Throughout its ~40 year history the PV industry has operated in a climate of stop/start/stop incentives along with a perception that it is more expensive than other energy generating technologies (specifically, conventional energy, though also wind and nuclear).  In the early years, the public perception was that PV was essentially a science experiment best suited to sandal wearing hippies, instead of a business started by engineers and scientists and propelled forward by small companies taking significant risks, often on a shoestring budget.  The perception of solar as the most expensive energy source continues, despite a tacit realization that conventional energy – globally – enjoys significant direct and indirect subsidies.  In many countries the electricity that the public buys from the utility is delivered at a price point that is below the cost of production.  Simply put, to try and achieve grid parity with electricity that is delivered to the customer below the cost of production is absurd as well as ironic. 

Promises to compete with conventional energy at an unfairly low price point are holding the PV industry in a vice from which it is difficult to emerge. From Browning:

Rouse up sirs! Give your brains a racking, to find the remedy we’re lacking, or, sure as fate, we’ll send you packing! At this the Mayor and Corporation quaked with a mighty consternation.  

Or, put another way, continue lowering the price of the PV technology (including system installation) or the incentives necessary to stimulate demand will be removed. Ironically, even when costs are lowered the PV industry pays a price for its success.  During the early days of the European Feed in Tariff incentive model, 2004 through 2010, industry demand soared from megawatts to gigawatts with demand primarily led by the European FiT countries.  As installed capacities mounted, governments and utility ratepayers (who bear the cost of the FiT) became concerned, and the FiTs began to change or was cancelled. Retroactive changes to FiT rules have proved harmful to investor confidence.  Meanwhile, a global recession caused ratepayers (and again, governments) to look askance at the newly booming solar industry.  Currently in Europe austerity measures and country debt are ongoing threats to the continuation of incentives. 

It is concerning that the very manufacturers suffering significant losses also proclaim that the current prices for PV modules are not only sustainable, but will be even lower in the near term.  During the recent CEO panel at Intersolar Europe all the executives, none with positive net incomes to point to, agreed that current pricing was fine.  It is as if the entire industry is suffering from hysterical blindness.

At this juncture the strongest factor holding prices for PV technology down is the expectation that prices will continue to fall.  The best that can be hoped for at this point in time is that prices will stall, and remain flat until costs catch up, and innovations in balance of systems and installation efficiencies will accelerate.  Before this finally happens, unfortunately, consolidation and failure will continue, potentially leaving the PV industry with a barren landscape when it emerges. 

And in after years, if you would blame, his sadness, he was used to say, it’s dull in our town since my playmates left! I can’t forget that I am bereft.  The music stopped and I stood still, and found myself outside the hill, left alone against my will, to go now limping as before, and never hear of that country more!

Granted, the above is gloomy picture.  However, if it is your company that fails in a hostile competitive climate where unrealistic expectations must be met, I assure you, gloomy is the most likely mood. 

Luckily, survivors populate the PV industry.  In fact, surviving, thriving and innovating against all odds are primary industry traits.  During this hopefully brief correction, learning in terms of manufacturing costs will accelerate, as will the development of innovative business models.  Concerning prices, likely the best that can be hoped for is that they will stop falling and stay flat for a period long enough that the industry can catch its collective breath.  Meanwhile, along with accelerated learning, it is time to develop a message about quality, clean, reliable electricity, generated by a low maintenance technology that enjoys free fuel and offers energy independence.  The PV industry can emerge from this painful period stronger and with a message that focuses on attributes other than simply being the cheapest energy game in town. 

Image: Pied Piper via Shutterstock

 

Comment:

"In many countries the electricity that the public buys from the utility is delivered at a price point that is below the cost of production. Simply put, to try and achieve grid parity with electricity that is delivered to the customer below the cost of production is absurd as well as ironic. " I agree. Maybe more campaigns and marketing should be towards this, so that the general population would know the facts straight. "It is concerning that the very manufacturers suffering significant losses also proclaim that the current prices for PV modules are not only sustainable, but will be even lower in the near term." I think this is the overal strategy of consolidation they are aiming for still. (Sadly for Inovation currently!) One margin that is often overlooked when the companies brag about better and better production cost is the operational expenses. Often these are still at very large costs and if you spread them out over the watt of modules shipped you see that modules cost much more than what is claimed in the flashy presentations of production costs. And even more frustrating, it becomes a struggle to get to 100% utility to spread opex out over maximum shipments. This causes huge downwards pressures, together with dumping caused by insolvant companies or soon to be insolvant companies selling below production costs to get cash quickly.

 

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