How Do U.S. Solar Companies Compare To China's?

Solyndra is just one of several American solar companies that have gone bankrupt this year. To get a sense of how the industry is doing overall — and whether it can hope to compete with Chinese solar companies — Melissa Block talks with David Baker, who covers energy for the San Francisco Chronicle.

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MELISSA BLOCK, Host:

To talk about whether Solyndra's troubles are at all representative of the U.S. solar industry on the whole, I'm joined by David Baker, who covers energy for the San Francisco Chronicle. And David, have there been other U.S. solar companies that have gone belly-up recently, as this one did?

DAVID BAKER: Yeah, we've seen several succumb to the market pressures in the last couple of months. We had SpectraWatt and Evergreen Solar, both of those filing for bankruptcy last month. We also had BP Solar as well. So we've been in the midst of a shake-out for a while, but it's accelerating.

BLOCK: Well, where are the success stories in this country? Where are the U.S. solar companies that are doing well?

BAKER: Well, there's one that's considered to be doing quite well, the most established in this country, I'd say, at this point. It's First Solar. They're based out of Arizona. And they focused early on on driving their costs down as hard as they could, as fast as they could. But even they have seen their profits eroded by the competition lately. Here in the Bay Area, we also have Sun Power Corp. And they aren't doing quite as well. They actually posted a fairly large loss in the most recent quarter.

But they've been around for quite a while and, again, there's sort of a comfort level out there with them, although there's a lot of speculation about their future.

BLOCK: Let's talk about the competition and then the market pressures that you mentioned earlier, specifically about China. As we heard in Yuki Noguchi's piece, a lot of concern about China's dominance and the fact that they've been subsidizing solar manufacturing. How can the U.S. hope to compete against China, in particular?

BAKER: Well, that's been the big question for about the last two years. The Chinese government decided five, six, seven years ago, somewhere in that ballpark, that they really wanted to own this industry. And they way they went about it was essentially subsidizing very, very heavily, companies that would churn out standard solar cells, nothing terribly flashy, nothing terribly innovative, but they would do it at the lowest possible cost they could while keeping the quality pretty high. The U.S. companies have been focused on tweaking the technology, getting more efficient solar cells, getting more energy out of each one.

And now, suddenly, they've got these products where they've been trying to make the products better and better and yet they're being undercut just by people who can sell for much cheaper. And as a result, our dominance of the market has just evaporated. We used to be the main maker of solar cells, solar panels, and now the latest statistic I've seen is that we make maybe seven percent of the world's supply.

BLOCK: And what would have to happen to turn that dynamic around?

BAKER: That's a really tough question. The kinds of subsidies that the Chinese have been putting into their companies are just not politically feasible here. The figure that the DOE likes to use is that last year, the Chinese government provided more than $30 billion, billion with a B, to their solar companies.

BLOCK: In terms of cost, David, how competitive is solar as an energy source?

BAKER: That depends on where you are. Now, here in California, it's getting to be pretty competitive if you're talking about large solar installations that sell their power to utilities. In that case, it's coming pretty close to the cost of energy from a natural gas plant, which is our standard out here. We don't allow new coal plants within the state, effectively. That's sort of a magical moment. The entire industry has, for the last decade, been trying to get to this thing called grid parity, where the price that you pay for energy from solar is roughly equal to what you pay from a standard power plant.

And in this one case here in southern California, it's getting very close to that. Now, that's due, in large part, to California state policies that require the utilities to get a lot of their power from renewables. And as a result of that, we're getting a lot of projects built and the prices are coming down. However, if you were to go to another state like Georgia, it wouldn't be anywhere near that competitive. You would be much, much more expensive than power from a coal plant.

BLOCK: David Baker covers energy for the San Francisco Chronicle. David, thank you so much.

BAKER: Thank you.

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