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August 22, 2011

Solar Manufacturers Slowly Closing Up Shop In U.S.

August 22, 2011
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“The Solon product we manufacture here in Tucson may have a better fit and finish than some others, but the market doesn’t really value that. The market values a low price. We are going to stop beating our heads against the wall and say, ‘How can we be smart strategically?'” said Dan Alcombright, president and CEO of Solon North America.
First, Evergreen Solar closes its solar manufacturing plant in Devens, Massachusetts at the end of March, laying off 800 workers[i]. And now, following in that company’s footsteps, Solon Corporation, announced that it will close its solar panel manufacturing plant in Tucson in October, laying off about 65 workers[ii]. Because of lower prices for solar panels, competition in manufacturing from China, and less income than expected from its sale of the Devens plant assets, Evergreen Solar is now filing for bankruptcy and laying off another 65 workers, most of which are at its Midland, Michigan manufacturing plant.[iii] Both companies plan to continue in the solar field, but with different missions and fewer employees. Evergreen Solar with continue in its research of improved solar technology, where it started its business in 1994. Solon will keep its power plant development business, which is more profitable than its solar manufacturing business. Both companies will reduce their work force to about 70 employees.

Solon North America

Solon North America is a subsidiary of Solon SE of Germany and was founded in 2007. It opened its 105,000 square foot, 60 megawatt capacity, solar panel factory in Tucson, Arizona in 2008. Solon SE recently reported that through the first half of this year, it lost about $90 million. Due to competition from low-cost factories overseas and the market favoring low-cost products rather than better fitted or finished products, Solon North America announced that it will have to close its Tucson manufacturing plant, laying off about 65 workers in October. It will maintain operation of its power plant development business where it is currently building power plants for Arizona Public Service Company, Tucson Electric Power Company and Pacific Gas and Electric Company, all of whom are subject to state renewable energy mandates which force the utilities to purchase electricity from such sources.  It will still employ about 70 workers in the Tucson area.[iv]

Among Solon’s other endeavors are a partnership with the University of Arizona and Tucson Electric Power to study storing energy generated by solar power at a plant built at the University of Arizona’s Science and Technology Park. The company also worked with Arizona Public Service on a 145-acre, 18-megawatt solar plant.[v]

Evergreen Solar

Evergreen Solar started business in 1994 in a 2,500 square foot laboratory in Waltham, Massachusetts with an innovative idea to reduce the cost of photovoltaic solar using a “string ribbon” process for making solar cells.[vi] It started selling solar cells using this technology in 1997 and went public in 2000. However, in the first quarter of this year, Evergreen Solar saw its shipments of solar panels drop 62 percent from the last quarter of 2010. The company said the drop was due to sluggish demand and the lowering of subsidies for solar power in Europe. That forced the company to lay off 800 workers at its Devens, Massachusetts plant.

In the hopes of capitalizing on China’s skilled, low cost labor and Germany’s expanding solar market, in 2005, Evergreen Solar expanded globally to Germany and China in conjunction with companies in those countries. It received a $33 million loan from the Chinese government for its China expansion.[vii] But even this move was not able to keep Evergreen Solar from filing for bankruptcy and laying off an additional 65 workers, mostly at its Midland, Michigan plant.

The state of Massachusetts subsidized the company ’s solar panel manufacturing industry to the tune of $58 million. Now that Evergreen Solar has filed for bankruptcy, the state is trying to recoup about $4 million from the company. In its bankruptcy filing, Evergreen Solar listed a $1.5 million debt to MassDevelopment, the quasi-public state economic development agency.[viii]

Conclusion

Solar panel manufacturing may be profitable for some countries where skilled labor can be found cheaply, especially as long as governments direct consumers to purchase electricity from such sources, regardless of economics. But, in the United States, solar manufacturing plants are closing and the “green jobs” associated with them are evaporating. One may wonder why, but the economics are clear. Without massive subsidies, these industries cannot survive, and without policies that force these products to be purchased, they can’t survive. European countries (e.g. Spain and Germany) are examples where legislative and regulatory policies required solar energy to be purchased at rates far above the going retail rate.[ix] These countries found that they had to slash subsidies because of high rates and little power production due to low capacity factors of solar plants.

With such European experiences, and with companies closing down solar manufacturing plants and laying off workers, why must our government continue to push for these expensive technologies[x] that cannot survive in the market place on their own?

 


[ii] Arizona Central Business News, Tucson losing solar-panel factory, August 17, 2011, http://www.azcentral.com/business/news/articles/2011/08/16/20110816tucson-losing-solon-solar-panel-factory.html

[iii] Herald, Evergreen Solar files for bankruptcy, plans asset sale, August 15, 2011, http://www.bostonherald.com/business/technology/general/view.bg?articleid=1358998&pos=breaking

[iv] Arizona Central Business News, Tucson losing solar-panel factory, August 17, 2011, http://www.azcentral.com/business/news/articles/2011/08/16/20110816tucson-losing-solon-solar-panel-factory.html

[v] Tucson Sentinel, Tucson’s Solon to turn off solar manufacturing, lay off 60, August 15, 2011, http://www.tucsonsentinel.com/local/report/081511_solon_layoffs/tucsons-solon-turn-off-solar-manufacturing-lay-off-60/

[vi] The New York Times, Why Green Energy Can’t Power a Job Engine, January 18, 2011, http://economix.blogs.nytimes.com/2011/01/18/why-green-energy-cant-power-a-job-engine/?ref=business

[vii] Ibid.

[viii] Herald, Evergreen Solar files for bankruptcy, plans asset sale, August 15, 2011, http://www.bostonherald.com/business/technology/general/view.bg?articleid=1358998&pos=breaking

[x] Institute for Energy Research, http://instituteforenergyresearch.org/2009/05/12/levelized-cost-of-new-generating-technologies/


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