2011 Trends Taking Us Forward…

As 2011 rapidly comes to a close, we take a quick a look back at some of the key developments of the past year – ones that will likely shape the market in major ways going forward. 

Chinese Solar Panels Fuel Growth & Protectionism

While low-cost panels from China have fueled a rapidly growing U.S. solar market, they have also become a point of contention.  In October, a handful of U.S. solar manufacturers led by SolarWorld formally accused Chinese companies of dumping panels in the U.S. market.  This complaint could lead to tariffs being levied on Chinese-made panels. In turn, this could halt or reverse the trend of rapidly declining solar panel prices crucial in stimulating overall market growth.  China has retaliated, launching an investigation of its own on U.S. solar subsidies and incentives.  Both sides appear wary of starting an all-out trade war, but the result of the dumping allegation will certainly impact the U.S. market moving forward. If accepted, the trade allegations will lead to higher costs for new solar customers and impact market growth.

Electric Vehicles Enter the Mass Market

The Chevy Volt and Nissan Leaf hit the U.S. markets this year to much fanfare.  While sales of the Volt have been less than expected, the car has received a number one ranking in Consumer Reports Customer Satisfaction Survey.  Electric vehicle sales volume is anticipated to increase significantly in 2012, and retail-oriented companies are already deploying strategies to allow customers to recharge while shopping.  As part of the ECOtality program, leading organizations, such as Walmart, Walgreens, and IKEA, have begun deploying EV-charging stations across the US.  Corporations are also installing EV-charging stations to allow employees to recharge at work and purchasing EV’s for employees use.

Renaissance in U.S. Domestic Fossil Fuel Production

The U.S. is undergoing a renaissance in domestic fossil fuel production, thanks to the use of hydraulic fracking. Fracking, now used in more than one-third of all natural gas wells, is expanding oil and natural gas production in the U.S. and putting downward pressure on prices.  In 2010, natural gas production grew for the fifth year in a row, increasing by 4.4 percent compared to 2009—driven by improved horizontal drilling and hydraulic fracking technologies.  Prices have dropped from the 5-year (2005-2009) Henry Hub price of $7.28 Mcf to $4.52 Mcf in 2010, as the supply of natural gas has increased. Dropping natural gas prices have created a more difficult environment for many renewable energy projects, which must compete against natural gas-fired power plants on price. Yet many see fracking as a potential environmental and public health concern. Last week, a report from the EPA indicated that fracking was “likely” responsible for contaminating nearby ground water in Pavillion, Wyoming. Despite these concerns, fracking appears here to stay and will continue to affect the market for renewables in the future.

The ‘Solyndra Flu’

In September, solar panel manufacturer Solyndra filed for bankruptcy two years after receiving a $528 Loan Guarantee from the DOE.  The company’s failure, dubbed the ‘Solyndra Flu’, a term referenced by Cromwell Schubarth of the Silicon Valley Business Journal, has dulled enthusiasm for clean tech products in the marketplace, and made investors increasingly wary. Conservatives in Congress are openly questioning the loan guarantee program and President Obama’s entire clean technology agenda. This failure has increased the partisan divide around renewable energy.  A recent poll by Pew Research found that support for increasing renewable energy funding remains positive at 68%, it has dropped markedly in the past year—fueled by a dramatic drop in Republican support.   The effects of Solyndra’s failures may be temporary, but gaining political support for new renewable energy legislation has become a much more difficult prospect in the immediate future.