Exciting week at Intersolar North America, and a lecture

Navigant’s Paula Mints reviews last week’s Intersolar North America, a solar conference which has come into its own, and has some harsh words about domestic support for solar — and why China’s a role model now.

July 19, 2011 – 2011 is the year that Intersolar North America came into its own as a premier US conference, and it looks to be up to the challenge of competing with Solar Power International. The sessions were solid, the exhibits were much improved, and the side events were well-attended and fun — ample opportunities to network, and enough parties to satisfy and exhaust all partygoers. Sure, there was the usual hype, some misinformation and enough effusive enthusiasm to power a balloon ride over Napa Valley. But these large conferences allow the solar industry to come together in one mass, enjoying hard one success and a bit of gossip and hope for tomorrow.

This hope is certainly necessary, considering recent news. A US House of Representatives panel has voted to subpoena White House documents related to a $535-million federal loan guarantee for Bay Area CIGS manufacturer Solyndra, and that the federal government may limit use of solar on public lands. The reality is that solar continues to fight for every kilowatt that is installed and the struggle is not over.

On the good news front: California’s PACE program, which allows homeowners to roll the cost of their system onto their property tax bills, just may have a second life. A bill shortly to be introduced in the California legislature just might reinvigorate this necessary financing tool for potential residential system homeowners. Financing remains one of the key roadblocks to system ownership.

Now the lecture

Manufacturers from China are now the leading (literally, the most) suppliers of solar technology globally. There has always been significant outsourcing (and rebranding) in the solar industry, and it is a non-secret that most manufacturers buy technology from other manufacturers. So it has been in all widget industries, so it always will be.

Though it is currently out of vogue to point out the significant level of subsidies offered by the Chinese government to its manufacturers, it is nonetheless hazy and difficult to ferret out the truth of fact. Manufacturers in eastern Germany also enjoy subsidies. Bluntly put, if manufacturers in the US were offered anything similar in terms of subsides they would happily take them, and the US would be significantly more competitive.

Domestic content requirements simply do not work. It takes a large market to encourage technology development and manufacturing in a country, and for one good reason — it is expensive to develop this amazing technology. For the solar industry (CSP, CPV and PV) to realize its potential it needs financial commitment (government and private) to the technology and the market. To this end, instead of useless punitive measures, incentives that encourage manufacturing are a much better bet. If you were ever spanked as a child you know that most of the time, you likely did not change your bad behavior — you just got better at hiding it.

China’s solar manufacturing ascendency was no secret. Its manufacturers clearly announced that they were vertically integrating from raw material through to distribution — and take heed, equipment manufacturers, this is the next step. Government-supported vertical integration gave manufacturers in China great strength; aggressive pricing took them the rest of the way. In 2010, 54% of technology was shipped from China and Taiwan, close to 40% by manufacturers in China. In 2011, manufacturers from those two areas will ship even a larger percentage.

Regional shipments as a % of total GW, 1997-2010.

What’s the message here? Frankly, all manufacturers would happily take government assistance in order to increase production, yields, and efficiencies along with lowering manufacturing costs. However, the industry crucially requires investment in both the market and manufacturing. In this regard, China needs to take it to the next level and invest in its market. After all, if the government in China can invest in the longest over-water bridge and the fastest train (both infrastructure investments that improve the lives of its citizens), it can invest in clean solar installations.

And governments everywhere else can step up to create a global, competitive environment for the solar industry.

Paula Mints is principal analyst, PV Services Program, and director in the energy practice at Navigant Consulting. E-mail: pmints@navigantconsulting.com.


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