Solar Manufacturers Suffer as Panel Prices Drop
4:44 minutes
The price of solar photovoltaic panels is coming down, and it’s great news for consumers, solar installers and the environment.
But not everyone is happy about cheap solar: The price of solar photovoltaics is so low, that, according to Bloomberg, some manufacturers were likely selling at a loss in December 2016. Ethan Zindler, an analyst at Bloomberg New Energy Finance, says that overall, the solar industry is “booming.” But as he explains, the current price of solar panels shines a light (pun intended) on a cutthroat market for manufacturers.
“If you’re a consumer who’s been thinking about putting solar on your roof, now it’s cheaper than it’s ever been,” he says. “You used to look at a system that would cost $30,000, and it may cost as little as $10,000-$15,000 now. And so there’s great opportunities for consumers in the most developed countries, those of us who have nice houses that want to put them up on our roofs.”
Another type of consumer stands to benefit a great deal from cheap solar panels: “There’s about 1.3 billion people still on our planet with no real adequate energy access,” Zindler says. “A simple module or two on a thatched roof can provide a light for the first time. There are solar lanterns that are being sold at very inexpensive prices that can really make a difference in people’s lives.”
But for photovoltaics manufacturers, current conditions aren’t so bright. The competition among manufacturers is intense right now. And with the collapse in prices, many manufacturers are operating at or just below their margins. “It’s hard to make money,” he says.
Nowhere are the pros and cons of cheap photovoltaics illustrated more clearly than in China. Zindler notes that many of the biggest players in solar technology — like Trina Solar, Jinko Solar and Yingli Solar — are Chinese companies that helped spur the market. Now, they’re in some ways, victims of the market’s success. But as he points out, China is the largest consumer — and supplier — of solar.
“There’s a lot of attention that gets focused on China and the amount of coal that they burn, and their CO2 emissions,” he says. “But it should not be overlooked that they are the largest market right now.”
In fact, China recently pledged to spend more than $360 billion on renewable energy by 2020. “To put that in context, that industry has already in China been attracting about $100 billion a year,” Zindler says. “So it’s great to have that long-term commitment, but that’s basically the size of their market.”
And many other emerging markets “also happen to be countries with fantastic solar resources, great sun,” Zindler notes. “And so adding a new megawatt of capacity in these countries from solar can really be the lowest-cost way to bring more people onto the grid.”
So for solar manufacturers, the cloudy day isn’t likely to last.
“It’s an interesting industry because it’s still young, so it’s facing pressures right now,” Zindler notes. “But overall … the percentage rates of growth that we’ve seen year on year have really been quite spectacular overall.”
Segment Guests
Ethan Zindler
Ethan Zindler is an analyst at Bloomberg New Energy Finance in Washington, D.C..
Segment Transcript
IRA FLATOW: And now it’s time to play good thing, bad thing, because every story has a flipside. Now the price of solar photovoltaics has dropped to an all time low. They are dirt cheap, which seems like a good thing, right. We need all the cheap renewable energy we can get.
But not everybody is winning in this low cost solar game. Joining me now to talk about the good and bad of cheap solar panels is Ethan Zindler. He’s an analyst at Bloomberg New Energy Finance. He joins us here in our New York Studios. Welcome, Ethan.
ETHAN ZINDLER: Thanks for having me.
IRA FLATOW: OK. Let’s talk about some pretty obviously good things about this, right, cheaper to buy solar.
ETHAN ZINDLER: Yeah. So solar is more for the masses, obviously, if it gets cheaper. If you’re a consumer who’s been thinking about putting solar on your roof, now it’s cheaper than it’s ever been. You used to look at a system that would cost $30,000. It may cost as little as $10,000 to $15,000 now.
And so there’s great opportunity for consumers in the most developed countries, those of us who have nice houses that want to put them up on our roofs. But there’s another type of consumer too that we’re talking about. And those are people in emerging markets or in the developing world.
You know, there’s about 1.3 billion people still on our planet with no real adequate energy access. And those folks stand to benefit a great deal as well. A simple module or two on a thatched roof can provide light for the first time. There are solar lanterns that are being sold at very inexpensive prices that can really make a difference in people’s lives. So on the consumer side, it’s generally a win.
