The solar power industry has received recent encouragement in two of its biggest potential markets — China and the United States — from the government and investors alike.
But as both countries’ solar capacity increases by leaps and bounds, the industry is encountering obstacles that cause some analysts to question the U.S.’s and China’s commitment to a greener future based on the sun’s energy.
On Saturday, China pledged further support for its ailing solar power sector. The industry has struggled with a glut of available solar energy. That, in turn, has seen prices for solar power hit rock bottom.
The State Council, China’s cabinet, said in July that the country aimed to more than quadruple solar power generating capacity to 35 gigawatts by 2015.
in a statement published on its website, the council said the Ministry of Industry and Information Technology was taking measures to “promote the healthy development of the photovoltaic industry.” The ministry will be able to meet the July directive on time, the council said, by consolidating the solar industry and standardizing its practices in order to build up capacity faster.
In late December, the government announced the development of a huge 1 gigawatt solar panel field in the middle of the desert in the country’s remote Xinjiang province. The project will take four years to build, with the first 300 megawatts of energy coming online next year.
But despite the government’s push, the solar industry in China is struggling.
Two of the country’s biggest solar equipment producers — LDK Solar and JA Solar Holdings Co Ltd — are teetering on the edge of bankruptcy. And China’s Suntech, once the world’s largest manufacturer of solar panels, is now in the process of liquidating.
And the government’s role in the solar industry has also caused trade friction between China, the U.S. and the European Union. The U.S. and EU have accused China of dumping underpriced solar panels on foreign markets, making it harder for other countries to develop their own solar industries.
On New Year’s Eve, SolarWorld Industries America, a major American manufacturer of panels (but the subsidy of a larger German company), asked the Commerce Department to restructure the way it imposes duties on solar imports. If the Commerce Department complies, it would effectively kill the Chinese market for solar panels in the U.S.
The request comes as the U.S. demand for solar appears to be nearing a boom.
Earlier this week, a Minnesota judge recommended that Xcel Energy invest up to $250 million in solar energy instead of natural gas, as it would benefit the state economically and environmentally.
And solar advocates claim that 2013 was a landmark year for solar in the U.S., promising 2014 will see even more solar developments.
If stock prices are any indication, they’re right.
SolarCity, the solar power giant owned by billionaire Tesla founder Elon Musk, saw a sevenfold increase in stock price since it went public just over a year ago. Other solar stocks are also surging.
Despite the success, though, some U.S. analysts question the ability of solar companies to maintain their growth.
Some stock analysts think the current surge in prices on Wall Street can’t be maintained forever, according to the New York Times.
The Times also points out that SolarCity and other companies have faced consumer criticism on websites like Yelp. Some say the company is growing too fast to do its work well.
But growing pains may be the least of the U.S. solar industry’s problems.
Perhaps the biggest threat to growth is a coordinated campaign by utility companies and conservative groups to strip solar power of the government incentives that make it affordable for average homeowners. Without those tax breaks and credits, the solar industry could struggle.
Conservative groups like the American Legislative Exchange Council (ALEC) have promised to fight hard against solar incentives in 2014. Last month, the Guardian obtained documents showing ALEC’s plan to introduce laws that would disincentivize people from solarizing their households at a statewide level.
“As it stands now, those direct generation customers are essentially freeriders on the system,” John Eick, ALEC’s legislative analyst for energy, told the Guardian. “They are not paying for the infrastructure they are using.”
With wire services