The U.S. solar industry closed its first quarter on March 31. So where does the U.S. industry stand at the quarter pole of 2015? Here are three trends we’re watching:
1. The pending expiration of the investment tax credit (ITC) in 2016 is the top issue facing the industry.
During the financial crisis in late 2008, Congress passed an eight-year extension of the ITC. For the past few years the Solar Energy Industries Association (SEIA) has been working behind the scenes to get an extension of the ITC. Now, with the expiration deadline only 18 months away, the issue is becoming extremely serious. President Obama recently called for a permanent extension, and SEIA is pressing Congress to follow that direction.
But this will not happen without a full-court press by everyone involved in the solar industry, from installers and manufacturers to consumers and local governments. It’s not as if we don’t have heavyweights on our side. Wal-Mart, GM, Apple, IKEA — four of the leading corporations in the country are also the leading corporations for installed solar in the country.
It’s an all-hands-on-deck moment here, people. If you care at all about the solar industry at all, get involved. It’s critical to everyone’s future.
2. Thought you’d heard the last of the trade actions? Think again.
Sigh. The company that has single-handedly tried to divide and destroy the U.S. industry is at it again. Despite winning two trade cases — imposing heavy tariffs on its Chinese competitors — the talk in the industry is that they will be bringing another action within the next two years to prohibit the Chinese from manufacturing panels in Malaysia, which is where many Chinese companies are making their panels to avoid the tariffs.
The United States now has the highest costs for solar panels in the industrial world! Every time I think of how these trade cases are harming this wonderful industry, it makes my blood boil. Is the company really planning to chase the Chinese around the globe to limit their ability to compete in the U.S. panel market? Doesn’t it have better things to do? Like maybe developing better panels and streamlining production processes?
And it’s not as if these tariffs are having any real effect on the Chinese in global markets. Apple recently announced its support for two large-scale solar projects in China, totaling 41 MW. It pales a bit in comparison to the 41 MW per day the Chinese are installing, but it’s obvious Chinese panel manufacturers have plenty of work outside the United States to keep them in business.
If we keep beating up the Chinese panel manufacturers, they may decide the United States is no longer a viable market. They could pull back their exports of inexpensive panels (part of the reason solar is more cost-competitive with fossil fuels now than ever before). Prices of projects could go up considerably, leading to a significant slowing of the industry’s growth.
If you want competition, let’s have competition. If you want protectionism, get out of the U.S. market. We don’t need you here.
3. Consolidation is coming — and that’s a great thing.
GTM Research has consistently reported over the past three years that consolidation will take place in the solar manufacturing industry globally. And it is happening, though at a slower pace than many had hoped.
I say “hoped” because consolidation would absolutely demonstrate that solar is no longer a niche market. As an industry matures, you typically end up with 10 to 12 manufacturing companies doing 80 percent of the business in the industry. We still have a long way to go, but we are getting there.
Three years ago, the leading panel manufacturer only had 10 percent of the market, so there’s obviously room for improvement. With so many marginal manufacturers in the industry, it dilutes the R&D money, diffuses the energy and mystifies consumers. Consolidation could solve many of those problems.
At the quarter pole of 2015, we believe these are the emerging issues we are facing as an industry. What trends are you seeing? We look forward to your comments.
Lead image: Caution tape. Credit: Shutterstock.