August 5, 2005
Shortages Stifle a Boom Time for the Solar Industry
By CHRIS DIXON
New York Times
http://www.nytimes.com/2005/08/05/national/05solar.html?pagewanted=print
With a bill in California that aims to put solar power in half of new homes
within 13 years, and with installation incentives in the federal energy
legislation passed last week, the future of solar energy in the United
States would seem all the brighter. But the future may have to wait, if
only a little while.
American suppliers for the solar energy industry say that burgeoning demand
both domestically and overseas, a weak dollar and shortages of raw material
have created back orders of several months on electricity-generating
photovoltaic, or PV, panels.
"For all the years I've been doing this," said Daryl Dejoy, owner of a
solar installation company in Penobscot, Me., "I could get all the solar
panels in the world and no customers. Now I have all the customers in the
world and no product."
Executives of American solar manufacturers and industry groups say the
global solar market has grown roughly 40 percent annually in the last five
years, driven in large part by Germany. Under an incentive program
championed by that country's Green Party, German businesses and individuals
with solar equipment can sell power they create to utilities at
above-market rates. The utilities pass the excess cost on to their customers.
"It's giving Germans a solid 15 to 20 percent return on equity," said Rhone
Resch, president of the Solar Energy Industries Association, the trade
group for the American solar industry. "You're seeing a lot of companies in
Germany start venture capital units based on solar farm development. People
are even putting panels up on barns."
Germany consumes 39 percent of all solar panels in the world, with Japan
next at 30 percent and the United States a distant third at 9 percent.
Germany installed nearly 400 megawatts of solar power last year, Mr. Resch
said, while Japan, whose government subsidizes solar energy consumption,
installed nearly 300 megawatts. Americans, with far less in subsidies,
installed 90 megawatts, most of it in California.
Japan had the greatest total solar power capacity by the end of 2004, at
1,100 megawatts, followed by Germany, with 790 megawatts, and the United
States, with 730, said Noah Kaye, spokesman for the solar energy
association. The American figure was enough to power about 300,000 homes,
however, some 120,000 more than in 2000.
Now the Million Solar Roofs legislation in California, passed by the State
Senate and under consideration in the Assembly, would subsidize the
installation of solar equipment with a goal of putting 3,000 megawatts of
solar energy to work by 2018. Assessments on electricity bills would pay
for the subsidies.
California is among many states - New York, New Jersey and Connecticut are
others - that already provide subsidies to solar power users. But the scope
envisioned by the new California bill, whose enactment appears likely,
dwarfs all others.
In addition to the state efforts, the energy measure passed by Congress
last week offers a tax credit of up to $2,000 for homeowners who install
solar equipment.
But the shortage of solar panels has led to long waits and inconvenience
for many Americans who are ready to spend $10,000 to $20,000 for
residential solar power systems of 2,000 to 5,000 watts. The shortage has
been made worse because photovoltaic electricity is used to power not only
homes but also businesses, boats, recreational vehicles, highway signs and
cellphone towers.
Mr. Dejoy, of Penobscot Solar, said that for the nation's installers, the
situation was "brutal." Even orders that were paid for months ago, he said,
had no guaranteed date of delivery or even final price. Recently, a
customer who had agreed on an order of several thousand watts balked when
Mr. Dejoy told her that a panel supplier had increased the price by a
dollar a watt.
Matt Lugar, director of solar sales for the Sharp Electronics Corporation's
solar division, in Huntington Beach, Calif., said the supply problems were
"a natural evolution in any industry that's exploding."
"There's a lot of panic among our customers who have been in solar for a
long time," Mr. Lugar said of the installers. "Prices are rising
dramatically. Unfortunately, it's the natural movement of supply and demand."
Until early 2004, Mr. Lugar said, the price of solar panels was dropping as
technology advanced. Since then, manufacturers' prices have risen as much
as 15 percent, he said, adding that the purified silicon at the heart of
solar panels and computer semiconductors alike had also been in extremely
short supply.
Mr. Lugar said it was difficult to predict when the industry would be able
to meet demand, given a possibility of large subsidy increases in Spain,
Italy and Portugal.
But Mr. Kaye, of the Solar Energy Industries Association, said that
California's incentives could entice suppliers to increase production for
the domestic market.
And his boss, Mr. Resch, said the shortage of customary solar resources
provided an opportunity for producers of newer "thin film" solar panels.
These panels, which can be rolled up for portability or installed on curved
surfaces, are now produced in relatively small quantities by several
Silicon Valley manufacturers.
"The solar energy industry is diverse," Mr. Resch said, "and will meet the
challenges the market presents."
For now, solar installers like William Korthof of Pomona, Calif., can only
lament.
"We're getting unannounced price hikes from suppliers," Mr. Korthof said,
"and are seeing a complete inability to forecast when they can ship us
product. Last year I had waits of two weeks for panels. This year it's two
to three months."
Mr. Korthof said that his business, Energy Efficiency Solar, was installing
roughly 25 kilowatts of solar power a month for customers. With a reliable
supply, he said, he would be installing 50 or more.
Mike Dewalt, who lives outside Peoria, Ill., said he had waited three weeks
for a shipment of solar panels for his home. Several weeks later, Mr.
Dewalt said, the supplier told him that four more 120-watt panels he wanted
would be at least eight weeks in arriving, and that payment would be
required immediately.
Mr. Dewalt said that after calling Northern Arizona Wind and Sun, he had
his panels in a week. But Eric Phillips, general manager of that business,
said its waiting times had also lengthened.
"I'm probably taking 10 to 20 calls a day for modules I can't supply," Mr.
Phillips said.
"Only three to four years ago, solar was a really hard sell - trying to
convince people to put a system on their home," he said. "These days, we
say, 'I can't get the kinds of numbers you need.' "
================================
George Antunes, Political Science Dept
University of Houston; Houston, TX 77204
Voice: 713-743-3923 Fax: 713-743-3927
antunes at uh dot edu
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