It's the Adam Sewall Blog

Shyam Mehta of Greentech Media covers some interesting ground trying to answer the question, Is U.S. solar PV manufacturing doomed to failure?

Mehta starts by noting that Evergreen Solar, a Massachusetts-based maker of solar panels, in January announced plans to close its manufacturing facility in Devens, MA, and layoff 800 of its 925 employees. He then cites two other recent prominent solar PV plant closures in the U.S. — BP Solar’s and Sepctrawatt’s — to highlight what doesn’t work when it comes to solar-panel manufacturing.

To paraphrase, if it costs you more to make run-of-the-mill solar panels than it does your Chinese competitor, you should be surprised why your U.S. facility hasn’t been shuttered already.

What might work?

Located far away from all the doom-and-gloom pronouncements about domestic PV manufacturing is a large factory in Perrysburg, Ohio that manufactures CdTe modules. It is owned by First Solar, and by all accounts, is doing rather well: it produced an estimated 206 MW in 2010 at below 90 cents a watt, which at its current efficiency (11.6%), is extremely competitive.

How can this be?

First Solar’s technology is low cost (even penalizing it for its lower efficiency relative to c-Si), but it’s also proprietary; it has designed and assembled its own equipment and developed its own process flow, and so far, the Chinese have been unable to duplicate it with any degree of success. Of course, First Solar’s modules would certainly be cheaper if they were manufactured in China: indeed, the U.S.-made modules cost about 10 cents a watt more than those produced at First Solar’s gigawatt-scale fab in Malaysia, another low-cost location. But the Ohio plant is competitive today, and that’s the point; just because the modules could be produced for a slightly lower cost elsewhere is not in and of itself a reason to close a plant. ..

The moral of the First Solar story is that for a domestic facility to succeed in today’s global market, the technology it deploys must be both low (delivered) cost and proprietary.

Mehta then cruises through standard strategies — what could work — for promoting in-country manufacturing. He cites incentives and protectionism before landing on what I think continues to be the most compelling question when it comes to matters of U.S. manufacturing: do we really even need it to work?

[W]hy should we be so hell-bent on preserving American solar manufacturing in the first place? Does it have anything to do with the actual generation of solar electricity in this country? Not in the slightest. Could it be energy security? Comparisons with oil don’t really cut it; we procure 85% of our electricity needs from coal, natural gas, and nuclear, most of which is sourced domestically, so there is no pressing concern here. Is it jobs? A module assembly plant creates roughly 1.5 jobs per megawatt; hardly the panacea for our unemployment woes. Meanwhile, installations create three times as many jobs, and this is work that cannot be outsourced. But a factory with moving parts, permanent “green” jobs (few as they may be), cranking out thousands of pretty panels a day seems a lot sexier than a rooftop installation on a Walmart store that is silently producing clean electrons. What seems to be the case is that manufacturing is held up as some sort of status symbol, both in the minds of politicians and the public, partly because it is tangible, and partly on account of nostalgia for a bygone era.

For what it’s worth, I’m a firm believer in renewable energy and American jobs. From what I’ve read, however, I just don’t see how manufacturing solar panels — which is a relatively capital/input-intensive, labor-light process — can be the single stone that kills two birds, at least from a total number of employed standpoint. Doing energy efficiency and weatherization retrofits? Sure. Installing solar panels? You bet. Maintaining wind turbine farms? It can’t hurt. But even America’s leading solar manufacturers — First Solar and SunPower — realize that some manufacturing activities are most cost-effective when done overseas.

Related: check out Daniel Ikenson’s mini-rant on why he’s boycotting ABC News and Disney to better understand some common misconceptions about manufacturing in America. Spoiler: we’re more efficient and more high-tech than ever, but the percentage of our workforce in the manufacturing has been in steady decline since the 1970s.