Solar energy production is in crisis

Germany’s biggest solar energy producer, Conergy, is bankcrupt, and currently undertaking procedures for insolvency. Though the newspapers present this as a surprise, l present you a graph with its share price evolution from 2006 onwards:

Präsentation1

Are you surprised now? Well, with that kind of evolution in the share price, this was to be expected. Now, Conergy had problems with its managers, claims of accounting `problems’, unfortunate management decisions which led to a fixed price of some supplies that drastically fell in price quickly after the fixing, etc. But is that the main reason?

So here is the evolution of the share price of Germany’s second largest solar energy producer, Solarworld.

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Wait one more year, or two, and with that kind of evolution you will see another bankcruptcy… Though a big investor from Katar last month stepped in to give funding to Solarworld, it apparently didn’t help the share price. So we may say that the German solar energy production in general is in a bad state.

But then again these companies don’t even make it in the Top 10 of world’s solar energy producer (if one accepts Wikipedia as a sufficiently credible source…).  So let’s go to the Top 10. Number one is a Chinese company, called Suntech, number two is a US-based one, called First Solar. Let’s look at First Solar:

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Though we see that there was a crisis effect in 2008, and the share price fell considerably until the beginning of 2012, it has since picked up. This is a main difference to Germany. Is this due to better management? Difficult to say. Is it due to subsidies? Well, subsidies in Germany for solar energy have been really large. If subsidies play a role here, then Germany’s companies should look much more solid instead of bankcrupt…

So there is another claim out there, namely that cheap Chinese solar panels flood the markets, produced more cheaply because of cheaper labor and lower environmental standards. Let’s see whether that picks up in the share price of China’s largest solar energy producer, Suntech Power:

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Hohohoho – unexpected, no?

Looking at this, I doubt really that the international competition argument pulls here. It looks to me that in general solar energy is in a crisis – at least if you trust the predictive power of the share prices. I also looked at other solar energy producers, and those that I took a look at all had a similar evolution. My guess is: the increase in share price was around 2008 was mostly speculation that went hand in hand with the oil price boom and extensive governmental subsidies. When the subsidies worldwide started to be reduced due to the austerity programmes we also saw a reduction in solar demand growth, investors got scared, moved their money to gold/silver or under the mattress.

The question is: if these solar energy producers really are in such a bad state as their share price suggests, what is going to happen to solar energy in the future? What would be a good governmental policy? Solar energy is already approximately competitive to traditional non-renewable energy sources. They are simply bought less because they are only profitable for consumers after several years. Discounting matters.

Governments should take that into account – one way to provide a good policy is to shift benefits for consumers forward or costs backwards. Thus, there could be special loans e.g. for solar energy so that consumers do not need to put all money up front, which thus shift the costs backwards in time.

In any case the quick study above suggests that world solar energy producers are at a cross-road. The question is what will happen next?

UPDATE (16. July 2013): China is buying tons of solar panels from its nearly bankcrupt solar giants. Hard to understand why the EU does not do something similar in order to meet/exceed emission targets AND move away from austerity at the same time AND save its failing solar giants which it subsidised for so long only to allow them go bankcrupt eventually…

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