In the U.S., solar panel makers Evergreen
Solar, Inc.; Spectra Watt Inc.; Stirling
Energy Systems; and Energy Conversion
Devices Inc. all filed for bankruptcy in
2011, and Energy Conversion Devices,
Inc., and Konarka Technologies, Inc.,
followed suit this year. There also was the
highly publicized and politicized failure
of Solyndra, LLC, which, after receiving
$535 million in U.S. Department of
Energy loan guarantees in September
2009, shut down all operations and filed
for bankruptcy less than two years later.
In addition, German solar project
developer Solar Millennium AG and
its American subsidiary, Solar Trust
of America, which holds the rights to
develop the world’s largest solar power
project, the Blythe solar power project in
Southern California, recently
filed for bankruptcy
and insolvency
proceedings
in both
Germany
and the
United
States.
Finally,
claiming
an
inability
by its solar
business
to sustain
long-term returns
for the company,
industry super-major
BP announced that, after 40
years, it was exiting the business
and planned to sell its interests
in the solar projects it had
developed in the U.S., Germany,
Italy, Spain, and the U.K.
cells is merely one indication of the
conflicting implications that U.S.
energy policymakers will face in the
future. This is particularly true for
alternative fuels, for which subsidization
and incentives play such major roles
in their ongoing development.
What follows is a look at the current
state of development of certain
alternative energies in the U.S.
Solar. Allegations of product dumping
and low product prices, demand that
was less than anticipated, and general
market uncertainty have inflicted
serious damage on the solar industry
in the past 12 months, with most of the
negative impact and notoriety landing
squarely on solar panel manufacturers.
Department of Commerce to impose
duties on wind towers manufactured
in China. Also similar to the solar cell
controversy was the reaction to the
news by Chinese manufacturers, who
criticized the protectionist measures and
warned that implementing such
tariffs could have a negative
impact on the U.S.
wind industry. The
U.S. reportedly
imported $222
million in
Chinese
wind
towers
in 2011.
ExxonMobil
anticipates that
renewable fuels will
account for only 7 percent
of global demand for
energy by 2040.
One of
the biggest
constraints on
wind energy’s
growth in the
U.S. is the capacity
of the transmission
grid to deliver that energy to
customers. Another primary
issue will be concerns regarding
plant siting, including the potential
impact of plant locations on the
surrounding environment and wildlife.
U.S.-based First Solar, Inc., announced
earlier this year that it would cut its
workforce by 30 percent, eliminating
2,000 positions across the company’s
global operations; close all of its
operations in Frankfurt, Germany;
and indefinitely idle some production
lines in Malaysia. As of May 31, both
the MAC Global Solar Energy Index
and the Bloomberg Leaders Solar
Index were down by more than 70
percent compared to last year.
Ethanol. Having rebounded
from a number of major bankruptcies,
significant restructuring, and
consolidation in 2008-2010, the industry
seemed to right itself in 2011 and into
2012. According to the Renewable Fuels
Association, the U.S. ethanol industry
produced a record 13. 9 billion gallons
in 2011, up from 13. 2 billion gallons
in 2010 and from 1.6 billion gallons
in 2000. However, many questions
regarding the ethanol industry remain.
To be sure, alternative fuels represent
a rapidly growing segment of the
overall energy market. Still, ExxonMobil
anticipates that renewable fuels will
account for only 7 percent of global
demand for energy by 2040.
The industry pain extended globally as
well. Citing variations of complaints of
intense competition and the reduction
of governmental support, European
solar panel makers that filed for
bankruptcy or insolvency proceedings
included French company Photowatt
and German manufacturers Solon,
Scheuten Solar, Odersun, and Q Cells.
Q Cells, which was considered the
largest solar manufacturer in the world
as recently as 2008, had seen its stock
price plummet from $150 a share to
just pennies a share by April 2012.
Is the reduction in the national carbon
footprint that was anticipated from
the use of ethanol actually being
realized? Will historically high prices
for corn, the principal feedstock for
ethanol production, persist? Because
of the role of corn as the principal
feedstock and its increasing dedication
to ethanol production, are prices for
other grains and for food in general
being forced upward in the U.S
and throughout the world? These
and many other issues will require
continued consideration in the future.
However, the overriding issue that
has not been discussed much is that
practically all alternative fuels being
developed in the United States depend
heavily on various forms of government
subsidies, incentives, or other support,
without which they are not currently
competitive with other traditional
energy sources. With the forecasted
increase in the supply of U.S. natural
gas likely moderating prices in the near
term, the ability for alternative fuels to
compete, with or without government
support, will be further strained.
Jul/Aug
2012
Journal of
Corporate
Renewal
Wind. The U.S. wind industry has also
experienced many of the same issues as
solar panel manufacturers. Allegations
by U.S. wind tower companies of unfair
subsidization of Chinese imports
recently resulted in a decision by the U.S.
Internationally, recent trends reflect
a move away from subsidization. In
an effort to control increasing budget
deficits, Spain earlier this year stopped
all government subsidies and support
for renewable energy projects. Germany
has announced the phaseout of all
subsidies for renewable power by 2017.
In the U.S., the wind power segment
has flourished largely because of the
production tax credit (PTC) for electricity