wind turbines and solar panels. And not only that, but has now become the world's largest renewable energy producer - as well as the first developing country to create a national strategy for addressing climate change. You can read the policy here. And if this strikes you as mere propaganda, do your research. China is not only backing up that policy with action, but regularly exceeding the policy's benchmarks. Meanwhile, back here in America we're still trying to figure out the First Law of Holes.

We should have seen this coming. Yet back in 2001, when we still had the muscle to develop a far-sighted energy policy, what we got instead was shotgun marriage to big oil (and coal) courtesy of Dick Cheney's narrow minded Energy Task Force. It took almost four years and an aggressive legal challenge to get the Administration to release any records of those meetings. How's that for an "open and honest" government? The Bush Administration put together an energy policy with far reaching consequences for virtually every citizen in the U.S., yet refused to tell the public who really authored it. And when we found out, all the major players turned out to be (surprise!) representatives from every single major player in the coal and oil industry - including the ever so patriotic and unselfish Ken Lay... you know, the guy who was indicted and convicted on six counts of securities and wire fraud.

Steve, if there's a silver lining here its tiny and not very encouraging, but its all we here in this country have to go on at this point: Change will come. But it probably won't originate in the forums of public opinion or the halls of Congress. It's going to happen in the board rooms of the Exxon's, the Peabody Coal's and the Duke Energy's. These people aren't stupid. I'd like to think they're motivated by a concern for the health of the planet - but if past history is any indication, I'm not banking on it. However, sooner or later they're going to wake up to the same conclusion that the rest of the world has already recognized, namely, that renewables represent an astonishingly rich souce of future profits. I hope when they do it won't be too late.


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