The high-profile collapse of Fremont solar-panel manufacturer Solyndra has eroded political support in recent weeks for green-energy investment in the United States. Even the installation sector, poised to expand immensely in the coming years as solar panel prices fall, is taking a hit. Late last week, San Mateo-based SolarCity announced that the Department of Energy would not be able to finalize a promised $275 million loan by its September 30 deadline due to Congress’ investigation of Solyndra. The loan would have allowed SolarCity to install rooftop solar systems on 160,000 military family homes, doubling the total number of residential solar installations in the country and representing the largest residential solar project in US history.
According to Solar Energy Industries Association Vice President Tom Kimbis, any retreat from public funding of the country’s burgeoning solar industry represents a grave mistake. “From the standpoint of the government, they should be looking to invest in a portfolio of technologies,” he said. “I think there’s still an important role for the government to play in longer-term, high-risk R&D.”
But the government’s part in helping clean-energy companies get off the ground is now in doubt. Solyndra, the US Department of Energy, and the private investors who contributed more than $1 billion to the development of Solyndra’s unique design were all caught flat-footed by a 70-percent decline in the price of silicon between mid-2008 and today. And now the fallout from Solyndra’s failure is sending ripples throughout the industry that a month ago would’ve seemed impossible. We’re left to wonder if US companies’ ability to innovate will be enough to allow them to survive.
Despite the challenges, there’s much to be optimistic about. While China has increased its market share of worldwide solar-cell production from 6 percent to 54 percent in just six years, the US solar manufacturing sector is also growing at a considerable, if more manageable, pace. It has added about 9,000 jobs — a 36 percent increase — in the past year, according to nonprofit industry advocate The Solar Foundation. And between 2010 and the end of 2011, 27 new solar manufacturing facilities began or will begin operations in the United States, according to the Solar Energy Industries Association. The organization also reports that domestic photovoltaic module production at the start of the year was 31 percent higher it was than at the start of 2010.
While the United States may never be able to match China’s massive government subsidies and cheap labor, it does hold other advantages. Not only are many American solar module manufacturers cost-competitive with foreign operations, they’re often cleaner; lax environmental regulations allowed a solar-panel manufacturer in eastern China to emit high levels of fluoride in a nearby river before local villagers succeeded in getting the plant closed last week.
Domestic operations’ greatest strength may be in developing solutions to industry-wide challenges. According to Kimbis, as the US solar industry matures, many foreign companies are locating here in order to be closer to centers of innovation. While the heavy lifting of large-scale manufacturing may well occur elsewhere, he said, homegrown ideas are likely to lead the evolving global solar market. “American innovation will continue, and the strength of the United States in the solar market is in innovation,” he said.
This has already been borne out by Bay Area companies including SolarCity and Oakland’s Sungevity. Both installers of residential rooftop solar have devised solar-leasing programs that eliminate the often prohibitive up-front cost of new systems.
According to Sungevity founder Danny Kennedy, 60 percent of its customers save 10 to 15 percent on their monthly electricity bills from day one, including the cost of the lease. Kennedy said he believes the company’s financing model holds more promise to support the spread of rooftop solar than does any radical hardware redesign such as that offered by Solyndra.
Yet US companies have an important place in driving hardware innovation, too. One of Solyndra’s former neighbors in Fremont, silicon-panel manufacturer Solaria, is taking advantage of the dip in silicon prices and its patented high-efficiency design to aggressively expand and hire new staff, including dozens of laid-off Solyndra workers. The company formerly imported its panels from India, but built a new plant in Fremont earlier this year and is planning to add another in California as early as next year.
“Right now the smart money is looking a little bit less at totally new materials and a little bit more at what you can do in the silicon realm,” said spokesman David Hochschild. Solaria’s contribution to the field is pairing solar cells with lenses that magnify the sun’s energy and reduce the use of silicon by half. This both increases efficiency and reduces the cost of the panels.
But there’s still room for improvement, Hochschild said. “I think there’s a lot more cost to be taken out of the cost of silicon solar panels. … The wafer is going to get thinner, the cell is getting smaller.”
While Solaria itself has benefitted largely from private investment, Hochschild agreed that government support will be critical to helping the United States achieve those aims and maintain its place as a global solar leader. “What I’d like to see going forward is a focus from the Department of Energy on the technologies that are actually driving the market today — how do we make them cheaper, better, faster, and more robust,” he said.
For now, however, government support likely will not be renewed any time soon as the Solyndra bankruptcy reverberates. House Republicans on Friday threatened to shut down the federal government unless Democrats agreed to slash funding for renewable energy projects in exchange for additional disaster-relief funds. The crisis was later averted, but the message was clear.