What are we to make of the fact that Solyndra, a government subsidized domestic solar panel manufacturer, apparently went bankrupt because Chinese solar panels became so cheap; that domestic solar panel producers will, in general, have a hard time competing with imports; that a government subsidy to consumers who build solar panels at their homes is actually benefiting Chinese manufacturers; and that solar energy initiatives in the U.S. will therefore have a strong Chinese imprint at a time when we are trying to create manufacturing jobs here?
Well, the situation is not necessarily as dire as the above facts would imply. First, a little technology. There are two quite different means to convert solar energy into other types of energy, such as electricity, hot water, steam, etc.
(a) Solar panels use photovoltaic technology to transform solar rays directly into electricity. This can be done on a small scale in homes or with large arrays of panels to generate much greater amounts of power.
(b) An entirely different technology uses mirrors to concentrate the sun’s rays on pipes
carrying water or special liquids that can be heated to very hot temperatures. These liquids can be run into heat exchangers that generate high pressure steam which drives turbines that generate electricy. This type of systems is better suited for generating large amounts of power than photovoltaic cell installations.
It is therefore easy to see why residential and commercial installations use solar panels while utilities are showing a strong preference for the other type of system. That is, in part, due to the fact that with this type of system it is possible to store the hot liquid in a large tower and generateelectricity when the sun is down or when peak power is required by the network it feeds into. (With photovoltaic cells, it is not possible to store generated power).
Reverting to China, that country has plans for massive construction of alternative energy installations, including wind, solar, hydroelectric, geothermal, biofuel, etc. A national goal is not only to build more of these installations than any other country, but to also become a leader in supplying such equipment to the world. Chinese solar panels have become cheap as a result of massive government spending in this area, leading to continuous manufacturing improvement, in accordance with Boston Consulting Group’s well-known experience curve. So, there is no mystery here. We are importing large quantities of inexpensive Chinese solar panels because that country gained the manufacturing lead.
A WSJ article excoriated Obama for providing the above-cited subsidy which has led to the import of Chinese solar panels rather than helping the domestic solar panel industry, as intended. Actually, home installations would have used more domestic panels, but it turns out that entrepreneurial firms have ended up financing many of these installations, benefiting from the subsidy and buying Chinese solar panels in massive amounts by bundling orders. Nevertheless,The U.S. is still better off by getting alternative energy from the sun rather than from burning hydrocarbons in home furnaces.
But here is the interesting point. The U.S. is leading in the other type of solar power installation – the one that generates steam and drives turbines. This is an ideal system for hot desert areas, such as in California. Bright Source Energy is building a 370 megawatt installation in the Mojave desert and Southern California Energy is building a 245 megawatt unit. Two companies are proposing to build 500 megawatt solar thermal plants in a number of areas in the United States,
And the Chinese? They are also planning to build such plants. However, the U.S. is the technology leader with a company called eSolar, established with funding from Google. Also, thermal solar plants need a combination of clear, unpolluted air (for the mirrors), in areas where the sun shines much of the day and year and where ample water is available to condense the steam from the turbines. Apparently, there are few areas in China that offer this combination.
GE, who makes turbines, has now teamed up with eSolar. It does appear, therefore, that things are less bleak for the U.S. in the solar energy situation than some people believe. It is now up to the U.S. to start going down the solar experience curve.