Citing national security and environmental degradation, the federal government has pressured the manufacture of solar panels in the U.S. by enacting tax credits, loan guarantees, and state mandates for utilities to derive a certain percentage of their electricity from green energy even though green energy is more expensive than traditional energy and the cost would be passed on to the consumer while the taxpayers guarantee the loans.
With all the government involvement in “green” energy, less than 0.1 percent of all electricity produced in the U.S. is generated by solar panels. Stimulus funding and tax incentives have kept the solar industry alive worldwide. When government funding stopped, as it has been the case of four large solar panel manufacturers in Germany and numerous ones in the U.S., those companies declared bankruptcy.
Photovoltaic solar panels can be used on a small or large scale while concentrated solar technologies can only be used for utility-scale electricity generation. This administration declared in the Blueprint for a Secure Energy Future:
“We invented the photovoltaic solar panel, built the first megawatt solar power station, and installed the first megawatt-sized wind turbine. Yet today, China has moved passed us in wind capacity, while Germany leads the world in solar.”
What bureaucrats fail to mention is that the four largest German suppliers have gone bankrupt and twelve American manufacturers involved in solar panel production and/or renewable energy storage have filed for bankruptcy. Amy Payne of Heritage Foundation calls the twelve American manufacturers “the Green Graveyard of Taxpayer-Funded Failures.”
Alexandre E. Becquerel discovered the photovoltaic effect but it was the American inventor, Charles Fritts, who made the first solar cell in 1883. RCA, Texas Instruments, and the Japanese used PV panels on a small scale. It was the oil crisis of the 1970s that increased the attractiveness of solar panels but they remained expensive. President Carter offered the first “direct federal support for solar [panel] manufacturing.”
There are two types of solar panel manufacturing:
– Crystalline silicone system with four stages of production, polysilicon manufacturing, wafer manufacturing, cell manufacturing, and module manufacturing
– Thin-film PV (a newer method, similar to flat panel displays manufacturing for TVs, computer screens and cell phones)
A polysilicon plant requires $500 million-$1 billion in construction capital. European, American, and Japanese companies dominate the polysilicon manufacturing. Polysilicon, which is based on sand, represents about one-fourth of the total cost of a solar panel.
(Green Rhino Energy, Value Chain Activity: Producing Polysilicon, greenrhinoenergy.com/solar/industry/ind_01_silicon.php)
The production of solar glass requires massive capital and large shipping costs. Sixty percent of the global supply is produced by four manufacturers, Asahi, NSG Group, Saint Gobain, and Guardian. (Green Rhino Energy, Value Chain Activity: Manufacturing Solar Glass, greenrhinoenergy.com/solar/industry/in_15_solarglass.php)
According to Paula Flowers, Asahi Glass of Japan produces more than 50 percent of the world’s solar glass through its AGC Solar, a Belgium-based company. Its factory in Kingsport, TN produces solar glass for the U.S. market. (TN Solar Energy Activities Update, TN Chamber of Commerce and Industry, October 7, 2011)
The Department of Energy estimates that the plant manufacture of 120 MW of solar cells per year would need at least $40 million in initial investment. The solar cells are cut wafers into 5X5 or 6X6 inch pieces linked by copper leads. A wafer is a shaped polysilicon into an ingot.
(U.S. DOE, Energy Efficiency and Renewable Energy, Solar Photovoltaic Economic Development, Building and Growing a Local PV Industry, November 2011)
The modules weigh 34-62 pounds and are comprised of 60-72 cells covered by solar glass to protect against environmental damage and are attached to an aluminum frame and supported by a plastic backing.
Currently, lack of profitability has driven the consolidation of the solar panel industry into the hands of ten companies that control half of the global production of photovoltaic solar panels and they are located in China and Taiwan who subsidize exports and have been accused of engaging in dumping of products on foreign markets at prices lower than prices charged on domestic markets. China currently exports 95 percent of all the photovoltaic panels it produces. (CRS Report for Congress, April 27, 2012, p. 17)
Federal programs that created our domestic demand for solar photovoltaic panels have reached funding limits and have expired such as the 1603 cash grant program, the advanced energy manufacturing tax credit, and the S. 591, introduced by the 112th Congress to extend the credit, will expire at the end of 2016. (U.S. Solar Photovoltaic Manufacturing: Industry Trends, Global Competition, Federal Support, Michaela D. Platzer, April 27, 2012)
Examples of government support for solar power include advanced energy manufacturing tax credit (MTC) which reached funding cap in 2010, Section 1705 Loan Guarantee Program for “new and significantly improved” technologies, the investment tax credit (ITC) which ends in 2016, the Section 1603 Treasury Cash Grant Program, and the Sunshot Initiative of the DOE.
The White House Fact Sheet lists 27 Solar PV manufacturers who received 48C Manufacturing Tax Credit (MTC) from approximately $1 million to $142 million. Two of the companies listed have already filed for bankruptcy: Abound Solar Inc. which received $12.6 million in 48C MTC and Amonix Inc., which received $3.6 million in 48C manufacturing tax credit. (CRS Report for Congress, April 27, 2012, pp. 28-29)
John Boehner’s office issued a statement last week that the former Office of Management and Budget Director ignored warnings on Solyndra’s insolvency – millions of taxpayer dollars could have been saved by closing the company immediately and selling its assets. “Instead, the DOE restructured the loan to Solyndra (a solar cell manufacturer), putting private investors ahead of taxpayers for repayment if the company closed (crony capitalism). Solyndra’s liquidation will recover just $24 million of the $527 million that taxpayers lent to the company.”
A bill is making its way through Congress, No More Solyndras Act, which will ban any new loan guarantees from title XVII of the Energy Policy Act of 2005.
“The competitiveness of solar PV as a source of electric generation in the United States will likely be adversely affected both by the expiration of these tax provisions and by the rapid development of shale gas, which has the potential to lower the cost of gas-fired power generation and reduce the cost-competitiveness of solar power, particularly as an energy source for utilities. In light of these developments, the ability to build a significant U.S. production base for PV equipment is in question.” (CRS Report for Congress, Summary, Michaela D. Platzer, April 27, 2012)