Is Solar Power (Once Again) Really On Its Death Bed?

by Bob Shively, Enerdynamics President and Lead Instructor

To hear some folks talk, solar power is a dying industry.  We’ve seen this story before, they say: Remember the Jimmy Carter administration?  And how Ronald Reagan took the solar panels off the White House?  And after the 1970s how solar was only a demonstration technology for the next 40 years?  To back this argument, they point to numerous bankruptcies and closures of solar manufacturers.  Indeed the Wall Street Journal recently reported that “since August 2011, at least 30 North American and European solar manufacturers have run into trouble, taking more than 2,700 MW of capacity offline.”[1]

But it may be a bit premature to plan on solar’s demise.  A big part of the current difficulties is simply the growing pains of any industry in its infancy.  How many computer manufacturers have come and gone in the last 20 years? And the same Wall Street Journal article referenced above states that even if every North American and European manufacturer of solar panels shut down, there would still be more manufacturing capacity in the world than last year’s worldwide demand of 27,000 MW due to robust manufacturing capabilities in Asia.

The result is severe price competition, which makes it tough for manufacturers but drives down prices for consumers.  Rather than stifling demand, it grows it.  Following is a graph showing how quickly photovoltaic solar costs have fallen:

       Source:  Presentation by U.S. Secretary of Energy Steven Chu[2]

Secretary of Energy Steven Chu, admittedly a supporter of renewables, believes that solar photovoltaics are currently crossing the chasm as described in Geoffry Moore’s popular business book of that exact title, “Crossing the Chasm”:


        Source:  Presentation by Steven Chu previously cited 

But other more hard-nosed businesses are joining the solar bandwagon.  The largest private installer of solar power in the U.S. is none other than Wal-Mart.  The profit-minded retailer expects to have more than 90 MW of solar capacity installed by the end of 2012.  According to Marty Gilbert, Wal-Mart’s Director of Energy: “We are trying to show folks that you can not only pursue these sustainability initiatives, they also make business sense.”[1]

In these times of potential rapid change, no one can predict the future.  But Chu likes to quote the one-time President of Michigan Savings Bank who told Henry Ford’s lawyer that “The horse is here to stay, but the automobile is only a novelty – a fad.”   Only the future will tell us who is right! 


[1] August 16, 2012 in the Overheard column of the Wall Street Journal

[2] Energizing American Competitiveness in Solar Technologies, presented by Steven Chu June 13, 2012 available at: http://www1.eere.energy.gov/solar/pdfs/sssummit2012_plenary_chu.pdf

[3] Bloomberg: Wal-Mart Beats Apple, Ikea in U.S. Solar Installations, available at: http://www.bloomberg.com/news/2012-07-30/wal-mart-beats-apple-ikea-in-u-s-solar-installations.html

About Enerdynamics

Enerdynamics was formed in 1995 to meet the growing demand for timely, dynamic and effective business training in the gas and electric industries. Our comprehensive education programs are focused on teaching you and your employees the business of energy. And because we have a firm grasp of what's happening in our industry on both a national and international scale, we can help you make sense of a world that often makes no sense at all.
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2 Responses to Is Solar Power (Once Again) Really On Its Death Bed?

  1. jody cloud says:

    with the rising costs of energy and the decreasing price to use renewable sources
    we must expand our renewable energy platform..

    LED lighting is a huge energy saving opportunity and this years election will
    be interesting to see what either Barack Obama or Mitt Romney will do to support these
    programs.

  2. I think we are still on the nose end of the industries life cycle. The adoption rate has been slow but I think it is by design. Not enough people understand how easy it is to acquire solar panels and I don’t think they truly understand all the benefits either.

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