“This achievement marks a milestone in the solar industry’s evolution toward providing truly sustainable energy solutions,” said
Ahearn expressed thanks to governments in
“This represents a major milestone for the solar industry,” said
The Oregonian/Amy Hsuan/February 21, 2009
NANTONG, China — In a hollow factory so new it smells of plaster, Lynn Sha's lone assembly line is laying the groundwork for a global solar eclipse.
Every five hours, a silicon-coated panel rolls out of QS Solar, a company just eight months in the business. Sha, a stylish twentysomething vice president, expects within months to pump out enough panels for a quarter-million households.
Never mind that until last year, QS Solar was QS Latex, a glove manufacturer with no experience making silicon anything.
"Soon, we'll be able to sell to our customers for just $1 per watt," says Sha, crossing the floor in towering heels. Little does Sha know her sky-high ambitions threaten to cast a shadow as far as Oregon.
At a buck-a-watt, solar — the world's most expensive energy — would beat today's cheapest power, coal-fired electricity. That would pave the industry's way to the rooftops of the masses, giving it a surefire edge in the world's race for affordable clean energy.
And, with next-to-nothing overhead and abundant cheap labor, Chinese companies are almost sure to get there first. More than any others, China's factories hold the promise of delivering solar energy at Wal-Mart prices, spawning a glut of panels worldwide.
But their zeal could dim Oregon's own solar boom, the pillar of the state's hope for economic recovery. Oregon officials are betting big with taxpayer dollars to snag solar manufacturers and their pledge of high employment — just as global prices are expected to plunge.
"I see more overcapacity coming out of Asia than anywhere else," says Christopher Dymond, a senior energy analyst with the Oregon Department of Energy. "We will see quite a few companies go out of business."
Over the past decade, China's unprecedented rise has elicited awe from across the world while stoking fears among competitors. There's little question that the world's fastest-developing nation means new possibilities for Oregon: New wealth in the most populous nation germinates demand for Oregon fruit, trees and nursery products. The government's enormous cleanup efforts open doors for Oregon's green experts. High-tech companies reap higher profits with a Chinese work force, reinvesting in American technology.
China's global shadow at times becomes a spotlight. A nation that not long ago seemed exotic and distant now looms close enough to shape Oregon's economy during a time of crisis and opportunity.
Booms and busts
Even with its damp climate, Oregon has appeal for the solar industry. California, the nation's biggest solar customer, is right next door. Oregon also boasts a high-tech work force with expertise in silicon, the essential ingredient to turn sunlight into electricity.
Its biggest sell: millions of taxpayer dollars to subsidize solar companies, expected to create thousands of jobs in the coming years. So far, the state has snagged photovoltaic giant SolarWorld, which unveiled the nation's largest solar plant, in Hillsboro, and other brands, including Sanyo and Solaicx.
But Oregon's much-hyped foray comes just after a historic boom for solar. With concerns over global warming and oil prices driving big investments in clean energy, worldwide production of solar products exploded by an average of 48 percent a year starting in 2002.
Venture capital poured in. Germany and Spain doled out incentives to consumers. Solar companies basked in a record $15.9 billion in profit in 2008.
Suddenly, dark clouds gathered. Germany and Spain cut consumers off. Tightened credit markets blocked financing for costly systems. Analysts predict that a stockpile of modules worldwide will drive prices down by 20 to 30 percent.
Already, Oregon officials say the promised employment boom won't be as big or easy as they'd once trumpeted as companies brace for a crash.
"We are entering a very dynamic and turbulent period in the solar industry," says Edwin Koot, CEO of SolarPlaza, a Dutch consultancy firm. "Everyone will be affected. But never underestimate the Chinese."
The Chinese boom
Three hours by car from Shanghai, Jiangsu province is China's new golden powerhouse. Here, in the marine-layer fog of the Yellow Sea, an estimated 500 companies have ignited in just a few years — a cluster of businesses similar to what Oregon officials hope for, only on a scale to match China's ambitions.
Already, companies here dominate the global landscape: Six of the top 15 solar manufacturers are Chinese, exceeding the numbers from solar stalwarts in Germany and Japan.
Analysts predict world demand for solar this year to be roughly 4.2 gigawatts, according to iSuppli, a research firm that tracks solar trends. Manufacturers across the globe plan to pump out nearly three times that, or 11.1 gigawatts.
Last year, China made up more than a quarter of the world's production, nearly matching all of Europe. Already, smaller factories in China are sputtering out. But the big Chinese companies show few signs of slowing.
