SolarTown is just up the street from a local independent sporting goods store, which moved in when this area was just making a comeback from years of neglect. The service is good, the product selection is good and the prices are right. These factors should make the store a fixture in the community, but three months ago, a sporting goods chain moved in just a block away at DC USA, the largest retail complex in Washington, DC. The prices for the chain store may be slightly better, but even more than the prices, the location is much better. The small independent store saw its revenue drop by over a half in three months, and as you can see from the picture at the right, it is now going out of business. Oh, how in just a few months, the fortunes of this small store changed. So has been the effect of the tsunami of Chinese manufacturing on the solar industry. In just a couple of years, the Chinese ramped up production, lowered prices and swamped the US and other markets.
Posts Tagged ‘solar industry’
The loud sucking noise you hear is the sound of solar manufacturing going overseas. If it were not clear before this month, it is now abundantly evident that manufacturing of solar panels that you may want to put on your home in the United States are not going to come from the US anymore. The trend of manufacturing of solar panels in China is only accelerating as the news in the past few weeks has shown. The evidence is plastered on every news release—we surrender and are leaving town fast. BP Solar hammered shut its operations in Maryland. Evergreen Solar filed for bankruptcy. And now Solon is closing its US plant. Solar panels are not like nails or screws, but more akin to refrigerators or dish washers—consumers pay more for quality and features. We still hold that view and will advise our customers to shop wisely and look at various criteria to rate solar modules, and of course one of those is cost, but that should not be the end all. The market, as shown by the flight of solar manufacturing, is going elsewhere. Thinning margins means a commodity market and the Chinese are willing to tough it out in the long to capture the lion’s share of the business. The future for manufacturing of solar panels in the United States is bleak.
An investment analyst calls SolarTown, inquiring about trends in the solar panel market for 2011, particularly the supply of modules. It reminds me of the study I heard about in business school that if you ask 100 of the leading economists whether interest rates will rise or fall, 42% will get it right. You can pay a lot of money for analyst reports, but with the solar energy market expanding rapidly and incentives seemingly changing day to day, it is hard to predict supplies. That has been a challenge for us, especially last year, but we think that we did well by our customers to secure modules at good prices.
I was glad to hear that solar made it into Obama’s speech earlier this week, but solar is finding itself lumped in with some strange bedfellows, nuclear and now even natural gas. How did that happen? Sometimes the story of a product or technology is all in the marketing. The success or failure of a product may depend less on the ultimate merits or utility of a product but more on the consumer’s perceptions of that product. In other words, it depends on what consumers think they see, not what they actually see. To get solar into the mainstream, then, we need to come up with a new branding effort. “New and improved solar” is not going to get us very far, but we need you to weigh in helping the solar industry to adopt a new nomenclature that will attract the masses. Think cheap solar, or eco-solar, or simply superb solar. The one that I like the best is sexy solar as in I just put some sexy solar panels on my roof this week.
Solar Champion Felled by Would-Be Assassin. Like many others, I was riveted by the news over the weekend that Congresswoman Gabrielle Giffords had been shot at close range at a meeting with her constituents. My initial reaction was that this was news you would expect to come from Kabul, not Tucson. But as the news came in, it became clear that the senseless violence commonplace in war zones had invaded the quiet streets of one shopping center in Arizona and almost claimed the life of solar champion Gabrielle Giffords.
These are some of the highlights of the year gone by and an outlook of things to come for 2011. The solar industry has waited to find out what would be the fate of the Treasury Grant program. If you haven’t tuned in for this debate, this development is very good news for the renewable energy industry. The solar industry had another stellar growth year. A recent report predicted that the industry will grow as much as 22% in 2010, when all of the numbers (modules) have been counted. The one gnawing issue is that the solar industry is quickly becoming a Chinese industry, as even today the Chinese own 66% of world production. It was a better year to put home solar panels on your roof than investing in solar stocks. Morningstar says that solar investors “could be in for a rude awakening come 2011.” The biggest change in the industry came with the micro-inverter. Sure, solar panel efficiencies improved, which means more output for the buck, and the price of PV came down, but the biggest change in the industry came with the industry acceptance for residential PV installation of the micro-inverter. Enphase is no doubt the market leader, but there are many, many wanabees and the competition for micro-inverters will heat up in 2011. The other major shift we saw in the industry is that regardless of whether the homeowner gets a micro-inverter, the homeowner almost invariably wants to get monitoring of the solar energy system.
I take no pride in writing this blog post about discount solar panels because no matter how hard we try to persuade our customers to look past cost, by and large, they are not convinced. In the last several months, the single most important criterion for our customers in purchasing home solar panels is price. There are numerous ways to differentiate solar modules. We have even introduced a solar panel comparison to alert you to significant differences in the panels that we sell. Of course, the essential difference is expected output, and you will want to look at efficiency and the PTC rating (PVUsa Test Conditions) to come up with an estimate of what your solar panels will produce over the life of the panels. There are other parameters that you may want to consider, such as size and weight. Aesthetics, that is the look of the panels, is no small matter if you live in a trendy area and your southern facing roof is visible from the street. But as we have been looking at the results from the past several months, we have noticed one unmistakable trend: our customers love low cost panels.
The sea change that occurred yesterday in the elections has the solar industry abuzz in speculation and trepidation. There is much analysis and a lot more guess work at play, but the political developments should focus the mind on what can be done. The first clue is what the lame duck Congress will try to do. We already know that cap and trade is a nonstarter, but some remnants of an energy bill may be pushed forward before the new Congress convenes in January. Many solar industry analysts are watching for a particular piece of legislation known as the Treasury Grant program.
We went to a reception by the Clean Economy Network last night—we had a chance to meet with lawyers and lobbyists, financial analysts, and even a few solar energy installers. We got a good review of industry trends and some of the upcoming challenges from Reed Hundt, CEO of the Coalition for Green Capital and Ethan Zindler, Head of Research at Bloomberg New Energy Finance. There is obviously keen interest in renewable energy these days. Take a look at the news article we posted today on some of the latest optimistic trends in the solar industry. Support for solar energy is up—right across the board, regardless of party affiliation or geography. Some want to reduce the threat of global warming, and some want to create jobs, and still others simply want to do their part to save energy. The solar energy industry is optimistic that the residential PV market will continue to expand. At the reception, despite some of the hopeful signs, there were some long faces in the room.
“The time to embrace a clean energy future is now,” said the President during his talk on the BP oil spill earlier this month. For much of the past year, the nation’s energy policy has played second fiddle to , well, everything else, but primarily health care and most recently financial reform. Deadlines have come and gone, and with the mid-terms elections around the corner, it is hard to see how Obama will pick a rabbit out of the hat and push the energy agenda forward.
What is clear is that as states and local governments are cutting back on their solar energy programs, just at the time when the solar industry needs this support the most. The Maryland program cut its rebate program with only a few days notice. Take a look at our SolarTown news stories to read about some of the states that are throwing their renewable energy programs to the wind in an effort to close budget gaps.