New blog: Time to end the guilt on incentives and start fighting

The last month has brought another depressing piece of news: This time the potential demise of Suntech, a pioneer credited with helping scale up the PV industry, on the verge of bankruptcy...

Taken from the Mar/Apr issue of Renewable Energy Focus magazine, just published. For a free subscription click here.

The recent turmoil being suffered by module and cell manufacturers in the PV industry is well documented (Paula Mints writes about it eloquently in the latest issue of REFocus magazine – see page 12) but in some ways the fact that a company of the prominence and status of a Suntech can go under, makes it all the more symbolic. At a time when we should be talking about good news and new markets, it is yet another bankruptcy making headlines.

According to Mints, we can expect further manufacturer failures, despite relatively high levels of technology deployment. Why? Simply because prices have become too low to be sustainable; currently the average price for PV modules is <US$0.70/Wp, down from over US$3 in 2007 and 2008.

The top ten manufacturers (in terms of companies that delivered the most shipments in 2012) lost a combined, eye-watering US$2.1bn last year: “This is not grid parity, it is not progress, and it cannot continue”, says Mints.
Time to level things up?

For years the renewable energy industry has been talking up the notion that at some point “grid parity” with conventional sources of energy generation would be a reality. This has almost been used as defence for the fact it requires support to help develop and scale up.

Maybe the lesson of recent events is that grid parity (and low prices) is not quite the holy grail it seems. Low pricing in the PV sector has proved unsustainable. How do companies innovate when losing money?

To a certain extent the notion of grid parity has pitted renewable against renewable: wind vs solar, CSP vs Solar PV. Technologies should be selected on the basis of the best available resource (and metrics) for a specific project/location.

Another consequence of the push for grid parity, and admittedly after some overly-generous and ill conceived support schemes, is that politicians have stripped back FiT programmes and other incentives. Of course it is desirable (and necessary) to be able to exist as an industry without subsidies eventually. But as the PV industry is finding out to its cost, low cost products don't necessarily equate to an industry reaching maturity.

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