Wednesday, November 2, 2011

Comments on US Solar Company Collapses

The bankruptcy of not one but several U.S. companies producing solar electric modules has generated speculation about whether the entire solar industry itself is on the brink of collapse.

Some details, then, are in order:

1. Both Solyndra, that company that went bankrupt despite all of that stimulus funding, and Evergreen Solar, our most recent bankruptcy addition, have a product that, depending on your point of view, could be seen as "highly innovative" or as "unproven technology."  The workhorse of the solar industry is monocrystaline silicon cells, arranged into rectangular panels. The process uses the highest quality silicon, and the efficiency of these panels can't be beat by anthing currently in large-scale production.  Both companies were producing something off of this beaten track.

panels using monocrystalline silicon cells.
Solyndra produced long cylindrical tubes instead, supposedly enabling them to produce maximum power no matter what angle the sun was shining, which is typically when the panel is exactly perpendicular to the sun. The downside being that only a small percentage of the panel would be perpendicular to the sun at any given time.   Evergreen solar, meanwhile, used polycrystalline silicon and produced those panels through a unique manufacturing process designed to use less silicon:  great when silicon prices were high but a bit of a liability when silicon prices began to fall, because monocrystaline panels out-perform polycrystaline panels every time. Both companies had an unusual product, and the unusual product did not turn out to hold up when compared to the older and more reliable monocrystalline technology.

Panels using polycrystalline silicon cells:  a bunch of broken up silicon mixed together, rather that one crystal grown for the purpose.  While not as efficient as monocrystalline, polycrystalline panels themselves have done fine in the industry as a more affordable alternative.  However, increased production in other parts of the world has strained the affordable advantage of this type of production, especially for companies like Evergreen Solar which produced their panels in a very unique way.
2. China's solar production capacity has skyrocketed this year.  China has stated that it intends to become the solar production capital of the world, and increased Chinese capacity is the main reason solar prices have fallen, in the past six months alone, from $7 a watt to $4.50 a watt for an installed grid-tied system. Just like any company that tries to produce a product under USA labor and environmental laws while competing on cost with the cheap labor and pollution free-for-all that is Chinese manufacturing, the American company faces an uphill battle.  

And just like everything cheap that comes from China, the externalities associated with cheap labor and pollution free-for-alls do rather complicate the blessing of cheaper solar.

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