"We aren't going to stop," says Thomas Young, investment relations director with Jiangsu-based Trina Solar, the world's 14th-largest producer. "We're going to put our foot on the gas and sometimes coast and sometimes brake. But we can handle lower prices because we have such low overhead."
China has no domestic solar market despite its surging energy needs, so it ships almost everything overseas. That's likely to be the case until prices crash.
"The Chinese tactic has been to scale up production and sell it to the Europeans at European prices," says Koot, the Dutch analyst. "Once the prices begin to plummet, they'll use it themselves for their domestic market. It's a smart strategy."
Most companies in China start like QS Solar, without much expertise or technology. But they know the formula for running a tight-ship factory — and can build one practically overnight. Not to mention, workers are a dime a dozen — and cost about that much.
"Chinese companies have been able to grow their capacity very quickly, faster than European companies," says Rory MacPherson, investor relations director with Suntech Power, a Jiangsu-based company that is the world's second-largest solar manufacturer. "And it's because they have such low manufacturing costs."
At Solarfun, nearly 15,000 modules are practically handcrafted each month. Founded in 2004 in Jiangsu and now the world's seventh-largest solar module producer, the company's campus houses more than 2,000 workers. In teams of 100, they solder cells, lay thin films of plastic and apply bar codes, one by one.
"Asian factories are much more disciplined than Western factories," says Harold Hoskens, Solarfun chief executive officer. "Where mechanization would outweigh the benefits of manual labor, it's a long way off, and we still have very good quality."
Worker productivity is meticulously recorded on whiteboards. A notation next to every worker's name indicates how many cells he or she has made — and broken. A perfect production record means a green smiley-face sticker next to a worker's name — and a $10 bonus, a hefty sum for workers who average about $150 a month. Workers who break five in a month get a red face and risk losing their job.
At the end of every month, each team produces 1.6 megawatts of energy, enough to provide 533 Oregon households a third of their energy needs. Their record of success: 96 percent.
"That is the human potential," says sales manager Yizhong Li.
Oregon competitors
SolarWorld's new Hillsboro factory is strikingly devoid of people. In an enormous production area, floor-to-ceiling machines hum, while robotic arms sort and move wafers. Computers control almost every step.
Mechanization, says Vice President Bob Beisner, is better because computers are more precise than people.
"You can set up a robot to handle the wafers gently and repeat it at high volumes," Beisner says. "To teach that to a human and have them repeat it is very, very difficult."
Still, the German company expects to eventually employ more than 1,000 people, in maintenance, administration or engineering. By early 2011, SolarWorld will pump out 500 megawatts of electricity-generating cells. And, despite the economic gloom, Chief Operating Officer Boris Klebensberger doesn't see downshifting expansion.
Still, he can't ignore China's meteoric ascent.
"We would be foolish if we didn't admit Chinese companies are our competitors," Klebensberger says. "So you have to be better, or you aren't going to survive."
For SolarWorld, survival rests on a tactic almost identical to that of the Chinese factories: scaling up production to bring down costs. The difference at SolarWorld is that the average salary is $3,200 a month for production workers, not the $150 paid in China.
Lower profit margins will be the wave of the future for solar companies. And those with lower costs will live to compete another day.
"The solar industry in the past four years has never had to face a competitive market," says Travis Bradford of the Chicago-based Prometheus Institute, which tracks renewable-energy industries. "The era of easy profit in this business has passed. SolarWorld has been a beneficiary of that."
SolarWorld, one of Germany's fastest-growing companies last year, counts on a loyal customer base and a 25-year warranty. It also banks on a brand that's far from China's image as a maker of cheap goods.
American-made is also a selling tool for John Sedgwick, co-founder of California-based Solaicx, which opened a Portland plant in late 2007.
"The whole theory is that we're providing a superior product," Sedgwick says. "The Chinese are competitors in that they make a similar product. But our technology is highly differentiated from the technology they use there."
But Chinese companies' quality is as high as their American and European competitors, Bradford says.
"So far," he says, "I have not heard of any substantiated quality issues from the top five companies in China."
Tough decisions
The world's largest trade show, in Munich last April, featured just one U.S. state with its own booth: Oregon.
That's where Nikolaus Meyer, CEO of Sulfurcell, a German solar manufacturer, first heard about Oregon's generous tax credits.
"I heard that if you build a factory in Oregon," Meyer says, "the government will pay for it."
He isn't entirely off. Oregon offers companies tax credits, job training and cheap loans. That's not including the tax rebates individual communities can throw in.
