Mid-2012, the solar shutdowns and the industry's painful correction continue. Motech announced that it will shutter US-based polysilicon manufacturer AE Polysilicon, and GE announced that it is stopping construction on its CdTe manufacturing facility in Colorado, citing un-competitively low prices and a return to R&D. In early 2012, CdTe manufacturer Abound made a very similar announcement of a return to R&D. Abound ceased operations officially in June, and filed for bankruptcy. The solar industry desperately needs a return to pricing sanity (meaning healthy margins) and frankly, needs to remain optimistic during these painful times – realistic optimism is possible, even now.

The need to remain optimistic despite formidable odds has been a solar industry survival tactic. Without optimism – courageous optimism – progress for all technologies would stall. Innovation requires optimism, and, as optimism and skepticism are not mutually exclusive, the combination of the two drives innovation forward while keeping it real.

Healthy optimism has kept the solar industry on track to develop the best distributed-generation source available and one that in the developing world profoundly changes lives. Optimism provides part of the focus needed by scientists to continue working to solve problems with increasing efficiencies, lowering costs as well as working with new materials and deploying the technology.

Healthy optimism embraces failure because failure is often at the root of innovation. Failure and quitting are not synonymous. Quitting means stopping. Failure offers an opportunity to rethink the problem, perhaps finding a new direction. Healthy optimism works with facts, embraces challenges and realistically works towards its goal. Solar is filled with healthy optimists, and, that trait – the belief that the industry and all its participants are working towards a necessary change in the way the people of the world source their electricity, will be crucial to surviving the current correction and moving forward towards future success. After all, if this is an energy revolution, it will not be won overnight and it will not be easy.

Continued artificially low prices for PV technologies are the force behind manufacturer losses and failures, while the expectation of low prices is the mountain that must be moved before healthy margins and positive net incomes can return. In Europe there appears to be a slow awakening to the fact that, well, the low prices are both too good and too low to be true. Unfortunately, even realizing this, prices that are, in some cases, as low as $0.65/Wp are too good to pass up. The irresistible lure of the bargain is a consumer Siren call – even when the result of buying at artificially low prices is disastrous. Figure 1 presents average module prices to the first buyer from 2001 through Q1 2012. The average price in Q1 2012 is 20% lower than the 2011 global average price.

Figure 1: Module ASPs 2001 – Q1 2012

For the past several years, company roadmaps, which are essentially marketing pieces, have driven price, cost and efficiency expectations both within and without the solar industry. Roadmaps tend to be optimistic, and, as many optimistic roadmaps coincided with the public success of what had historically been a private industry, they were taken as fact by industry observers. Visionary forecasts, which tend to ignore market and technology realities, have also led observer expectations astray.

Most industry observers had, and still have, very little true understanding of the significant technological challenge it is to develop a commercially successful solar technology. Promises for significant cost decreases resulting in free system installation prices became facts in the minds of observers to the point where any failure became unacceptable, instead of a way to encourage further innovation. Though in terms of solar industry history, the FiT period was brief, marketing optimism during this time (approximately seven years) drove many a technology roadmap. Luckily, innovation did not get lost along the way, but it remains constrained by irrational expectations, exuberant promises, and often vehement disappointment.

Despite all of this, solar will survive, primarily because its pioneers, supporters and true, healthy optimists will continue innovating. 

Lead image: Not impossible via Shutterstock