Companies that supply solar energy panels seem to be dropping out of the market like golden leaves from the trees in October. Is this a sign of the bust of the industry or the beginning of something better?

We all know the story of Solyndra or at least we think we do. The California based company collected a huge loan from the Department of Energy to expand its business to make solar panels to supply electricity to the masses. Within months of getting that loan, the company declared bankruptcy. As I listened to congressional hearings, I heard many questions about why did we sink money into a company that was clearly unsustainable but no questions about where the money went and how much can we get back. Somebody must have asked but I never heard the question nor the answer.

Let’s leave that story behind and take a look at the industry overall. Today, one of the leading solar panel manufacturers announced that their sales are expected to be much lower than previously anticipated. They also recently fired their CEO for making poor business choices.

Germany is supposed to be a leading country in solar applications. However, the government recently cut back on severely investment and companies there are now starting to file for bankruptcy. It was not a surprise move by the country but the industry found they could not survive with current technology and costs.

Recall that many people here claimed that part of the solar industry problems was caused by Chinese companies that were undercutting prices. In a report from the Chinese media agency, Caixin Online, 10 of the 11 solar panel manufacturers there reported a loss last year. Only federal governments appear to have the ability to operate at a loss for long periods of time but we are seeing that even they have limitations although they still seem oblivious to that fact.

Not all panels are made of the same materials. Polysilicon compounds are highly sought for use in many designs and suppliers have had a hard time keeping up with demand, which was a major reason the prices stayed high. Other materials that could be used were also low in supply.

Boon or Bust
I am pretty sure that certain politicians are finding it difficult to believe that, with all their power, they are unable to substantially force people move in the direction they want. What is it that the politicians want? Well, here in the United States, it appears they want solar power to be our main source of home energy. They want us to ride trains rather than cars or airplanes. They want us to wear more sweaters in the winter. However, the American people know that things can be better and warmer and more convenient and they do not want to give that up. People look at traveling for over 50 hours by train from New York to San Antonio that also requires a number of transfers compared to a plane that takes 10 to 12 hours with a single transfer. Also, there are usually departure time choices in traveling by airplane but not so much by train.

Americans are a savvy people. They do know that someday there will be real alternative energy and travel choices. But, they also know that is has to be on their terms. They do not or cannot over pay for such services. Part of the reason solar companies are struggling is that the unit costs are starting to fall rapidly. Prices are just starting to fall through the $1 per watt level. That is still higher than fossil fuel or nuclear energy but is getting to where businesses are starting to take a closer look. Microsoft, Whole Foods, WalMart and others have built systems on their roofs to supply their store’s needs. General Motors announced plans to build solar trees in their parking lot at their plant in Warren, Mich. The panels will follow the sun and not only provide power to the plant but protection from the elements to the cars parked under them.

Many people in the industry see the failure of solar companies as a good sign. It will mean that prices are about to stabilize. It will mean more consolidation, which will lead to more investments. General Electric announced in October of this year that they are building the world’s largest solar plant in Colorado. They will also expand other facilities. Plans to expand plants in China will continue to move forward according to company announcements.

So, in my opinion, the future of solar-powered energy is still bright. Normal market forces will make it happen rather than political pressure. I would bet though that some politicians will say they invented solar power and it never would have happened without their support. However, it would not be wise to put all our eggs in one basket. Most homes today use a combination of energy sources to power their appliances and provide comfortable heat. I don’t know how long it will take but I expect the future to have even more choices.