Sulfurcell plans to build a new factory within the next two years. The question for Meyer is where: Oregon or Asia?
Oregon could be a winner if the U.S. solar market takes off, says Meyer, who plans to visit the state this year. But China is cheaper.
"The Chinese are going to be my competition for a long time," says Meyer, on a tour of Chinese factories in November. "I need to know who my competition is."
It may all end the same: If Meyer can't beat the Chinese, he may have to join them.
CNet/Martin LaMonica/February 24, 2009
A look at the numbers driving the solar-panel industry leads to one conclusion: prices are falling fast.
Photon Consulting, which advises solar companies, this week released a summary of a study that predicts that a number of solar companies will hit a long-pursued industry target of $1 per watt by 2012.
That race toward a $1 per watt manufacturing cost is leading to brutal price competition and a potential shakeout among solar suppliers, according to analysts.
For consumers and businesses, though, the race means that within a few years solar photovoltaic modules, or panels, will be able to generate electricity cheaper than the grid in many regions of the world.
"With $1/W for modules and $1/W for BOS (balance of system), solar electricity in sunnier areas will be (less than) $0.10/kWh by 2012, creating a large addressable market that is the grand prize in solar's race to $1/W," according to the report summary.
The average retail price for electricity in the United States over the 12 months ending in November was 11.26 cents per kilowatt-hour for consumers and 10.24 cents per kilowatt-hour for businesses, according to the U.S. Energy Information Agency. Prices vary significantly within the country, ranging from below 5 cents per kilowatt-hour in Idaho to 15 cents per kilowatt-hour in New York, for example.
Costs of solar electricity are falling through a combination of factors including better cell efficiency and improvements in solar manufacturing. Also, financing contracts where customers, usually a business, purchase electricity generated by rooftop panels over 20 or 25 years can result in a predictable and lower cost, according to analysts.
Photon Consulting in another study calculates that solar power is poised for far greater adoption because of falling costs. "Grid parity," or meeting the cost of electricity from traditional sources of power generation, is close for many places but Photon Consulting did note that there are economy-related risks to hitting that mark.
"Even at $0.15/kWh, the cost of solar power will be below grid parity for more than half of residential customers and 10% of commercial customers in the OECD (Organization for Economic Development countries), as long as grid electricity prices do not decrease through 2010. The other key risk to this view is significantly higher interest rates," Photon Consulting said in its report.
In the financial industry bailout package last year, the 30 percent tax credit for solar-electric investments was extended for eight years and the $2,000 federal tax credit cap was lifted. There are also a handful of companies offering financing options, such as leases, which lower the upfront cost of installing panels significantly.
Although the falling equipment prices make solar power more attractive for buyers, it spells real challenges for solar manufacturers.
Lux Research, a firm that does emerging technology research including green technologies, last week released a report that predicted a bruising economic environment for solar companies in 2009.
The prices of silicon--the most commonly used solar cell material--were relatively high in the past few years because the supply did not keep pace with demand. But that dynamic has been reversed, with a silicon glut pushing the prices of panels down, according to Lux Research.
"Starting in the fourth quarter of 2008, the global solar boom has sharply, and with little warning, peaked and turned into a global solar shakeout, as an oversupply of solar modules and a drying up of project financing has led to a drop in prices and a build-up of inventories, placing many firms in peril," according to the Lux Research report summary.
In addition, the difficulty in getting venture capital could derail large-scale production of low-cost thin-film solar cells.
Photon Consulting identified First Solar, REC Q-Cells, SolarWorld, SunPower, and Suntech as companies who are leaders in electricity costs.
The full host of incentives for geothermal, solar thermal air and water heating, biomass and methane-capture will be launched over the coming weeks.
District residents, businesses, nonprofits and private schools may now apply for up to $33,000 in assistance to install renewable energy systems on their buildings. The Green Energy DC Renewable Energy Incentive Program is the first of a series of upcoming initiatives to support clean energy technology. Up to $2 million for each of the next four years will be available, beginning immediately with solar photovoltaic and wind turbine systems.
“The District’s rooftops are an amazing, untapped resource for clean, renewable energy,” said George S. Hawkins, director of the District Department of the Environment (DDOE). “It’s exciting to be able to offer more incentives than we ever have before.”
DC has never been known to be a hotbed for wind energy or methane capture and some of the other technologies listed above, but the latter inclusion of geothermal and solar thermal technologies is definitely going to spur on even greater opportunities for homeowners and businesses down the road.
