In 2010 solar was arguably the fastest growing industry in the world, with installations growing by over 100%.
New Energy Finance has calculated that global capacity has expanded to 41.5 gigawatts as firms flooded into the market, but this outstrips demand of no more than 28 gigawatts.
Firms were attracted to the market by subsidised and feed in tariffs. Baulking at the huge potential costs treasuries in Germany, Italy and the UK have cut them.
Manufacturing firms that expanded capacity on the basis of the tariffs and solar farm developers are left stranded.
For example Evergreen Solar, it invested nearly half a billion dollars in a Massachusetts factory then was never competitive as Chinese firms flooded the market. The factory was closed earlier this year and they have filed for bankruptcy protection.
With the increase in capacity and economies of scale it was predicted that ‘grid parity’ with coal and oil would be reached before 2020 in many industrialised nations, and has already been reached in sunnier nations.
That may be reached a lot sooner is you are buying bankrupted stock as it looks like many other western firms will go down with considerable shorting of non-chinese solar company stocks. This global overcapacity will make it a buyers market and will make it much cheaper to install solar.
Get them while you can. It makes sense for China to introduce a feed-in tariff to reduce domestic oil and gas production, as imports are leeching at their export earnings and foreign currency reserves as domestic energy consumption grows. In any event with cost reductions subsidies might not be needed for very long – if grid parity was the only issue. The business case for feed-ins in China is not to make it cheaper but to speed its rate of adoption by raising awareness, and having a policy that pays for itself through need for less fixed capital investment in new large scale oil and coal power stations, and less oil imports.