China and Local Installers — the Big Winners in the Solar and Wind Energy Price Wars
Reports from the clean energy industry show China has surpassed the U.S. in market share and pricing for PV solar panels and wind turbines, while offering comparable quality and reliability. The consequence of this recent Chinese dominance has caused the demise of companies like Solyndra and Evergreen, the most visible examples of bankruptcies in the pipeline for U. S. manufacturers. And these sales difficulties have occurred despite federal tax incentives and rebates from many utilities still being in place, such as NVEnergy’s (Nevada) Solar, Wind & Hydro Generations programs.
Some short-term good news from both the solar and wind associations, SEIA and AWEA, come from reports of 70+% growth in installations Q2 2011 over 2010, as well as year over year. The same good news applies to clean energy job growth 2010 over 2009. However, both associations voice real concern over continued growth — in installations and job growth — with the expiration of the 30% Production Tax Credit December 31 and the uncertainty of federal energy policy going forward. But it’s not all bad news for the U.S….
Depending on where you are in the clean energy supply chain — PV panel or wind turbine manufacturer, ancillary capital equipment maker, raw silicon supplier, installer or consumer — your view of this industry (and fate) varies greatly. Recent research from GTM Research indicates that while 70% of the solar panels sold in the U. S. are from China, we still enjoy a net positive trade balance ($1.9B) in solar industry sales due, primarily, to capital equipment and silicon wafer exports to China.
Installers may be the least harmed by the price wars because 50% of the cost of a residential or small business wind or solar system is in installation and permitting, which are unaffected by global competition. Therefore, installers can pass the savings of lower priced solar panels, for example, directly to the consumer. Theses economies can help offset the potential expiration of tax credits and rebate programs.
One such installer is the Clean Energy Center (CEC) in Reno, Nevada. Reno is important as an example because of 1) its abundant natural resources of solar, wind, and geothermal energy for residential and commercial clean energy applications, 2) its availability of vast BLM land tracts, and 3) a supportive community and legislature.
CEC is a great example of the installer end of the supply chain because its business has grown 500% each year for the last two years. This is in stark contrast to many U. S. solar PV or wind turbine manufacturers that are already or soon-to-be out of business.
Something many do not know is that China’s solar and wind manufacturing advantage goes deeper than low labor costs. It subsidizes its energy manufacturers with cheap (or free) land, as well as financing. However, these quasi-capitalistic Chinese companies are in competition with one another, so we can expect to see the 30% price decline over the last year continue to fall. These economics will continue to plague U. S. manufactures, but in the end “consumer is king” in the U.S. and lower (panel and turbine) prices will reshape the U. S. clean energy industry. Examples of this reshaping include the Chinese building manufacturing wind turbine plants in the U. S. (Texas) to offset huge shipping costs and FirstSolar (Arizona) building a PV solar plant in China.
CEC was founded by Rich Hamilton on Earth Day 2008. With fourteen full- and part-time employees, mostly graduate engineers, it provides energy system design, feasibility studies, and installations for wind, solar, and (heat pump) geothermal systems for homes, businesses, and larger commercial operations.
It does not manufacture any of its installed equipment, but has reseller relationships with a variety of both domestic and foreign manufacturers. While CEC is just over 3 years old, founder Hamilton has been in the energy business for many years, having established himself years prior in the wind energy business with his previous company, Great Basin Wind LLC. Privately, Mr. Hamilton revealed that the personal genesis for his desire to promote clean energy stems from an extreme mountain hiking expedition in Bolivia. He returned after ten years only to find the Condoriri glacier severely eroded. This was his “a-ha” moment to do something about global warming and CEC is the business expression of that desire. He shared with me its mission, its “Modus Operandi,” which is “….. the ‘why’ behind what we do, for future generations, prosperity of the planet, and truly helping our customers with the best possible clean energy systems.” Daniel Herr, Director of engineering and operations, explains its success this way: “….. to me success is never just reaching one goal, but securing what has been achieved, while also striving to improve incrementally.”
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