Sunday, November 13, 2011

Another Solar Panel Company is in Deep Trouble

It really is amazing that at a time when world oil prices remain in the triple digits that solar panel companies seem to be dropping like flies. Here is a recent report on the latest casualty:
Energy Conversion Devices Inc. said late Tuesday it plans to furlough 400 workers as it temporarily halts production of solar energy products, and plans to lay off another 500 employees across the company by the end of 2011.

The Auburn Hills-based company said the furloughs include more than 140 employees who last week were given temporary layoffs at United Solar Ovonic plants in Greenville, plus manufacturing employees in Ontario and Mexico, citing high inventory levels.

"As we sell through that inventory, we'll resume production," said Michael Schostak, a company spokesman.
High inventory levels were also cited in a similar story I reported here two weeks ago about First Solar. Clearly, solar panels are not selling like hotcakes despite high energy prices. For Energy Conservation Devices, the news gets even worse:
The company posted a net loss of $306.4 million in the 2011 fiscal year ended June 30, including a net loss of $42.1 million in its fiscal 2011 fourth quarter.

Some analysts have said the company could be heading toward bankruptcy.

"Bankruptcy continues to become more and more likely, although it still is possible ECD could make it through the next year," Morningstar Inc. analyst Stephen Simko wrote in a late August note to investors.
I would never pretend to call myself an expert on solar energy, but it should be plainly obvious that there are very serious problems in an industry that despite government tax incentives and loan guarantees is unable to find profitability at a time when it ought to be booming.

Bonus: Just because I'm feeling a little goofy.


  1. It is not too surprising to me that homeowners are not the mood to lay out +$20k for a PV system.

    The common refrain is: “I’d buy 'it' if I knew I would still have a job in a year, but, I don’t, so I won’t.”

    'It' can be any major expense, including PV systems.

  2. @CW - I think a good comparison is how much of the world's expensive-to-extract oil will never be drilled because the capital won't be available in a crashing economy.

  3. The cost of electricity is not high, nor is it escalating rapidly. The cost of electricity us really ridiculously low. For example, the average US home uses 1000kWh per month and pays about $140 for this energy. If we had to employ humans to do this work, at the 100Wh a human metabolizes food into work, we'd need three shifts of 14 people per household. 14 people times 24 hours times minimum wage times 30 days delivers a "power bill" of >$70,000 a month! Energy has never been cheap, easy or a commodity - at least, not until the oil era.

    The solar PV manufacturing industry's input costs are increasing since there is a lot of oil-based material and technology used in each module - laminates, sealers, etc. Solar PV is truly a peak oil technology. Simultaneously, a contraction in the financial system occurred as a global explosion in manufacturing capacity, especially in 'legacy' silicon modules, took place, leaving the industry with nowhere to run except to lowered margins. Lower margins eventually mean consolidation or shutdown.

  4. Mr. Sunshine, I like your analysis of the cost of electricity in human energy terms, it give a freash perspective that most people never think about. I am presently making the same calculation with respect to food production in the US.

    Without electrical energy from the "energy slaves," coal and natural gas, the cost would be much much higher. Maybe then cost of the PV system would look more attractive. But still, I suspect that people would hesitate buying a system because they are more worried about day-to-day expenses and job loss than paying forward electrical expenses.

  5. Solar cell production and their use is booming around the world. The real issue is geopolitical - China is dumping their product to destroy all other producers. They did this very effectively with rare earth metals, and now control over 90% of the market there. China no longer exports rare earth metals directly - if a company wants to make something that requires a rare earth metal, they are required to open their factory inside of China, and then they can buy the strategic elements they need for high tech devices.

    In my state, the utilities are charging the customers now for nuclear plants that might be built in a decade or two ... these plants are already 5X over budget and way beyond schedule. Big electric stations no longer make sense in much of the world, as there is not enough water to cool them, putting them on the coast to use the oceans is a Fukushimad idea. Solar PVs on the roof would generate the most electricity on a clear, hot summer day, which is exactly when it is needed n my corner of the world. But Crash Watcher is right ... the average person is tapped out and cannot do what is best in the long run. Even putting $1500 of insulation into the attic is an incredibly good idea (financially, ecologically, etc), but when people are living paycheck to paycheck, most simply cannot.

  6. @Anon - thank you for that perspective.

  7. I would like to connect a solar panel to a small fan. I am not sure that what is needed to connect the two together. Any help is appreciated.