The Year Solar Goes Bankrupt...Germany's jobless now will include solar jobs lost to India & China
Get ready for
a new round of green bankruptcies, as Europe trims back subsidies for solar companies and taxpayers lose their appetite for subsidizing green power.
“The mini-bubble resulting from the rush to cash in on solar subsidies in European and U.S. markets is ending, as feed-in tariffs drop in Europe while loan guarantee and tax credit programs tighten up in the U.S.,” says a new report from Bank of America Merrill Lynch according to CNBC.com.
Germany is dialing back subsidies for solar this month by 29 percent with subsequent decreases each month, according to Bloomberg.com.
Rasmussen has recently released a survey of voters that show a diminishing number of voters support subsidizing the production of the Chevy Volt.
Only 29 percent of likely voters agree with Obama’s latest proposal to include a $10,000 subsidy in the federal budget to support the purchase of every electric vehicle.
The survey found that
58 percent oppose the plan, while 13 percent remain undecided.
And make no mistake, without subsidies solar, electric vehicles, wind power and other alternatives remain a chimera.
“Steven Cortes, CNBC contributor and founder of Veracruz Research, also sees solar stocks declining further and wonders about the impact of the recent natural gas boom on the sector.
“’As much as I love sun, I hate the solar space. This is not a real business, it’s a political construct,’” Cortes said on Fast Money Wednesday. “’And they can’t compete with natural gas at these levels.’”
According to the Associated Press the U.S. now has 2.433 trillion cubic feet in storage.
“That figure is 48.3 percent more than the five-year average, the Energy Department said,” reports the AP. “Natural gas fell 3 cents to finish at $2.27 per 1,000 cubic feet in New York. The price has fallen about 27 percent this year and is at the lowest level in a decade.”
Last week Abound Solar announced it would lay off half its workforce despite receiving a $400 million loan guarantee from the Department of Energy last year. The rating agency Fitch’s hit Abound over failures to meet stated goals, old technology, calling the company “highly speculative” according to ABCNews.
Reports ABC:
It remains way too early to determine whether Abound is poised to follow the trajectory of the best-known solar manufacturer to receive a sizeable government loan -- Solyndra, the California firm that filed for bankruptcy in September after having burned through the bulk of its $535 million federal loan.
Perhaps.
However, there is an old saying in the market that the tape doesn’t lie.
And the tape on solar companies is horrendous.
In the second quarter of 2008 First Solar (Symbol: FSLR) briefly touched $300 per share. Today it trades at $27.49. That equals losses of about $24 billion in market capitalization in just four years.
In April of last year Trina Solar LTD (Symbol: TSL) was trading just under $30 and is now trading at about $7.31. Earnings estimates have gone in the last few months from Trina losing about 17 cents per share for 2012 to losing about 63 cents per share.
The Guggenheim Solar ETF (Symbol: TAN) has also moved down from around $300 per share in mid 2008, until it trades now at $27.02.
And the fundamentals aren’t getting better for solar soon, because solar can’t compete with coal-fired or nuclear generated electric.
“
Fewer solar panels will be installed this year,” reports Bloomberg “as the first drop in more than a decade worsens a glut of the unsold devices that’s already slashed margins at the top five manufacturers, an analyst survey showed... Without government incentives, even record low prices for solar panels may not be cheap enough to encourage solar farm developers and homeowners to install them in the volumes needed to work through the glut, said Rozwadowski, the most pessimistic analyst in the survey. He expects installations to drop to 20.7 gigawatts.”
It’s important to note that the poor performance of the solar industry came at a time when government financial support has been at an all-time high world-wide. It only goes to show that politics and public policy are poor substitutes for free market economics.
Expect the solar industry to continue to crash and burn as
government money continues to dry up along with public support.
finance.townhall.com/columnists/johnransom/2012/03/12/the_year_solar_goes_bankrupt/page/full/
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Merkel’s Green Jobs Ambition Stalls With Cuts for Solar
Apr 30, 2012
German Chancellor Angela Merkel’s effort to create jobs in renewable energy is faltering as subsidy cuts and competition from Chinese manufacturers forces the industry to stop hiring for the first time in eight years.
Employment in Germany’s clean energy industry probably will “stagnate” this year after creating about 31,600 jobs a year since 2004, said Claudia Kemfert, senior energy analyst at the DIW economic institute in Berlin. Four German solar companies filed for protection from creditors since December including Q- Cells SE, once the world’s biggest cell maker.
Merkel’s Green Jobs Drive Faltering With Cuts for Solar
Employees assemble photovoltaic panels at Suntech Power Holdings Co.'s factory in Wuxi, Jiangsu Province, China. Photographer: Qilai Shen/Bloomberg
Merkel is paring solar incentives after a boom made Germany the largest global market for the technology, piling pressure on domestic manufacturers as Chinese manufacturers led by Suntech Power Holdings Co. (STP) take market share. The forecast underscores the difficulty Germany will have in reaching its ambition to replace nuclear power within a decade.
“The German government is running the German solar industry into destruction,” Hans-Josef Fell, a Green Party lawmaker and one of the inventors of Germany’s renewable energy subsidy system, said April 17, adding that he’s concerned about more “insolvencies, plant closures and job losses.”
Germany led industrial nations in promoting renewables since 2004 with the first above-market rates for solar energy. It prompted the U.S., Britain and Japan to follow with similar initiatives aimed at generating “green jobs.”