This all comes out amidst coming increases in incentives from the Federal government on the heels of passing the Stimulus Bill last week. So the combination of these two should produce some favorable business growth for installers in the region. I have heard from a number of solar installers that they were advising some homeowners to wait on their decision to see the full breadth of the DC program.
At present, the District is accepting applications for funding for potential recipients to be placed in the reservation queue, which presumably will fill up quick knowing how swiftly the funding from the last program was allocated. The 2009 DC Renewable Energy Incentive Program (REIP) intends to build upon the immense success of the Renewable Energy Demonstration Project (REDP) that was implemented last year.
The funding for this program comes from a ‘public benefits charge’ supported by ratepayers of Pepco and Washington Gas – and the program has allocations of $2 million per year secured through 2012. This funding is collected to help support an increase in the adoption of renewable energy, which is deemed a collective benefit to the region.
Under the REIP, photovoltaic incentives are based on the combined system rating in kilowatts (DC) output:
So under current incentives available to a homeowner in the District, a 4kw photovoltaic system would be eligible for $11,000 in system rebates from the REIP and 30% off of any remaining balance from the federal government from the Investment Tax Credit – meaning that a new system installed could be up to 60% off the average price.
So if you have been considering a system in the District, now is a good time to revisit the idea and contact your preferred installer, as these grants will definitely make the purchase an even more affordable solution.
If you are indeed interested in technologies other than solar, due note that the District is setting aside funding to be distributed for those technologies as well.
WASHINGTON (AP) — Across the Great Plains the wind blows incessantly, while in the remote Nevada desert the sun bears down without relief. Each holds the potential of a vast new energy resource.
While wind turbine and solar projects are ready to capture this new, eco-friendly energy source, where are the transmission lines to get the power to where it is needed?
Democratic congressional leaders, a former president and his one-time vice president, several Obama Cabinet members, energy executives and business leaders thrashed out that very predicament at a high-profile clean energy conference on Monday.
After two hours, a consensus seemed to emerge: The outdated electricity grid must be modernized and expanded if President Barack Obama's vision of dramatically increasing the country's renewable energy resources is to be accomplished. And the federal government will have to play a bigger role in locating high-voltage power lines to overcome local and regional resistance.
Senate Majority Leader Harry Reid, D-Nev., a leading participant in the gathering, said he will soon introduce legislation to give federal regulators authority to override states when it comes to locating long-distance power lines.
"We cannot let 231 state regulators hold up progress," Reid said, referring to the members of state public utility commissions that decide on transmission locations.
While states should be given every opportunity to participate, "there may come a time when the federal government will have to step in," said Reid, whose state is a prime target for entrepreneurs building solar energy projects.
House Speaker Nancy Pelosi, D-Calif., also called for expansion and modernization of the nation's power transmission system, saying these improvements are "essential to all that we do" to promote renewable energy.
The clean energy conference — which included former Vice President Al Gore, who won a Nobel Peace Prize for his work on global warming, and former President Bill Clinton — focused at length on the need for a national "smart" grid to transport electricity, and the need for grid expansion.
Gore said modernizing the transmission grid will allow for new ways to generate and distribute electricity.
Interior Secretary Ken Salazar said he's ready to open federal land to renewable energy projects, including wind farms in the waters off the U.S. coast, and map out energy corridors. But, he warned, the power grid of today won't get the new energy to the markets that need it.
"In the end, unless we are able to solve this juggernaut and deal with the transmission issue we're simply going to be standing in place," Salazar told the conference, which was organized by the Center for American Progress.
Sen. Jeff Bingaman, D-N.M., who chairs the Senate Energy and Natural Resources Committee that will craft energy legislation, said that while he has not seen Reid's proposal, he agreed the Federal Energy Regulatory Commission should have more authority for planning and locating high-voltage power lines.
Bingaman said he hopes to have a bill in four to six weeks that will address the grid issue and establish a requirement for utilities nationwide to generate a certain percentage of electricity — as much as 20 percent by 2020 — from renewable sources such as wind, solar and biomass.
States have fought to maintain jurisdiction over locating the power grid.
Fred Butler, a New Jersey regulator who is chairman of National Association of Regulatory Utility Commissioners, said state officials are willing to work with the federal government on placement issues but oppose a federal takeover of the authority.
Former New York Gov. George Pataki, one of the few Republicans at the conference, said the federal government must get more involved in establishing power transmission lines.
"If you try to run a wire through someone's community, that becomes about as contentious as you get," said Pataki. If that power is going through a state, he said, "you don't have to take a poll — no one is going to be for it."
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