As Earth Day (Sunday, April 22) approaches yet again in the US, it often leads to additional exposure and support for green energy sources such as solar power. This clean form of energy frequently carries the banner of the clean energy movement on Earth Day and other times, but it has taken a serious hit in recent years, as solar module prices continue to decline, many countries discontinue subsidies and many companies consolidate their business or close their doors altogether. Since solar energy is a large piece of the clean energy investment pie, it has dragged down cleantech venture capital as well.
In the first quarter of 2012, financial investment in clean energy was the lowest it has been since 2009, according to Bloomberg New Energy Finance. Their results indicate that investment was down 28 percent from Q4 2011 to just $27 billion. This financial result not only includes venture capital but private equity, public markets and asset finance. Much of the lapse in investment is due to the reduction in incentives and subsidies in Europe including: Spain, Italy, Germany, Poland and the UK. Germany, Italy and Spain have historically been the leaders in clean energy in Europe and especially with respect to the solar market. Moreover, renewable energy incentives in the US have been phasing out as Recovery Act measures expire, many of which supported solar energy.
Clean energy technologies, including solar power, advanced batteries, LED lighting and onshore wind, continue to fall in price and approach competitiveness with conventional sources; however, political momentum, necessary for sustainable growth, enjoyed in the past years has waned, as European and US governments face rising debt woes. This has lessened the attractiveness for many solar power projects at the utility, commercial and residential level.
In the mean time, China continues to dominate clean energy manufacturing, especially in solar modules and has been cited as culpable in the oversupply in the market and dramatically falling profitability across the industry, which has been driving many US and European companies out of business. As a result, there has been a shift of green job creation in these countries from higher-paying R&D and manufacturing to lower-paying service, temporary construction, sales and installer-type jobs, amid high unemployment rates and declining wages across the board. Much of this predicament is a result of the lack of a well-designed comprehensive energy policy in the US and in other countries. Piecemeal, short-term and shortsighted legislation often crumbles when faced with tackling major priorities.
This dilemma has degraded and devalued many top US companies in the solar industry. A severe cost-cutting exercise and manufacturing realignment is underway at First Solar, headquartered in Tempe, Arizona, as it plans to eliminate 30 percent of its workforce, permanently close its German manufacturing operations and idle four lines at its facilities in Malaysia. Earlier this year, it announced it was freezing the tooling of its new manufacturing site in the Phoenix, Arizona area (Mesa), which was expected to create approximately a 1000 jobs.
Similarly, SunPower, headquartered in Richmond, CA, is pursuing additional manufacturing cost reductions above and beyond its original plan announced this past year, all of which has refrained from major hiring in the US. This company has decided to stop using its Fab 1 facility in the Philippines and will consolidate production at its Fab 1 plant in the Philippines and its newer facility, Fab 3 in Malaysia, operated as a joint venture with AU Optronics.
Clean energy was the mantra of President Obama when he took office in 2009 and was promised to help rebuild the US economy and create millions of jobs in the process. Now it is being portrayed as a drain, as it has been mischaracterized, with respect to carbon emissions regulations and costs, and improperly implemented and executed at many levels including the Solyndra solar scandal.
Earth Day offers the chance for deep introspection on the future of clean energy in the US and especially for its flagship energy source, solar power.
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