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?
PErhaps something is missing in this technology. We engineers need to work hard to get novel ideas and make it more efficient. It may be successful after few years.
As an engineer and hobbyist I am rooting for photovoltaic energy but, as I am not a wealthy person, I cannot justify investing my money into the industry. If I had money to burn, I probably would. I do pay twice the normal local electric rate for 100% renewable power, and I drive an automobile with a high MPG rating and I burn renewable bio-diesel in it with only a small increase in fuel cost. So, I am trying to help the environment. But, with a 40 year breakeven point for photovoltaic energy, I cannot personally justify that expenditure.
It's not that I wouldn't invest in photovoltaics but that it wouldn't make sense to do so. And that decision was made decades before the current "failing" situation. I should have said governments instead of people because what I really disagree with is my government taking money from me with the threat of imprisonment or violence and spending it on things that don't make economic sense. If individuals want to spend their own money on photovoltaics without any need or desire for a return on that investment, that's fantastic and I fully support them. When a government throws away money on a historically losing proposition, that is a waste of valuable resources and, I believe, wrong.
The good news is photovoltaics, at the current Chinese prices probably does make great economic sense now (I haven't had a chance to run the numbers). And the industry we're fretting over now is really being improved because the poor players are being removed.
So, yes I'm like your sports commentator with the exception that the team I like (photovoltaics) is winning!
I love renewables and have invested in them but, I invest in things the market selects as winners not in things people, because of their belief system, want to be winner
@Kevin The way you put that reminds me of the conversation I heard on the sports radio station yesterday. One was saying that, of course, he is rooting for the Knicks. The other one stressed that though he is a Knicks fan, he recognizes that they are not doing so well. So, realistically, he would have to say that he does not believe they will win. He took the position that such a perspective does not diminish from his general support of the team. Would investments in energy that seems to be failing from an economic perspective be comparable?
Currently China is investing massive amounts into photovoltaic manufacturing. Their plan is probably to destroy competitors worldwide and create a monopoly on the commodity; much like the Japanese did with steel years ago. But at the same time we are able to buy solar cells for a buck a watt and panels for two, prices previously unheard of. The correct response for the rest of the world, of course, is to cover the world with their cheap cells until they can no longer afford the subsidy. Regardless of their intentions, those prices have made solar power economically feasible for the first time in history. Yes, they are doing their part to save the world; we just need to do our part.
For the most part solar cell manufacturing is automated so any country should be able to make cells for comparable costs. Perhaps the requirement to make shareholders rich and pay corporate executive salaries most of us only dream of might be holding us back from being able to make a go of solar power. I'd love to see a nonprofit take a stab at it.
Government subsidies, at least in the US, seem to me to be foolishly distributed. Solyndra is a perfect example, not because they failed but because their product was a really, really poor design that never would have moved forward without money taken from the US people. And because, once the executive salaries were covered there was little left to build a company with. Regardless how much money is thrown at an idea, eventually reality will take over. The US's recent housing industry debacle is a great example of how reality will eventually win out regardless of the money invested and peoples desires.
I love renewables and have invested in them but, I invest in things the market selects as winners not in things people, because of their belief system, want to be winners.
It is sad to see this happening, when really the whole world should concentrate on becoming more 'green'. The world is the environment in which we live afterall, and the global population needs to help lower the damage we are doing. In 50 years from now, we will probably be wishing there was more concentration done on 'green' energy at the present time and that governments supported it more, etc.
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?
I think the industry is resilient enough to survive. A current problem right now is there is a large supplies out there and not enough buyers. In the next few years the weaker players will disappear and the strong will survive. This will boost the industry and the growth will continue.
I read an interesting article recently about the difference between manufacturing and production. The former is simply building the kit and the latter is the whole business of using that kit to service customers and make money. The West needs to become expert at production and leave the manufacturing bit to the lower cost areas. There will always be a low cost manufacturing darling so we need to embrace and prosper.
Jenn--I hadn't had a chance to delve into this too deeply but I had heard that some of the EU's ventures were failing. Add that to Solyndra--which got a ton of money from the US government--and Evergreen, which just filed Chapter 11, I think, it looks pretty grim. I know that manufacturers continue to come up with ways to make the technology less expensive, so I am wondering if it the installation of solar that keeps the costs high? And the fact that governments are bankrupt doesn't help the prospects for subsidies.Bad news all around.
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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