More renewable reality
Solar Frontier KK, whose parent company is one of Japan’s largest oil companies, is set to open what will be the largest solar-power installation in the world, at a cost of $1.25 billion. Just a couple of problems: low demand and low efficiency. From The Wall Street Journal:
But funneling profit from still-cash-rich oil refining into Showa Shell’s solar operations is a gamble. Nippon Oil Corp., which has become part of JX Holdings Inc., had forged a joint venture with Sanyo Electric Co. to build a solar-cell factory by the end of the fiscal year that ends in March. Those plans were put on hold, however, amid plunging prices for solar panels as a flood of entrants into the market have intensified competition.
Credit Suisse on Wednesday downgraded several solar-energy stocks, expressing concerns that demand can’t keep up with new supply.
A spokeswoman for Japan’s Sanyo Electric Co., which sells crystalline-silicon photovoltaic modules but not thin-film panels, says it is researching thin-film technology but doesn’t see it as a viable business option until its efficiency improves. Sanyo’s modules convert 18.6% of sunlight into energy, compared with 11% for Solar Frontier’s current thin-film panels.
Solar Frontier says panels from its new factory are expected to be 13% efficient, however, about what Sanyo says is viable.
The take-home points from this example (which, by the way, are the norm): (1) Renewable energies are fueled by government policy, not supply and demand. (2) Renewables energies are – currently – exercises in subsidizing inefficiency. (For more, see my previous post on the premature promise of renewables.)
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Another interesting aspect of this particular story is the “distraction factor”–does anybody else remember the impact on BP’s core operations when they began their “Beyond Petroleum” move into solar and other renewables? I’m certainly not opposed to corporate diversification, but when you expand into government rent seeking, you do tend to ultimately dilute core competencies.