The Week in Green Energy: The Forest or the Trees?

by Terrence Murray - October 28, 2011

In terms of the big picture, things are looking particularly rosy for the solar sector. Study after study suggests that solar’s share of the global energy generation market will continue to grow over the next decade, and possibly well beyond. In the United States, the solar industry is fulfilling President Barack Obama’s promise that green jobs will help lead the country out of the economic doldrums. According by the Solar Foundation, an industry advocacy group, the number of jobs in the solar industry grew by 25% over the last 12 months.

However, neither the president nor many industry insiders feel like trumpeting the industry’s bright future. The September bankruptcy of Solyndra, the California-based solar panel manufacturer, proved to be a high profile embarrassment for the president, who held the company up an as example of his economic vision. Then, earlier this week, thin-film solar PV manufacturer First Solar gave CEO Robert Gillette the boot.

Gillette was initially tapped as the man who would lead First Solar into the brave new world of power plant construction. The $5million signing bonus First Solar awarded him back in 2009 belied the high hopes the company had for its then-new leader. While things initially went well for Gillette, plummeting earnings eventually doomed the CEO. At the start of this year the company estimated a 46 percent sales growth for 2011, fueled by its core German market and projected growth in Asia. Instead second quarter net income plummeted 61.6 percent, from $159 million in Q2 2010 to $61.1 million this year.

Growth in generating capacity was strong under Gillette. First Solar’s annual production capacity was 1,228 megawatts at the end of 2009, and the company expects to have 2,236 megawatts of capacity at the end of this year. However, aggressive expansion of capacity proved to be the wrong move in a market where the price for solar panels keeps falling to new lows.

In a sense, both Gillette and Solyndra were victims of the overall success of solar. As prices fall and solar expands, the entire industry finds itself on shaky ground. Many industry insiders are predicting that the immediate future holds a period of contraction and consolidation in the sector, and individual solar companies are in for a bumpy ride.

Recent events certainly give credence to such a prediction. Solyndra is bankrupt, SunPower was bought by Total earlier this year, and now First Solar is changing its CEO (and likely its corporate strategy). While these developments may not necessarily signal the end of what Christopher Burghardt, vice president of the First Solar recently called the solar industry’s “wild west” period, things are definitely changing. Whether they are changing for the better depends on whether you look at the big picture or the details.

Mark Pabst, San Francisco

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