Touring the solar world: Delhi to Munich to San Francisco to Beijing
A recent visit to from New Delhi to Intersolar Munich has shown that the solar world is still buzzing. The main threat to the industry is not the current mismatch of supply and demand and slowing growth rates, but a disturbing trend towards protectionism and provincialism that can be observed in all major markets. Changing our energy set-up has always been a global challenge and a global project. We have benefited tremendously from the internationalization of the PV industry. Costs have come down so rapidly that we are at the threshold of a world where solar can compete without subsidy. We need uninhibited competition and trade to now make it a reality.
- The solar industry is more robust and more sober now than two years ago
- There is a worrying trend towards local thinking – both, on the industry side and on the market side
- The industry as a whole would benefit enormously from uninhibited trade
Following a recent visit to the Intersolar Munich in June 2012, I want to share some ideas on the state of the solar market. Firstly, the industry has matured: It is no longer a big party selling a vision of green plenty, but a collection of more sober problem-solvers who are engaging with the technical, financial and infrastructural details of making solar power mainstream. Secondly, there was an ever so slight sense of optimism. In the past year, many companies have exited or have been bought, others have restructured their finances, changed their management, focus or products. While times are still tough (and I expect more consolidation in the industry), more companies are prepared to weather the storm. Thirdly, Intersolar in Munich is still the place for everyone in the industry to meet. It is a living example of the success of globalisation. What started as a great, global idea (using the sun as the most plentiful source of energy for the planet), has become a great, global economic success (the subsidy driven solar boom of the last ten years) and fantastic example of how international trade, scale, and best-practice-sharing can bring down costs and establish a new technology. As a result, we are now at a level where PV can start competing without government subsidies and where the industry can really take off.
This last point, the globalisation of the industry, is, however, coming under increasing pressure as the tightening market of the last years is now translating into protective policy measures. The US has recently imposed anti-dumping legislation on Chinese module manufacturers in a step to protect its own manufacturers. India wants to build its own (less efficient, more expensive) PV cell and module industry and to that end is debating domestic content requirements in its National Solar Mission (see our India Solar Strategy Brief and our July 2012 Solar Compass for details). China, after growing its industry for years on the back of European markets, is now making it almost impossible for international module manufacturers to compete in its own solar market. All these measures keep the cost of solar high and delay the moment when solar will be a mainstream alternative to conventional power supply options around the world. This has to be the goal. And the best way to achieve it is through international trade.
A global approach is not only impeded on the manufacturing side, it is also facing difficulties on the market side. Germany wants to fundamentally change its power supply – away from coal and nuclear, towards wind and solar. It is called “Energiewende” and Germany is about half way into this vast, highly ambitious project: too far to go back, but without a clear roadmap on how grids and storage have to be set up to replace scheduled power with unscheduled power. What is striking about the project is that it is limited to Germany’s borders. This is absurd as Germany is entirely embedded into a European power infrastructure. There is almost no coordination with its European partners who share a transmission grid with Germany but not Germany’s enthusiasm for renewables (France has a very pro-nuclear stance). There is also very little consideration for harvesting renewables where they are more plentiful. Any investment into solar power will be greatly more rewarding in sunny Southern Europe than in Germany – not to speak of the Sahara desert (the Desertec initiative is on hold).
Solar energy makes great sense and grid parity is within reach. However, this is a global project that needs to be approached with a global mindset, international infrastructure and trade. At Intersolar San Francisco, where I will be in July, I am hoping to see the famous American optimism and “can-do”, which is needed now more than ever: Making solar power work on a vast scale to use its full potential requires a belief in our ability to fundamentally change and improve our lives and a readiness to take risks. These are – in my mind – quintessentially American qualities. This may be a simplistic equation, but: India, where we work, is a vast market for solar. China has proven that it can manufacture more cheaply than anyone else. Germans have experience and a systemic approach. And the US has the most innovative financial industry. It makes sense to cooperate.