GE Solar Delay Shows Timing Will Never Be Good
We’ve heard this story before.
Much like taxpayer-backed Abound Solar – which just revealed it would declare bankruptcy – General Electric announced last week it would suspend construction of a solar panel manufacturing plant in Colorado. The excuse given was that GE plans to focus on research and development to improve the technology and efficiency of the panels it wants to produce.
“With the re-focus on technology, we’re sizing our team accordingly and really focusing our people on the technology side as we take this pause in the manufacturing build-out,” said Lindsay Theile, communications leader for GE’s renewable energy business, to the Web site Recharge.
That’s what officials at Abound said in February when the company - also based in the Centennial State - lopped off 70 percent of its employees while it allegedly performed upgrades to its plant to manufacture more efficient solar panels. That move followed an earlier, unannounced forced layoff during the end-of-year holiday season in which employees were required to use vacation time in order to get paid, and were told to not feed the rumor mill about possible financial troubles.
After bankrupt Solyndra, Abound and Evergreen Solar, and the deep troubles of First Solar, the mildly interested observer might think the industry troubles were relegated only to lesser-known or smaller start-up companies whose existence depended on government funding via grants, loan guarantees and tax breaks. That's not the case as GE has now shown, but it is not the first corporate giant to stall or bail on solar.
As NLPC reported in December, BP – which only a couple years ago touted itself as “Beyond Petroleum” – abandoned the solar business entirely, despite having received a $7.5 million grant four years earlier from the Department of Energy, to promote alternative energy. While struggling or failed U.S. solar companies blame the cheap and heavily subsidized production of panels in China and India for their inability to compete, BP sent its manufacturing to those countries, which would presumably have made solar viable.
But the oil giant still shut down its solar operations, even though it had help from U.S. grants. A Bloomberg story at the time reported that BP Solar CEO Mike Petrucci told staff, “The continuing global economic challenges have significantly impacted the solar industry, making it difficult to sustain long-term returns for the company.”
That move followed Google’s discontinuation of its “Renewable Energy Cheaper Than Coal” program, in which it had dedicated an engineering team to research and try to improve solar technology. It was also about the time Google faced difficulty with its investment in the massive Ivanpah (Calif.) Solar Electric Generating System in the Mojave Desert, which hit several obstructions from environmentalists because of the threat to desert tortoises.
Then there is deeply troubled First Solar, recognized by many as the industry giant in the sector but in reality is a pretty pitiful one. Backed by huge investments from the Walton family (of Walmart fame) plus significant government assistance – including more than $3 billion in taxpayer loan guarantees for three separate solar plants in the West – the Arizona-based manufacturer may one day supersede Solyndra as the poster child for solar failure. First Solar’s stock price has dropped precipitously, it laid off thousands of workers, is facing an investor class action lawsuit, replaced $125.8 million-worth of its solar panels in the 4th quarter last year due to poor quality, and has set aside $37.5 million to cover future claims. Company leadership, with significant influence from the Waltons, has replaced the CEO and is scrambling to save the company.
So what to make of GE’s solar move? If anything is to be learned with the industry, is that public statements about changes and intentions should not be believed. So when an official like Danielle Merfeld, GE’s general manager of solar technology, says, “Absolutely, we remain committed to this project,” be suspicious.
“It’s just a matter of the timing,” she told the Denver Post.
It was timing with Solyndra. It was timing with Abound Solar. It was timing with BP Solar. It was timing with Google. It is timing with First Solar. All had the benefit of massive infusions of public and private cash, yet in none of their situations could any of them overcome the “timing” – all which appeared to be bad.
An added curiosity about GE is that the green rent-seeking conglomerate just wrapped up a project in which it received $1.18 million in federal stimulus funds (jobs created: 1.21 – do the math) to research the enhancement of efficiency for solar photovoltaic modules. According to a presentation given by GE’s research team for the U.S. Department of Energy, the project was supposed to develop “a low cost layer, which will down-convert high energy solar photons to useful low energy photons, with high efficiency.” The projected “impact” from the project was “increased (photovoltaic) deployment in the U.S.” and “U.S.-based PV module manufacturing.” So the timing should not be any better than now for GE, right?
Nevertheless Merfield told the Denver Post that GE must “have the right technology at a competitive cost.”
“The reality is the industry has shifted over the past six months,” she said. “We’ve seen a 50 percent drop in the module price over that time period. With those market conditions, we can’t go forward at this time.”
According to green technology Web site Gigaom, “timing” doesn’t look to improve any time soon, with solar manufacturing “a hellish business to be over the past year and a half.” Its report cited a preview by GTM Research, which forecast for 2012 (and beyond) a level of solar production that is double what it expects demand to be. And Gigaom reported that the GE plant in Colorado will need more structural work before manufacturing equipment can be installed.
“After the equipment is in,” the report said, “it would usually take a year or longer to test the machines and bring them online for mass production.”
Sounds like good “timing” is a long way off – like never.
Paul Chesser is an associate fellow for the National Legal and Policy Center.