Commentary: Solar Energy Steers Its Future By Reflecting On The Past

Toward the end of last year, the Toledo Blade ran this piece detailing what a “failure” the solar industry had been in creating jobs in its area. Instead of focusing on the successful companies in the area (you can look here for the grouping of solar companies — many of them manufacturing — around Toledo), they focused on a handful of companies that have either closed their doors or are in holding patterns.

You may ask yourself why a paper that covers an area that includes First Solar, one of the most successful manufacturers of thin-film solar panels (and employer of more than 1,200 Toledo-area residents at their manufacturing plant in Perrysburg, Ohio), would attack an industry so vital to reviving the area’s manufacturing base. Toledo is, at its heart, a manufacturing town. The economic struggles of northern Ohio have been well documented, and we believe solar can offer it a way back to prominence.

Fortunately, the industry has its defenders inside and outside of the industry, including John Colm, president & executive director of  WIRE-Net, a not-for-profit advocacy group that represents hundreds of manufacturers in Ohio, many of which produce components for the solar industry. Colm wrote an Op-Ed piece that appeared in the Blade shortly after the New Year, countering the arguments in the original article.

It’s this kind of fight we as an industry can’t be afraid to join. We’d like to thank Mr. Colm for defending us in the face of unfair criticism — and we urge our users to do the same in their communities.

Here is Colm’s Op-Ed, reprinted in full.

John Colm, president & executive director of  WIRE-Net

John Colm, president & executive director of WIRE-Net

By John Colm

Looking back on the state of solar energy in Ohio, one might perceive the industry as an overfunded passing fancy. Since 2008, the state of Ohio has extended tax breaks, grants and loans to a host of solar entrepreneurs and businesses, only to watch as many of those businesses failed to produce the jobs, sales or potential that they had projected. It’s easy to react to this news by tagging the industry as a short-term fly-by-night sham.

But let’s go back to the early 1900s, when a budding auto industry attracted scores of inventors, developers and manufacturers, all vying for a piece of an emerging market. In its infant years, the automobile industry saw literally hundreds of businesses spring up around the country, rolling out new technology and innovative designs to capture the attention and imagination of a huge mass market that saw the potential in horseless transportation.

It was only through natural attrition that most of these early entrepreneurs eventually shut their doors, for reasons ranging from bankruptcy or mergers to technical obsolescence and phase outs.

(You can find a complete list of defunct U.S. automobile manufacturers on Wikipedia.)

In doing so, entire technologies, such as steamers and early electric autos, vanished. But that didn’t mean cars were a bad bet for the future. Early consumers didn’t revert back to horse and buggy transport because the Stanley and Duryea and Ajax companies ceased to exist.

Fast-forward a century or so and a similar picture of the solar energy industry emerges. A burgeoning industry that is racing to advance a variety of fast-developing technologies, all designed to result in products that generate clean, efficient power while being simpler to produce and easier to afford. Because that’s what a huge mass market that envisions cheap, reliable, clean domestic energy, is demanding.

The solar energy industry is presently going through the same early-stage development years as the auto industry of 1906. But the barriers to market success are a little different than when those early automotive pioneers were around. U.S. manufacturers in the solar sector are battling a number of constraints that have contributed to corporate attrition, in addition to technology challenges.

First, in 2008 when Ohio manufacturers were gearing up to produce solar power systems on a mass production level, no one foresaw the collapse of the U.S. economy, which, as we know, affected a lot more than this infant industry. Start-up solar manufacturers were hit just as hard as other businesses, and the recession led to staff reductions, a sharp drop in market demand and eventually, closed doors.

And if that weren’t enough, the Chinese stepped in and caused a seismic change in the marketplace that no one predicted. It’s well documented that the highly subsidized Chinese solar panel manufacturers, whose overcapacity forced them to dump their panels in the United States and beyond, disrupted domestic production and fueled an outcry to legislators from U.S. manufacturers to enact policy that would level the playing field and stimulate competition.

(SPW Editor’s Note: Based on our understanding of the current trade dispute with the Chinese and our extensive conversations with partisans on both sides, we don’t believe the case is as cut-and-dried as Colm states here.)

U.S. policy makers responded with public dollars because they too realized the potential for solar energy and foresaw the marketplace demand for solar products.

Those public funds were intended to encourage development of new technology that would make solar panels easier to be mass produced, which would elevate the technology to a commercialization level. Solar developers used those dollars to work through the high-risk “Valley of Death” product development cycle, which generally tends to swallow up dollars very rapidly.

Now we’re approaching 2014, and there’s been a natural shake-out in the solar sector. The remaining businesses in the industry are using much more targeted strategies, not to develop the technology, but to deploy the technology. It’s not taking as many resources to figure out the next generation of solar panels. Manufacturers now are fervently trying to beat the pricing challenges.

But all that said, the fact is that the market for solar energy has never been better. According to the Solar Energy Industries Association, prices of solar panels have fallen 60% since 2011, and the average price of an installed solar project has dropped 30%.

From a business standpoint, solar (and other renewable energy sources) is fast attracting the attention of bellwether businesses around the country. Google, Bank of America, Merrill Lynch and others have invested billions in the financing of solar energy installations nationwide. Wal-Mart currently is the largest corporate consumer of solar energy, with a reported 89 MW of capacity derived from its  own rooftops, or enough electricity to power 22,250 U.S. homes. (“When we find something that works — like solar — we go big with it,” the company’s website says.)

(Editor’s Note: SEIA has done an effective job of addressing the issue of corporate solar use, as a Google Hangout they did last year — in which our Editorial Director Frank Andorka participated — shows. Hear the Wal-Mart story from a company executive herself.)

The residential market continues its rapid growth as well. Through the third quarter of 2013, residential solar installations were up a whopping 45% year-over-year, driven largely by increasingly attractive economics, federal tax credits and a growing market demand for renewable energy.

(Editor’s Note: We would add the rapid expansion of zero-down solar leasing is also moving the industry forward in the residential sector.)

All told, U.S. homes and businesses together had enough solar panels at the end of the second quarter to produce 5.1 GW of electricity, up 46 percent from a year earlier.

Clearly, solar energy is an industry that is not going away. It’s important that Ohio keeps investing in that future and that Ohioans focus more on the potential of this rich energy source and less on which particular businesses will prevail from it.

John Colm is president and executive director of WIRE-Net, a non-profit economic development organization made up of hundreds of manufacturers throughout Ohio. Colm can be reached via email at jcolm@wire-net.org or by phone at 216-588-1445. 

 

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