The outcome is a normal economic cycle. When an industry is thriving, everyone wants to join. Bubble blows. When the supply goes up while the demand couldn't catch up, price goes down.
Investing in a factory requires a lot. Investors don't want to lose money. Executives don't want to lose their job. The workforce takes a hit. Layoff happens. The company shrinks. If the -ve trend cannot turn around, executives take a hit. Company may go downhill. The industry shrinks. Bubble bursts.
The government subsidy can only last so long. If the subsidized companies cannot stand on their own feet, they are going out. It becomes a game of who lasts longer, meaning which company is more efficient.
Solar energy is the new pet rock of our decade. I had a solar water heater that the govt the govt helped pay for in the 70's. When the fad wore off so did the industry, now its reborn to those who did not remember the original fad.
Again we see the negative results of mis-allocation of resources when governments artificially prop up an industry. There is too much manufacturing capacity and thus very large sums of capital that could have been allocated to productive purposes. Governments caused the bubble, just as government caused the mortgage crisis by distorting markets. How about a "sustainable solar" policy where markets decide the price and the product, and taxpayers do NOT foot the bill for the waste?
This is coupled to the crazy expansion that solar has experienced the last couple of years. World production capacity has increased massively and a lot of generic Si PV producers went full throttle in production. Led to the price collapse today and will continue quite some time. The business is ready to be reduced into a handful of big solar groups and this is the start.
Its surprising to know that solar industry is facing challenges inspite of rising crude oil prices. I think this slowdown in the solar industry is temporary and once the crude breaches the 150$ mark people will be forced to opt for solar based utilities.
Is it a warning signal to the whole PV industry? When US PV company shut down, we blame the crazy Chinese companies in cut-thoat price war. However, we are seeing Chinese company struggles as well! Is new energy still a good business to look into?
Blog That A-Ha Moment Larry Desjardin 4 comments Have you ever had an a-ha moment? Sure, you have. The Merriam-Webster dictionary defines it as "a moment of sudden realization, inspiration, insight, recognition, or ...