Global Concern
In the U.S., President Barack Obama’s ambition for a “Sputnik moment” spurring renewables has crumbled into partisan bickering about whether he was right to subsidize Solyndra LLC before it failed. That’s halted debate on tax credits that wind turbine makers rely on, leading Vestas Wind Systems A/S (VWS) to threaten 1,600 jobs in the U.S. The concerns about green jobs also are resonating in the U.K., suffering its first double-dip recession since the 1970s.
“As major economies face tougher fiscal conditions, indications suggest growth is slowing” for renewables, U.K. Energy Secretary Ed Davey said as ministers from 23 nations met in London on April 25. “New industries could suffer.”
The Environment Ministry in Berlin counted 381,600 people working in the clean energy industry last year, up 4 percent from 2010, a fraction of Germany’s total workforce of about 41 million. Growth in wind and solar jobs helped cut the unemployment rate to 6.7 percent, the least in two decades. The Federal Labor Agency will release monthly jobs data on May 2.
‘Step Backward’
“We’re seeing a major step backward regarding clean-energy jobs because of a lack of strategic industry policy coming from the federal government,” Steffen Streu, a spokesman for the economy ministry in Brandenburg, said by phone on April 18, a day after First Solar Inc. (FSLR) said it would close its biggest European plant located in the state. “It was always said that each coal job given up will re-emerge in the renewable sector. That’s not the case at the moment.”
Solar manufacturers are feeling the biggest pinch. German Environment Minister Norbert Roettgen, responding to concerns that a surge in solar installations was driving up the cost of electricity, is planning monthly cuts for subsidies to match the decline in panel prices.
A surge in output from Chinese panel makers such as Suntech have cut the price of a solar cell 67 percent to 48 cents per watt of electricity generated, according to Bloomberg New Energy Finance data. Germany and the U.S. so far haven’t backed calls from companies including Bonn-based Solarworld AG (SWV) to rein in what they say is illegal dumping by the Chinese.
Roettgen’s View
Roettgen said the industry will have to adjust to live with lower subsidies, though he expects employment levels will continue to rise across the renewable energy industry. The government also is providing incentives for wind farms, especially offshore.
“The success story in the job sector continued last year, and everything points to that it will continue this year,” Roettgen said April 25 in Berlin. “If enormous overcapacity exists in the solar sector, this will lead to adjustments that we can’t and shouldn’t stop with excessive subsidies.”
Sixty-two percent of Germany’s photovoltaic suppliers expect to dismiss workers, the VDMA machine makers’ association said on April 2. Its members expect sales to drop as much as 22 percent on average this year.
Q-Cells, Solon SE (SOO1), Solarhybrid AG (SHL) and Solar Millennium AG (S2M) all filed for insolvency since December. Solar Millennium, a developer that had 318 workers in June, fired its remaining 40 employees on Feb. 28.
Blow for East
Eastern Germany, where the solar industry settled to reap state and European Union subsidies meant to make up for the closure of strip mining, has been hit hardest by the collapse.
Q-Cells employs about 1,300 people in Saxony-Anhalt and Berlin. First Solar, the biggest U.S. solar manufacturer, said on April 17 it will close its manufacturing site in Frankfurt an der Oder in Brandenburg by the end of the year. That plant employs about 1,200.
“Thousands of solar jobs are at risk,” said Joerg Mayer, managing director of the BSW-Solar lobby. Companies that employ 110,000 people are bracing for a “drastic downturn.”
Job cuts may extend to the wind energy industry, which employs about 100,000. Turbine makers including Siemens AG (SIE), Vestas and Hamburg-based Nordex SE (NDX1) are seeking to reduce costs as they lose market share to Chinese rivals Xinjiang Goldwind Science & Technology Co. (2208) and Sinovel Wind Group Co. (601558)
‘Struggle’ for Wind
“The wind industry struggles with low margins,” Felix Ferlemann, chief executive officer of Siemens’s wind power division, said April 16. “This is not a sustainable situation. We are under pressure to reduce costs quickly.”
It’s not certain that all of the bankruptcies in Germany will lead to significant job losses.
Solon was snapped up by Middle Eastern solar-cell maker Microsol in March. The Berlin-based company, which since mid-2011 reduced its workforce by 25 percent to about 600, had to fire “only 18 employees,” said Karin Evers, a spokeswoman.
“I had expected a stagnation in the solar sector for the past years, and it never materialized,” said Marlene O’Sullivan from the German Aerospace Center’s Institute of Technical Thermodynamics, which helps compile the renewable energy employment data for the government. “Any forecast is clouded by uncertainty. If the German solar market collapses by 50 percent, that doesn’t mean 50 percent of jobs will be gone.”
Q-Cells shares climbed 21 percent in Frankfurt on April 23 after its administrator said several financial and strategic investors had shown interest in the company.
The DIW predicts the industry will create jobs in the long run. It estimates renewable energy companies may employ about 600,000 in 2025.
“Innovative companies will still have a chance, they have to go for research and education and export markets,” Deputy Environment Minister Katherina Reiche said in an April 19 interview. “If a company just counts on subsidies, it can’t be successful as a global player.”
www.bloomberg.com/news/2012-04-29/merkel-s-green-jobs-ambition-stalls-with-cuts-for-solar.html
