01.27.2011 0

More Solar Plants Close

We have covered the failures of subsidized industries in this space in the past. One of the most subsidized is the solar power industry.Whenever an industry requires a subsidy to survive, it usually won’t last.

Here is the latest round of solar plant closures:

Hit by slow demand and falling prices, two solar panel makers have announced plans to close U.S. plants. According to one consultant, the shutdowns could be the start of a wave of closures that affects dozens of companies.

General Electric plans to close its Newark, Del., solar module facility at the end of 2009 and lay off 82 employees. In a statement, the company blames the closure on “current challenges in the solar industry, including industry pricing that is below the cost of manufacture.” GE says it will shift resources away from crystalline silicon modules to concentrate on inverter and thin film technology.

Separately, Evergreen Solar told investors that it will stop making solar panels at its Devens, Mass., plant and start making them in China by mid-2010. The company says a 30% price drop for crystalline silicon solar panels over the past year has made it difficult to remain cost competitive in the U.S. Evergreen will continue to produce solar wafers and cells at the Devens plant.

GE and Evergreen join BP Solar in closing U.S. facilities. In March, the British firm said it would end module assembly at its facility in Frederick, Md., as part of a strategy to cut unit costs by 25% by the end of 2010.

The solar industry is suffering from a “triple witching hour” due to large inventories of solar panels, low polysilicon prices, and slow demand, says Robert N. Castellano, head of The Information Network, a market research firm. Castellano forecasts that as many as half of the more than 200 solar manufacturers worldwide may not survive.

He estimates that solar plants worldwide are operating at only 25% capacity and says small-scale U.S. facilities will not be able to compete on price with new plants coming on-line in China. Many of the new Chinese factories have been built with the help of low-cost loans and government stimulus aimed at expanding solar manufacturing in China, Castellano points out.

An industry thrives when demand from willing customers is great. The green energy industry has long been fueled only by the government’s demand that U.S. taxpayers’ money go towards propping these companies up.

Last summer, a BP Solar facility closed in Frederick, MD due to lack of government funding. Below is the video on that story:

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