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Salt Lake City, UT -- 2012 was a big year for solar, both domestically and globally, with some unlikely players throwing their hats into the ring and upping the ante on achievable power generating capacity. Here's a wrap-up of some of the year's most impactful events in the solar industry, with a little added perspective from some experts in the field.
Financial Innovation and Collaboration Takes the Solar Cake
If you ask Tom Kimbis what he thinks was one of the most important developments of 2012 for solar energy, he may tell you something you didn’t quite expect to hear. Kimbis, VP of External Affairs for the Solar Energy Industries Association (SEIA), says that much of the credit for what’s being seen as a landmark year for downstream solar growth belongs not to technical innovations, but financial innovations — the kind that are making it increasingly possible for people everywhere to be able to afford solar without having to take out a second mortgage on their homes.
“Innovation can take place throughout the entire value chain,” Kimbis said. “We’ve seen phenomenal innovation with the various leasing and third party ownership models that have driven the markets in the U.S. forward more than the increase in cell efficiency.”
According to the U.S. Solar Market Insight Report, which was released by SEIA and GTM Research, 2012 has seen total installed solar capacity in the United States reach 1,992 MW. This far exceeds the annual total capacity reached in 2011, which was 1,885 MW — a not inconsiderable accomplishment, considering that 2012 isn’t even over yet. There were 684 MW of solar capacity installation in the third quarter of 2012 alone, and in that same time frame the residential PV sector installed over 118 MW of capacity.
Kimbis credits the biggest quarterly growth yet for U.S. residential PV to an increase in third party solar leasing options for consumers, which he likens to financial options that car buyers have — where instead of having to pay cash, leasing or financing options help make ownership a possibility. “Overcoming that first cost issue is what the third party ownership’s all about,” Kimbis said.
Upstream financial collaborations also led to the green lighting of numerous global projects in 2012, including the Letsatsi and Lesedi solar farms in South Africa. Both were made possible by dollars from U.S. developer SolarReserve and two local companies, Intikon Energy and Kensani Capital. In Peru, OPIC came together with Latin America’s development bank CAF and investment firm Conduit Capital Partners for the funding of two solar projects that will result in a combined solar capacity of 40 MW.
Oversupply Goes Up, PV Cost Goes Down
Despite a boom in solar demand in the United States in 2012 and a growth rate which SEIA estimates will be at about 70 percent over last year (compared to 14 percent global market growth), the reality of global PV panel oversupply remains an issue of concern.
In 2012, that oversupply led to a showdown between Chinese solar manufacturers and the United States Department of Commerce. Chinese manufacturers were accused of dumping their oversupply into the U.S. market at such low prices that they injured the ability of US-based solar manufacturers to compete fairly. This ultimately led to a decision by the International Trade Administration to levy tariffs to levy tariffs on the importation of solar modules using cells manufactured in China. In the final ruling, it was announced that the tariffs would range from 24 percent to 36 percent.
Alas, the old adage about every cloud having a silver lining may be very true, especially if you look at it from a global perspective. In 2012, oversupply led to low cost, which in turn drove an increased global expansion in development among wealthy and developing nations alike, all eager to capitalize on the low cost of materials.
Marc Norman, lawyer for Chadbourne & Parke LLP and director of the Emirates Solar Industry Association (ESIA), called this a possible case of “creative destruction” that’s given developing countries an opportunity to enter the solar game.
Norman said that the low cost of solar PV could enable developing countries in particular to benefit from solar technology without even being connected to the power grid. “Solar technology can be applied off-grid,” Norman said. “For example, in rural areas where there’s a lack of infrastructure. There’s a golden opportunity for more bottom-up market evolution, as opposed to a more traditional top-down approach.”
Kimbis agrees, noting the inherent irony: “Falling pricing is a double edged sword. It’s great for deployment, it’s great for the consumer, and it’s caused greater amounts of solar installation. On the other hand, falling prices have yielded smaller margins for manufacturers, making it tougher to survive in a very competitive climate.”
Industry Jobs and Widespread Bankruptcies
In the United States, 2012 showed evidence that growth in the solar industry occurred at a much faster rate than other industries. According to The Solar Foundation’s National Solar Jobs Census report, U.S. employment in the solar industry grew at a rate of 13.2 percent and the sector added 13,872 jobs in 2012, while Bureau of Labor statistics indicated that solar accounted for 1 out of every 230 jobs created.
This information may seem to fly in the face of the numerous solar company bankruptcies and consolidations that have taken place globally in the last year, but according to Kimbis, that’s par for the course in an emerging industry.
“It’s just like any other industry,” Kimbis said. “Competition is extreme. This is something that the industry has known about for awhile; companies have been bracing for global competition for the last several years. It’s a story which has repeated itself through everything from personal computing, to telecom, to the automobile industry.”