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Things are looking bleak in the solar energy industry. Sales and installations are slowing and government support is waning, leading to an oversupply in solar panels, causing a huge price drop and a wave of losses and bankruptcies in the heavily government-subsidized industry.
In an effort to fight climate change, governments around the world, including state governments in the United States, have subsidized and in some instances mandated the use of solar power. Voter complaints have risen along with the rise in ratepayers’ energy bills as high-cost, low-reliability solar power has been forced onto the grid. Politicians have started to respond by reining back their support.
In the United States, for example, Iowa declined to continue the state’s 1.5-cent-per-kilowatt-hour solar power tax credit and Indiana ended its net metering program, under which homeowners who installed solar panels on their home are paid retail instead of wholesale rates for the power they sell back to the grid.
The biggest decline in support for the solar industry came, however, from China, which scaled back its domestic solar power targets, flooding the export market with relatively inexpensive solar panels.
The sharp price decline has put industry leaders into a tail spin. SolarWorld, once Europe’s largest solar equipment provider, announced on May 10 it was following its former rivals, Q-Cells, Solon, and Conergy, into insolvency. This was not SolarWorld’s first flirtation with bankruptcy, having been forced to restructure in 2013 when the government of Qatar bailed out the company by taking 29 percent ownership of it. In the United States in mid-April, Georgia-based solar panel manufacturer Suniva, which claims to be the “leading American manufacturer of high-efficiency, cost-competitive PV solar cells and modules,” after having lost millions of dollars in recent years, followed rival manufacturers Verengo Solar and Sungevity in filing for bankruptcy.
Interestingly, Suniva is majority-owned by a Chinese company, Shunfeng International Clean Energy, yet it filed a trade case with the International Trade Commission asking it to increase the tariffs imposed on and set minimum prices for solar modules imported from China.
U.S. leaders in the sales and installation of roof-top solar panels, SunPower and SolarCity, have not been immune from the downturn in the industry. In early May SunPower reported its sixth consecutive period of quarterly losses and laid off 25 percent of its workers. Tesla-backed SolarCity, accounting for 41 percent of the solar installation market, reported a 39 percent decline in installations year over year for the first quarter.
Could energy and business realities finally be “Trumping” climate fears?