ABB Pulls Investment from GreenVolts: Will this Trend Continue?

Meg Cichon, Associate Editor, RenewableEnergyWorld.com
September 21, 2012 | 7 Comments

News of ABB pulling its $20 million investment in GreenVolts hit the SPI show floor last week, dampening the electric excitement of President Clinton's keynote address. With so much consolidation, solar company bankruptcies and disappointing political support for solar in the past year, it is difficult to see the future of solar power, and ABB is hitting its brakes before it witnesses another accident.

GreenVolts, a CPV startup that had its hand in everything from technology to installation and once showed much promise, has been forced to lay off more than 60 of its 80 employees. Without ABB’s $20 million investment pledged in December 2011, Greenvolts is forced to look for a buyer for its technology or assets.

This is not an uncommon scenario for the solar industry as of late. Just a few months ago in July, HCPV manufacturer Amonix closed its Las Vegas plant and laid off its staff just one year after opening its doors citing lower-than-expected demand. And since Solyndra shut its doors one year ago and sparked political backlash for the solar industry, consolidation has steadily continued. According to ABB, this trend is expected to continue.

ABB attributes its decision to retract investment in GreenVolts to the oversupply and plunging prices of panels. But ABB isn’t just solely backing away from this investment, it is avoiding PV technology altogether.

“It is really in the PV panel space that we are not looking to continue,” said Barry Dillon, ABB’s Director of Media and Community Relations. “We are not interested in continuing to invest in that area or anything that competes with PV panels because of the cost problem.”

Though ABB invested in GreenVolts just last December, Dillon said the company was surprised at the change in market projections over the past few months. In these few months, projections through 2015 have dropped nearly 40 percent, according to ABB. “On the panels themselves, it just doesn’t look profitable and is not worth our time,” said Dillon.

So the big question remains: Are other companies going to follow suit? According to Adam Krop, senior analyst at Ardour Capital, companies will continue to pull investments, but mostly in the manufacturing and technology sectors. He believes that the industry is approaching a phase where it needs less investment in research and development because the technology is reaching the point where it doesn’t need support.

With high overcapacity of panels, there is a huge supply of equipment to meet project development demand for the next couple of years. “We expect installed costs to continue decline for the foreseeable future, which will continue to pressure margins at component manufacturers, but will only support strong installation volume growth,” said Krop.

Though investment will likely continue to be pulled from the manufacturing and technology front, Krop expects huge investments in the downstream PV market.

“It’s really a business decision,” said Dillon. “The industry analysts are saying that this area is not going to show any profitability for the next two or three years, so why continue?”

Lead image: Dramatic clouds via Shutterstock

7 Comments

HD BOESCH
September 24, 2012

Solar is growing, nation wide, world wide, helping the environment AND the profit of investors. The problem is not solar, the problems are specific technologies that won't work.
Solyndra: Ill-designed from the beginning. I advised our customers not to use it, because the claimed efficiency never will be achieved and never did. (I am the CTO of a solar installer in CA.)
Ammonix: CPV seemed to be the future for big solar systems back 6, 7 years ago when standard solar panels where expensive. The big 2-axis trackers, required by Ammonix' technology, are a technical challenge tracking the sun with less than 0.5% accuracy, and a financial burden. Main stream solar pushed the panel prices so much down, that expensive CPV in spite of higher efficiency just isn't competitive.
GreenVolts: I thought it's a better way for CPV than Ammonix and I had many meetings with their team. But at the end they couldn't figure out how to make their system competitive with main stream solar inspite of using Chinese manufacturing.

Summary: It's not solar, it's specific "exotic" technologies that let these companies down. To get solar manufacturing here in the US, heavy investment in big, automized manufacturing facilities to leverage scale of ecomony plus strong R&D in lower cost production technology for main stream solar is required. If we don't do it, solar will grow without us and China will take all the profit. They already have more than 50% share of the world market.

Kimberly Davis
September 23, 2012

@stephen-myers - Third-party ownership and financing, through lease or PPA, makes the most sense for (non-utility) end-users, shifting the ROI calculation to them. Finance from parties with a "tax appetite" can thereby monetize the ITC (see below). The other major factor in ROI is going to be state/utility incentives. Check out the DSIRE database for your area; your local solar integrator should be knowledgable on what will work best.

http://www.renewableenergyworld.com/rea/news/article/2012/07/moving-solar-beyond-1603-there-are-alternatives

ANONYMOUS
September 22, 2012

@robhilbun & @stephen-myers-259480. There is not one or the other. For profit is a good motivator, it has been proven over time. Greed, negligence, and just plain criminal behavior is not good for us. Our 'we the people' is quickly changing to 'we the corporations'. At some point 'we the people', which includes CEOs of for-profit companies and other rich and powerful, need to see the larger picture. It is our duty as a society, otherwise 'for profit' gets really close to Darwinism in its most basic form or even anarchy.

STEPHEN MYERS
September 22, 2012

@kdavis Excellent comment. One question, I live in the SouthWest and we have 15 - 20 days per year when it is overcast, other than that SUNSHINE! There is a new installation here close to my house that will provide a return on investment in 3-4 years. Most companies balk at waiting that long to get their money back.
Is that normal? I of course, understand conditions, technology variables, etc. But what is an "average $ ROI"?

Kimberly Davis
September 22, 2012

I fear policymakers and investors may mistakenly hear such stories as bad news for *solar* in the US, when it is really just on the manufacturing side. As Mr. Krop makes clear, with the current global PV oversupply, prices will continue to drop--great news for installations and downstream in the supply chain--until the market corrects. Distributed solar will continue to be profitable for investors, esp. with PPA/lease arrangements for customers. And customers will continue to want solar not only based on ROI, but also for the many who are pursuing triple-bottom-line (enviro/$$/social) internal sustainability goals. As more people understand grid-tied net-metering--and our federal, state, and local governments are demonstrating its success--solar will continue to grow inexorably upwards.

STEPHEN MYERS
September 22, 2012

@robhilbun, I disagree. We all live our lives with profit as a motive. Don't deny it. Do you think ABB is knowledgeable about their business? They have been in the electrical power business for quite a few years, over a hundred I think. Do they stay in business by giving away their services and capital? No, nor do you and I get up each day planning not to be profitable. The "For Profit" motive does not put our plant at peril, individual and political choices are much more dangerous than a company trying to survive and thrive.

Robert Hilbun
September 22, 2012

Barry Dillion quote says it all "it just doesn't look profitable and is not worth our time" .... everything has to be about making money not about the advancement of clean energy and our future of sustainablity ......... this corporate/industrialist for profit only way to look at the world is at our peril

Add Your Comments

To add your comments you must sign-in or create a free account.

Meg Cichon

As associate editor of RenewableEnergyWorld.com, I coordinate and edit feature stories, contributed articles, news stories, opinion pieces and blogs. I also research and write content for RenewableEnergyWorld.com and REW magazine. I manage...