Cloudy Days for American Solar
Air Date: Week of September 16, 2011
Two solar companies, backed by the federal government for more than half a billion dollars, have folded. But that didn’t stop the Department of Energy from announcing their support for a new, ambitious solar installation program. Host Bruce Gellerman asks Greentech Media solar analyst MJ Shiao if solar is still a smart investment. Photo: President Obama points to Solyndra’s cylindrical solar panel during a visit last year. (Flickr cc/jurvetson)
GELLERMAN: From the Jennifer and Ted Stanley Studios in Somerville Mass, this is
Living on Earth. I'm Bruce Gellerman. Last year, President Obama traveled to Silicon
Valley, hoping to hitch the nation’s energy future to our nearest star -- the sun. The
president was in California to champion a startup company called "Solyndra." That, with
the help of more than half a billion dollars in federal loan guarantees, was producing a
new kind of solar panel.
OBAMA: You're demonstrating that the promise of clean energy isn't just an article of
faith, not any more. It's not some abstract possibility for science fiction movies, or the
distant future - 10 years down the road or 20 years down the road - it's happening right
GELLERMAN: That was then, but the sun has since set on Solyndra. The company went
belly up. 1,100 workers lost their jobs, and FBI agents went in like gangbusters,
searching Solyndra for evidence of wrongdoing. Now, Congress is investigating whether
the federal loan guarantees to the company should have been made at all. Here’s Florida
Republican Cliff Stearns:
STEARNS: It should not take a financial restructuring, bankruptcy, an FBI raid for my
colleagues on the other side of the aisle to put politics aside and join us in our efforts.
GELLERMAN: The solar industry is under a dark cloud these days. Because, besides
Solyndra, Massachusetts based Evergreen Solar - which also received large government
support - filed bankruptcy. So did privately held SpectraWatt, financed by Intel. But
market analyst MJ Shiao of Greentech Media, says there’s a lot more to the solar story.
SHIAO: Well, certainly when you just take the three of them by themselves, it doesn't
paint a pretty picture for the US manufacturing landscape. And there’s a lot more
manufacturers in the US who are competitive right now, who are producing solar
modules, and even the raw materials for solar modules, and all of the supporting
components and hardware for solar systems that we need. So, the industry is much
greater than just these three companies.
GELLERMAN: But Solyndra was the big boy on the block, and together, I guess,
Solyndra and Evergreen produced, about what? 20 percent of the US production?
SHAIO: Most of that was actually Evergreen. That void will certainly be filled. It
might be filled by foreign manufacturers, but, it’s important to keep in mind that just
because Solyndra and Evergreen and SpectraWatt have failed, doesn’t mean that US
manufacturing is necessarily doomed.
GELLERMAN: President Obama was a great champion of solar electricity, and
specifically, this company Solyndra.
President Obama addresses the Solyndra California Solar Plant (embed):
GELLERMAN: Does he bear some of the responsibility for, you know, boosting it
and now we find out that, you know, the FBI is raiding their offices to see if there was
SHAIO: I absolutely say that his Administration, particular the DOE loan guarantee
program itself, does have some questions that need to be answered. You know, what kind
of due diligence was put in place? Why did they make this investment in the first place?
That being said, you can’t just say that: OK, this loan guarantee program has completely
failed, just because Solyndra has failed.
It is just a small part of the portfolio. It’s only about three percent of the entire solar
portfolio - this loan program - and that’s not including investments into other advanced
technologies like electric vehicles, batteries, and other technologies.
GELLERMAN: Now there’s news about another company called Solar City, and they’re
going to install more solar - I guess, they're gonna double the amount of installed solar
panels in the United States in just the next few years!
SHAIO: (LAUGHS). So they say anyway.
GELLERMAN: They have a Department of Defense contract. And they’ve got subsidy
from the Department of Energy. The Department of Energy is going to put these solar
cells on the roofs of houses on their base.
SHAIO: Yep, exactly. And, Solar City has been one of the pioneers of a very interesting
movement in the US solar industry which is where these companies are actually offering
solar leases. So, there is no up front cost to the residential homeowner, they instead,
they just simply pay a lease payment, or they pay an electricity bill to the company that
installed the solar.
GELLERMAN: So, Solar City installs it on a house on a military base. And then, they
get the electricity and they sell it back to the customer- the customer doesn’t have to pay
for the panel.
SHAIO: Exactly. So, Solar City is able to take advantage of a lot of the tax benefits,
the government subsidies, or local subsidies for solar in that area, but the residential
homeowner doesn’t have to put up any upfront costs for the system.
Solyndra specialized in cylindrical photovoltaic panels. The innovation, intended to absorb more light from more angles proved unsuccessful. (embed):
GELLERMAN: Do you ever see the day when solar can exist without subsidies?
SHAIO: So, that’s a really interesting question. So, this is actually, in the industry, we
call grid parity - when will solar reach grid parity? But suffice it to say, right now, we
don’t have to worry about that until about 2016, because that’s when the current major
solar incentives expire federally.
Another point is that other forms of energy generation receive very generous subsidies as
well. So, to say that renewables - solar, wind and other renewables - need to reach this
quote-unquote grid parity point where they’re no longer subsidized, is a bit of an unfair
GELLERMAN: Can the United States compete as a producer of solar panels? I mean,
China can produce them so much more cheaply than we can.
SHAIO: Mm hmm. I think the US can. I have to caveat with saying that, you can’t beat
China at its own game. These Chinese companies, they have access to cheap capitol,
access to cheap labor. They have better access to the supply chain for solar. So, it’s
incumbent upon US manufacturing companies to really innovate, and especially innovate
towards a low cost manufacturing.
I bring up First Solar which is one of the largest solar module producers in the world, and
it has facilities in the US that are on par with Chinese companies, because it has taken
such great lengths to innovate towards low cost manufacturing.
GELLERMAN: So, MJ Shiao as an analyst of solar markets for Green Tech Media, what
do you tell investors who just say, ‘Well, you know, I’m really interested in solar’- what
do you tell them?
SHAIO: I think the long-term picture for solar is strong. Investing in solar as a very
broad industry is going to be a winner. However, there are going to be many companies
that do fail. So there is going to be a lot of growing pains, and there are going to be a lot
of companies as a result that won’t make it.
GELLERMAN: Well, MJ Shiao, thank you so very much for coming in.
SHAIO: Alright, thank you.
GELLERMAN: MJ Shiao is an analyst for solar markets for Green Tech Media.
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