IRA FLATOW: It could also be something good for builders, job creation, right.
ETHAN ZINDLER: So if you’re an installer and you’re in the game of actually putting these things up on roofs, the cheaper the systems are, obviously, the more of them you can potentially put up. And that’s definitely good news.
IRA FLATOW: So what’s the downside?
ETHAN ZINDLER: So there’s a couple folks that probably are not thrilled about this. I mean, certainly if you’re a manufacturer, there is what we would really consider to be cutthroat competition now among the players that are out there. Prices have really collapsed. And so you have a number of manufacturers that are operating basically right at the margins, in some cases maybe even a little bit below the margins. It’s hard to make money.
IRA FLATOW: Where are they? Who are they? Chinese?
ETHAN ZINDLER: In a lot of cases of, they’re Chinese companies, companies that your listeners may not be familiar with, but which are some of the greatest, biggest players in the world, folks like Trina Solar, Genco, Yingli, others. Those companies have helped to spur a much larger market. But they have also– and they also certainly are suffering as the margins collapse.
IRA FLATOW: So they’re sort of victims of their own success?
ETHAN ZINDLER: That’s right. There are one other group that also potentially stands to lose a little bit from this, which are utilities. Because if you think about it, every time a system comes online in a service area, that’s potentially– those are potentially electrons that are not necessarily going to have to get bought from the grid, from the existing utility.
IRA FLATOW: And so solar, though, is booming, right? It’s not going to be hurt. It could use these extra–
ETHAN ZINDLER: You know, in the grand scheme of things there, it’s booming. But it’s an interesting industry, because it’s still young. So it’s facing pressures right now. But overall, yes, the percentage rates of growth that we’ve seen year-on-year have really been quite–
IRA FLATOW: And where’s the biggest growth happening?
ETHAN ZINDLER: So China is the largest market in terms of demand for solar in the world, really, by far right now. And they’re the largest supplier. So there’s a lot of tension that gets focused on China and the amount of coal that they burn in their CO2 emissions. But it should not be overlooked that they are the largest market right now.
IRA FLATOW: And we’ll continue to see under developed countries instead of building other normal standard power plants. So we’ll just go right to solar, because it’s cheaper.
ETHAN ZINDLER: So that is really the exciting thing in many ways is that a number of the emerging markets also happen to be countries with fantastic solar resources, great sun. And so adding a new megawatt of capacity in these countries from solar can really be the lowest cost way to bring more people onto the grid.
IRA FLATOW: So even though China may be losing money per solar panel, they’re going to still make it, right?
ETHAN ZINDLER: So there’s announcements today that they’ve pledged another $250 billion to go towards renewables over the next three or four years. To put that in context, that industry is already in China, been attracting about $100 billion a year. So it’s great to have that long-term commitment, but that’s basically the size of their mark.
IRA FLATOW: Yeah, we need to do a whole hour on green energy. We’ll have you back, Ethan.
ETHAN ZINDLER: Thanks so much.
IRA FLATOW: Ethan Zindler is an analyst at Bloomberg New Energy Finance. We’re going to take a break. And when we come back, more research says there was no slowdown in global warming 15 years ago.
Well, here’s this data that will sway skeptics, or do we need to think differently to persuade doubters? If you got into an argument over the holidays about global warming, maybe we have some answers for you for your next argument. Stay with us. We’ll be right back after this break.
Copyright © 2016 Science Friday Initiative. All rights reserved. Science Friday transcripts are produced on a tight deadline by 3Play Media. Fidelity to the original aired/published audio or video file might vary, and text might be updated or amended in the future. For the authoritative record of ScienceFriday’s programming, please visit the original aired/published recording. For terms of use and more information, visit our policies pages at http://www.sciencefriday.com/about/policies/
Meet the Producer
About Christopher Intagliata
@cintagliataChristopher Intagliata was Science Friday’s senior producer. He once served as a prop in an optical illusion and speaks passable Ira Flatowese.