Can the U.S. Tap Solar Energy's Blue-Sky Potential?

Is solar energy finally ready for its day in the sun?

A look at recent headlines would suggest it is -- at least in Europe and Japan. Meanwhile, a “roadmap” being unveiled this week by the Solar Energy Industries Association, solar's principal U.S. trade group, sets a path for the U.S. solar industry to reclaim America's former leadership position.

Solar’s future certainly seems bright in Europe and Japan, with several recent announcements heralding accelerating growth. In December, Sanyo Electric, said it plans to raise its production capacity for solar cells to 1,000 megawatts a year -- 15 times its present capacity -- by 2010. Sanyo intends to focus on the European market, mainly Germany, to take advantage of generous government subsidies there for installing solar. Meanwhile, Sharp Corp. recently said it will bolster its solar cell production lines at its Katsuragi Plant to cope with burgeoning demand both in Japan and internationally, expanding annual production output to 400 MW per year.

While some of Japan’s solar cells are exported to the U.S., a few companies are setting up shop on, or near, U.S. soil. In December, Kyocera Solar held a ribbon-cutting for its new solar product assembly operations near Tijuana, Mexico. The new line is part of a global expansion Kyocera announced in September that will double its solar manufacturing capacity to 240 megawatts per year during 2005. And Mitsubishi Electric recently announced its entry into the U.S. market, focusing initially in the Southwest.

Big things are happening in Europe, too. A Germany solar company, SolarWorld, recently said it expects 2004 profits to be higher than earlier forecast and may split its shares after they rose by almost 15 times over the past two years. The firm makes raw materials and parts used to produce energy from solar power, and has benefited from rising demand for solar, especially in Germany. And U.S.-based Evergreen Solar and Q-Cells AG, a German manufacturer of silicon solar cells, recently formed a joint venture to develop a 30 MW manufacturing plant in Thalheim, Germany.

All of this action continues a seemingly unstoppable trend. Final figures aren't in, but worldwide solar shipments are expected to reach nearly 1,000 MW last year -- a healthy jump over 2003's 685 MW -- which itself was a 35% increase over 2002. Over the past two decades, the PV industry has seen a strong, steady growth rate around the world.

But not in the U.S., where the market for solar remains -- well, cloudy. Actual installations of grid-connected solar are still measured in the dozens of megawatts a year -- less than 90 MW last year -- a fraction of the power produced by a single midsized coal or natural gas power plant. And many of those cells were imported from Japan and Europe.

Reclaiming leadership in the global solar marketplace will be no mean feat. As recently as 1997, U.S. solar companies controlled 100% of the U.S. market and 40% of the global market, according to SEIA. Today, U.S. firms control only 73% and 14%, respectively. In 2003, following several years of growth, shipments from U.S. solar manufacturers actually decreased by 10%, while shipments from Europe grew by 41% and from Japan by 45%. (The U.S. drop was due to lowered production by BP Solar, the repurchasing of solar cells by Shell Solar, and the bankruptcy of Astropower -- the second largest U.S. producer of solar cells, subsequently purchased by GE Power.)

SEIA’s new roadmap hopes to change that. It calls for a variety of measures to be enacted at the national level, including tax credits, uniform net metering, boosts in federal procurement, and support for state programs. Plus, massive infusions of R&D for solar panels and system components.

SEIA’s recommendations sync with that of two other forthcoming reports. One, from the Energy Foundation, examines the potential demand for grid-connected solar rooftop PV in the U.S. in 2010, assuming installed system prices can drop to between $2.00 and $2.50 per watt -- about a third of today’s costs. Suffice to say, demand at those prices will skyrocket.

The other, written by my Clean Edge colleagues and I, offers a plan for an aggressive, “man on the moon” U.S. solar initiative that could lower prices and recapture global leadership. More on that report coming soon.

With luck, all of these efforts will shed new light on solar’s unlimited potential in the U.S., as the nation’s political leaders begin anew to debate, and shape, its energy future.

Comments

[John Welem]

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