Solar Energy Evolution: Death and Transfiguration

The publication last week of the IPPC’s “Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Adaptation” brings home yet more evidence of the profound physical changes to our planet caused by man-made climate change: increase in the frequency of hot days, longer and more intense droughts, more heavy precipitation and increased wind speeds of tropical storms. The idea of the report is to get policymakers on the climate change adaptation page.

And in terms of actual GHG emissions, the news is no better. The amount of greenhouse gases in the atmosphere reached a new high in 2010 since pre-industrial time and the rate of increase has accelerated, according to the World Meteorological Organization’s Greenhouse Gas Bulletin, released today. It focussed special attention on rising nitrous oxide concentrations.

The International Energy Agency also published last week in World Energy Report 2011 a stark warning that unless we invest in cleaner energy technology, temperature rise from climate change could be economically disastrous. “Delaying action is a false economy: for every $1 of investment in cleaner technology that is avoided in the power sector before 2020, an additional $4.30 would need to be spent after 2020 to compensate for the increased emissions.”

This raises the obvious question about mitigation: Where do we stand today in deploying non-GHG-making energy sources? How is solar energy faring?

A number of recent articles point to the fact that solar energy is going through a death and transfiguration phase, to borrow an image from Richard Strauss.

Richard Blackwell from the Globe and Mail wrote a rather dismal assessment of solar collector manufacturing companies in Ontario where policy uncertainties at the federal and provincial levels lead inevitably to customer nervousness. He shows that over the last year, a number of Ontario-based companies like Arise Technologies, or ATS Automation Tooling Systems are facing bankruptcy or closing plants. He blames the industry downturn on falling prices, over-capacity and intense competition. He also claims that there is a weak market, but others disagree.

Nobel economist and New York Times columnist Paul Krugman takes on a more global perspective and is firmly convinced that solar is much more promising than appears to be the case. For him, companies like Solyndra went under because they could not keep up with the competition and the dramatic drop in the global price of solar panels. The cost of electricity produced by photovoltaic cells has gone down by 7% percent a year in real terms. And “ if this downward trend continues — and if anything it seems to be accelerating — we’re just a few years from the point at which electricity from solar panels becomes cheaper than electricity generated by burning coal.”

The source of this competition is China. According to Keith Bradsher of the New York Times, the country accounts for three fifths the world’s solar panel production. 95% of that is exported, much of it to the United States. Given China’s government-controlled economy, US solar panel manufacturers see their Chinese competitors as benefiting unfairly from government subsidies. And so it’s not surprising that the US Department of Commerce at the request of these manufacturers opened an investigation into “dumping” charges. The Chinese are accused of selling solar panels in the United States at prices lower than the cost of making and distributing them.

The Chinese cleantech industry responded to these charges vigorously which was to be expected. But surprisingly, a new American trade group representing buyers and installers of solar energy systems argued that “any new Commerce Department restriction on Chinese solar panels would slow the adoption of clean energy technology in the United States and could cost thousands of American jobs. Environmentalists also tend to oppose policies that might slow the adoption of solar energy.”

So here it is again, the age-old process of the introduction of a new technology and the death and transfiguration of a global industry.