A few years ago, the promise of global renewable energy turned many of us, myself included, into Green advocates.
Companies and governments made strong arguments for outfitting urban rooftops and rural fields with solar panels and plopping down wind turbines along hilltops. It was easy to see, too, the environmental evils in coal burning and atom splitting, the latter brought into sharper focus after last year's earthquake and tsunami triggered a nuclear power plant meltdown in Japan.
But, how quickly things change in the face of economic crisis, pullbacks in government subsidies, and stepped up competition from manufacturers in lower-cost regions. In the end, it's all business, and now the greenest promises are running red with losses.
Last week, bad news from Germany sparked a lot of Internet chatter about the health and future of Europe's green energy industry. Particularly, the insolvency filing of Q-Cells SE, once the world’s largest producer of solar panel photovoltaic cells, showed the fragility of the market -- Q-Cells is the fourth major solar-power company bankruptcy in a handful of months to collapse. As a report in Germany's Der Spiegel indicates, Q-Cells' demise "underscores the degree to which German solar firms are being outpaced by competition from Asia -- despite billions in German government subsidies granted each year to the industry," and its inability to effectively wean itself away from government reliance.
It's not just an isolated incident hitting only a few companies in one country. A Global Post story gives a pretty good rundown of all sorts of problems needling the industry, including these:
France’s market leader, Evasol, was reported close to bankruptcy last week, barely a month since the state power company stepped in to rescue Photowatt, another prominent manufacturer of the photovoltaic cells... Denmark’s Vestas, the world’s largest manufacturer of wind turbines, made a loss last year for the first time since 2005. Its market share has dropped from 28 percent in 2007 to just 12.9 percent last year. Four of the top 10 turbine producers are now Chinese, including second place Goldwind.
So was the greenwashing we came to love, and wave emotional (if not political) flags for, all for naught? I don't think so.
Renewable energy is still a good option. It's the economics behind it -- or at least the business models -- that appear not to work well, at least at this point in time. Converting existing utility infrastructure to modern, sustainable systems costs a lot of money. Since governments and countries have to pitch in to offset the cost of massive capex projects, it's no surprise that innovation and projects of this scale get postponed or axed when local authorities are slashing budgets and trying to get spending under control. The companies themselves should also be faulted; the times of honey and manna in the form of government subsidies were never going to be sustainable forever, and many of them seemed to lose sight of international competitors gaining ground in a maturing market.
The question, now, is whether the industry is resilient enough to withstand the market dip and create lean and efficiently operating and supply chain practices to make it worthwhile for everyone down the road?
Prabhakar, Bolaji - I generally agree with this theory for low-cost, commercial tech products, but in this case, we're talking big-time costs and long-term change involving utility companies. In this case, governments had to offer some sort of incentives to get things moving. I think part of the problem is that manufacturers didn't innovate fast enough to develop more efficient products that could be sold cheaper to a broader base of customers; relying on government subsidies was never going to be sustainable.
_hm, Kevin - maybe that's the question: why does it take 40 years to get a payback, and what engineering/technology fixes can be made to make this more economically feasible?
"I think governments believe in nuclear energy much more than they believe in green energy and that's a problem"
@Cryptoman: Nuclear energy is much more efficient than solar or any other green energy and has great economic benefits. The problem here is that the governments are looking only at the short-term economic benefits and not the long term in order to look good in financial terms. Green energy may not be as efficient in the short-term but it will have significant results in the long run.
I agree. I don't think that green energy at the exclusion of fossil fuels, or fossil fuels at the exclusion of green energy, determined solely by regulatory measures. merits good policy on any level. Certainly, the push for green energy solutions has placed market pressure on fossil fuel alternatives for more environentally friendly ways to use fossil fuels, and likewise, fossil fuel economics places pressure on green energy options to find economically viable green energy solutions. Let both compete in the open market. I think that will be the fastest way to produce real, economically and ecologically viable solutions.
Without govenments' support the green energy will never take off. It is not an easy change given that we have been so dependent on fossil fuels and nuclear energy for so long. Switching to green energy will be costly and will take time. Therefore, government support for R&D as well as deployment is a must have.
Governments spend billions of dollars on defence and military each year and that money comes from the taxpayer. This expense is justified and the system works and is very well funded. This is mainly because the people and the government truly believe in how important national security and defence really is. Do we all believe in the necessity of green energy as much as we believe in national security? If the answer is "yes" then that means there is a will. Where there is a will there is a way.
Given the current trends around the world, I think governments believe in nuclear energy much more than they believe in green energy and that's a problem. For most people green energy seems like utopia and nuclear energy is the easy and the cheaper way out it seems.
Interesting post, Jennifer. What do you think are some of the reasons for solar-power companies are going into bankruptcy? Is it because their products have a low demand and limited sales? If it's low demand, is it closely linked with the high price of solar power generation?
If a product is good it will be a winner on its own.
When there are government subsidised projects the entrepreneurship spirit is less and hence the projects don't deliver saleable products.
Now that by and large people have understood the importance of alternate energy generation, they will support the products using such technologies if they see an attractive ROI.
So the challenge is to create alternate energy generation products that homeowners would buy , like they buy a fridge or a washing machine and treat that as a standard and required home accessory.
Jennifer, most of the companies wants to go for greener environmental friendly and to make use of renewable energy sources. But the initial investment costs are burning company's accounts. So government has to come up with suitable financial and subsidiary schemes for companies, inorder to make the initial investment hassle free.
Kevin, Some years back an old head told me the best advertising for a product is the product itself. I have since found out he was right 100 percent. If renewable energy is so good and so much needed, then it should win on its own merit and not by the amount of money being thrown at it by governments.
I haven't seen any studies on the viability of a green tech power grid. The start-ups that are pioneering this field promote it as an "if we build it, they will come" proposition.
The fact is that large-scale renewables are usually located in remote areas, which make transmission loss a serious concern. Energy-producers are focused on the low-hanging fruit of existing fossil fuel sources, which are simply not keeping pace with growing demand. This takes needed investment away from the fledgling greentech sector.
A new report shows that most of the worrisome issues that the supply chain industry has been dealing with for years are not new, but there are some new concerns that need answers. Here’s a look at what keeps supply chain professionals up at night.
When it comes to shipping supplies from China to Europe, trains might be the most cost-effective way companies have available to them. DHL is looking to jump on that bandwagon.
For many dealing with the enormous task of tracking,
reporting, and resolving issues associated with
potential counterfeit parts, there is a collective
hope that 2013 will bring clearer guidance on what
needs to be done by whom and when.
A necessary foundation for moving efficiently at real-time speed, supply chain analytics is still very much at the beginning stages of development at many companies.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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