Alternative Solar Electricity Solutions

The business of developing and providing solar electric power has had its struggles in the United States.

But two new developments may change all that. Robots are bringing manufacturing back home, and a new way of providing solar electricity makes it feasible. These two events are already occurring.

One of the main problems with the industry is the cost of manufacturing. China has put a lot of American solar manufacturers out of business because of their low cost of labor and cheap manufacturing costs of solar photovoltaic panels (solar PV).

Importing solar panels is cheaper than buying American made solar products. This has been true with many types of manufacturing. We never yet have had a leader who understood the urgency of the problem.

We all know about the issues with high unemployment in America. And we know about the imbalance of trade. We import more products manufactured elsewhere than we buy from our own resources. What a shame. It’s part of the bigger problem that we have with our economy.

So how does this all relate to solar power? I’m sure you know about the fiasco with Obama giving a $535 million loan to Solyndra in 2011, a California based solar panel maker.

Obama didn’t practice his due diligence to have this company's finances checked out first. Solyndra took the money, our money, and then declared bankruptcy.

Two other solar panel manufacturers had also gone bankrupt in 2011. Can we blame them? The politicians we elect are passing laws that favor outsourcing. I never could understand why. The only result of this is to destroy the economy.

Outsourcing is cheaper than building in America. But then there are less people employed and less people with enough money to buy the products. So I would think it could be cheaper in the long run to make products here in America.

But that’s a catch-22. Isn’t it? If companies were to bring their manufacturing home, products would cost more. Maybe so. But we'd have more people employed and more people with the money to buy the products that are made in the U.S.A.

Getting back to the solar business. It’s a struggle as it is. Solar companies are going bankrupt. How can we expect to see a positive change so soon?

The two things I mentioned at the start of this discussion are happening already, slowly having an effect on the solar business. And it's happening by the actions of private industry and technology. Not by actions of our President.

Bringing Manufacturing Back Home

We have a new technology of robots that are used in the solar panel manufacturing process. This contributes to the desire to bring manufacturing back home.

You might say we are still not creating jobs. You argue that the robots are taking the jobs away from people. Well, let me explain my viewpoint. I have noticed more jobs becoming available that Americans just don’t want to take anyway.

I even had arguments with friends who are out of work. They tell me they are being offered jobs, but not at the salary they want. So they would rather be poor and not bring in any income at all that they could put towards building their future. So they collect unemployment, putting an even greater burden on the economy. And they will end up paying it back in future years anyway. And if not them, their children will pay it back.

What I just explained is actually another force behind the desire for companies to outsource their manufacturing. They can't find people to hire at a wage that allows profit. So they find it in other countries.

But now we have an alternative solution. Robots are willing to work for less. Using robots will lower the cost of manufacturing in the United States. It's just beginning to happen with solar panel manufacturing. And if this continues, it will bring more solar development back to the U.S.

The shear fact that we have more development here will indirectly create a need for other types of jobs. Unemployment will shrink. It can be a start to a turnaround. How? Let me explain...

Here’s some interesting math... According to Rush LaSelle, VP and General Manager at Adept Technologies, it takes four million workers to make enough photovoltaic panels to produce 500 gigawatts of solar electric power per year. Robots in the manufacturing process can reduce that workforce to one million people. A savings of 75% in labor costs. ^[1]

“Oh no! Another negative,” you say? Not really. Give me a chance to finish my explanation.

Those one million workers are people who would not have had jobs in the first place if it weren’t for the lower cost of labor. Remember that three solar panel developers went bankrupt in 2011, Solyndra and two others. So anything that makes it profitable to do manufacturing in the U.S. will simply have a positive effect on employment.

It has to start somewhere. And this is it.

There is one other occurrence in the solar electric business that is changing things in a positive way...

Up till now the cost of buying and installing solar panels on homes and factory buildings has been so great that the Federal Government and some State governments have offered credits and discounts to home owners who install solar power.

There were a lot of problems with this scenario. In many cases these benefits barely made it worthwhile. And it still took at least six years to reach the break-even point. So most homeowners would not even want to bother.

Providing Homeowners Solar Power Without Selling Equipment

Now in 2012, a few companies have started a new way to provide solar power to homeowners without selling them the equipment.

They install the equipment on the homes and office buildings at their expense, and then sell the electricity to the homeowner or business at a lower rate than their electric utility would charge.

This business model involves getting loans from banks and investors to pay for the equipment. So it doesn’t matter that it may take six years to break even. A homeowner might care about that, worried that they may want to move in six years. Or concerned that other life changing issues may get in the way.

But a business is in it for the long run. They can afford to use investment money to acquire the solar panels and pay for installation. As a business they get investment related business tax deductions as well.

One example of this new business model is a company called SunRun. They sell the generated solar power to the homeowner at about 15% less than the local electric utility.

Another company is SolarCity, who received $280 million in financing from Google in June 2011, and $1 Billion from Bank Of America in November 2011. SolarCity installs solar PV panels in 33 States on military homes and office buildings. ^[2]

Installation is an important part of the business that needs to be handled well. I think it’s good that these companies are responsible for their own success, because they would be more certain to do their proper due diligence when hiring local installers.

When a homeowner buys their own solar PV panels, they contract with an installer who they hopefully can trust. Some installers don’t care about important items like shade from trees causing solar panels not making full power. But that is no longer a concern for the homeowner.

Since these companies make money by charging for the electricity, they will be motivated to hire the right people to do the installations correctly. SunRun, which I mentioned earlier, hires local installers. Solar City, on the other hand, actually employs their own installers.

With all that said, homeowners and businesses that want to go solar, now have an alternative way to install solar electric power. And they can get American made products to fulfill this desire. That’s a win-win for everyone.

Copyright © 2012 Glenn Stok

[1] Tech Briefs, February 2012

[2] Bloomberg Business Week, Feb 13-19, 2012

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