Breaking! Solar Sector Falling on Hard Times
As we plod toward a new year, Washington is cloaked in a gloomy overcast. The dreariness extends well beyond Washington, though. As the Wall Street Journal reports today, dark times have also fallen on the solar sector:
Long viewed as a remedy for the world’s dependence on fossil fuels, the solar industry is dimming as makers of panels used to harness the sun continue to fall by the wayside.
Bankruptcies, plummeting stock prices and crushing debt loads are calling into question the viability of an industry that since the 1970s has been counted on to advance the U.S.—and the world—into a new energy age.
Raise your hand if you’re surprised!
Even after decades of failure, the federal government continues to believe it can pick winners and losers. Almost nowhere is their failure more pronounced than the energy sector. As my colleague Ashe Schow routinely points out, the stimulus failures extend well beyond Solyndra. The WSJ story notes that in the “past several months, at least seven solar-panel manufacturers have filed for bankruptcy or insolvency.”
At play in the solar industry is a creative destruction, of sorts. Zhengrong Shi, chief executive of Chinese solar-panel manufacturer, explains “The industry simply cannot support 300-plus cell and modular manufacturers.” The WSJ explains:
The glut of manufacturers stems from various sources over the last several years, including efforts by the U.S. government to encourage clean technology, venture capitalists pouring into the sector and institutional investors buying into IPO issues of solar companies amid an oil-price boom and a heightened sense of climate-change urgency. At the same time, European governments offered rich subsidies for solar installation, driving demand in the market.
In a sense, the now-bursting solar bubble was a government driven phenomenon; from governments incentivizing “clean technology” to private sector investors betting the United States and other countries would pass aggressive global warming measures that would make solar more viable. In short, absent government intervention, many of these companies would never have been in the position to fail.
From Carter’s Synfuel program to Bush’s ethanol mandate, we’ve seen the government overreach with damaging consequences. Yet, members of Congress continue to ignore those lessons. Early next year, lawmakers may try to move the New Alternative Transportation to Give Americans Solutions (NAT GAS) Act (H.R.1380/S.1863). The measure would create a host of new subsidies, intended to “jumpstart” the use of natural gas in transportation. It is just another boondoggle waiting to happen. Happy almost New Year!