A solar-panel glut could be a golden opportunity
There have been several reports in recent days (here’s one) about an impending massive oversupply in the solar panel industry. This of course is exactly what the fledgling panel industry, the photovoltaic wafer designers, foundries, and the equipment industry—especially Applied Materials, which has benefited from the solar build-out while the IC business has been terrible—don’t need. Nor is it good news for the chip companies who were planning to make some money in smart power by tagging along on the solar build-out.
The situation does have all the earmarks, though, of a typical venture-capital-led market fiasco. Once again, it appears, fund managers have rushed to fund just about anything with the word "solar" in it, never stopping to look at the total available market or the already-funded capacity. Tragedy of the commons, indeed.
But this doesn’t have to end in tragedy. Massive overcapacity in cells and panel assemblies could be just the opportunity the Obama administration is supposedly looking for to inject stimulus dollars and get an immediate, multiplier-effect return. A tiny—compared to, say, bailing out General Motors for another six months—injection of capital and incentives could stimulate enough panel demand among residence and small-business owners to pull that surplus through the channel. The results would be manifold.
To begin with, the majority of smaller, and therefore marginal, cell and panel suppliers would survive long enough to live or die by their technology and efficiency, rather than being doomed by the stupidity of the investment community. This competition would be good for the development of an efficient technology and an efficient channel. Secondly, creating end-user demand to soak up the supply would create a substantial number of semi-skilled jobs for installers. So instead of further loss of skilled workers, we’d get increased employment of harder-to-employ workers in damaged areas like construction.
Third, maybe less obviously, a surge in panel installation would put pressure on the electric utilities to deal with the serious issues that the proliferation of panels creates for them: load-factor problems, having the grid source power instead of consuming it during warm summer days, house-by-house energy management instead of simple consumption metering, and so on. This pressure would accelerate the demand for real smart-power solutions, and the conversion of the US electrical grid from its current 1940s configuration to something a little more in keeping with our current needs.
Finally, subsidized panels on homes and small businesses would create a modest positive cash flow—by reducing electric bills—in the places where it’s needed most: into the pockets of the people who are struggling with mortgages, credit-card debt, and commercial loans, and with their struggles virtually preventing a recovery. And if the subsidy happened to overshoot current supply by a little bit and actually accelerate the deployment of panels, it might preserve demand for the hugely-expensive manufacturing equipment too.
Not a bad scenario, all told. But it would require relatively quick action by a Congress that is not known for such. Of course, action as quick as the move the Congress made to approve its Cash for Clunkers version of a Keystone Cops comedy would do just fine.
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