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Solar is Hot – From our advisor, Alec Guettl

 

Posted from Sungevity

There’s a lot of confusion about the promise of clean energy jobs, and the picture only got murkier two weeks ago with the bankruptcy of Solyndra, a start-up US solar equipment manufacturer.  Given the funereal coverage of the Solyndra collapse, you might think solar is shaping up to be another dud in a series of attempts to make something good happen in this economy.  It turns out you’d be dead wrong.

Solar is the fastest growing energy sector and fastest job-creating industry in the country right now, and is likely to remain so for years to come, the failure of one company notwithstanding.

So what’s going on in solar?

Solyndra’s bankruptcy is regrettable, but not surprising.  This one company’s business model was dependent upon providing a particular design of cheaper solar equipment. Unfortunately for them, their U.S. and overseas manufacturing competitors developed technologies and processes that reduced the price of solar panels by 67% over the last three years.  (Repeat: The price of solar panels has dropped 67% in the last three years!) These changes in technology passed Solyndra by, leaving them with the cold, hard facts of business – Solyndra could not compete with the rest of a fast-evolving industry.

Like the constantly evolving cell phones and computer industries, economies of scale and innovation will force individual, non-competitive companies out over time.

But the bigger picture for U.S. solar is bright.  Last year, the solar energy industry grew more than 100% in the U.S., compared to overall GDP growth of less than 3%.  This industry growth was mirrored in job figures.  The number of solar jobs nearly doubled from 2009 to 2010 and growth continues in 2011.  Over the next 10 years, growth in this renewable energy sector is likely to expand exponentially.

This progress ultimately benefits consumers. In many parts of the U.S. today, homeowners can see their overall electricity bills go down 10 – 20 % overnight by switching to solar electric service through the availability of solar leases, without putting any money down or taking on debt.  That prospect – switch to solar for free and save money – is driving mass adoption, in the US and globally, and mass adoption is driving scale and price reductions further.

This is a great development for Americans, both as consumers of cleaner, cheaper electricity, and as participants in an economy that is seeing massive job growth from the solar industry in all 50 states.  While solar equipment manufacturing creates jobs, it turns out that there are four times more jobs in construction, innovation, software and marketing. These are jobs where America excels, and can’t or won’t be exported.

Solar’s growth is even more compelling when compared to the fossil fuel industry it is disrupting. In fact, the rate of solar job creation is significantly higher than the expected three percent net job loss in fossil fuel power generation.

As solar energy continues to disrupt fossil fuels’ monopoly on energy generation, it should be no surprise that opponents of solar, many of whom are funded by the oil and gas companies, often claim that solar benefits from outsized policy investment.

In fact, solar receives a small fraction of the subsidies the fossil fuel giants are granted, in spite of the fact that oil, gas and coal are mature industries that expose the country to environmental and geopolitical risk while individual companies break world records for quarterly profits with frightening regularity – in fact each time our gas prices spike.

Solar and other renewables do receive some policy support, but on a much smaller scale than the fossil fuel industries.  A recent study from the Environmental Law Institute showed that fossil fuels companies received a total of $72 billion in subsidies, compared to less than $2 billion for solar companies, during most of the last decade.

Or taking the longer view, in the aggregate, oil and gas companies have received about $450B in subsidies since World War I, while renewables in total have received about $6B.  And it’s not just because oil and gas have received subsidies for a longer period.  The same study found that oil and gas has received an average of $4.86B per year during its subsidy period (since 1918), while renewables, of which solar is just a subset, have received only $.37B per year, and only since 1994.

The point of a subsidy is to help a new industry achieve scale, so that the whole country can benefit.  With smart policy investments for solar, the goal is being achieved.  Today, nearly100,000 American construction workers, installers, innovators and other support service employees are building the US solar industry.  And small businesses are sprouting up all over the country.  Job figures are swelling, uniquely in this economy, subsidies are falling in many places, and US energy consumers are better served.  Within the next decade, solar will no longer need policy investments, unlike the fossil fuels that have depended upon them for nearly a century.

Consider this: every single day, more energy from sunshine falls on this country than we can consume in 10 years.  We’re finally figuring out how to convert and use that energy cheaply, so we don’t have to dig up, transport and burn 200 million year old carbon to power our lives.  There will be the occasional business casualty along the way like any other industry, but this is a journey that will make America more prosperous and secure.

About alec

Alec Guettel is a Co-Founder and the Chair of Sungevity’s Board. His primary operational focus is international market development. Prior to joining Sungevity, Alec co-founded Axiom Law, one of the nation’s fastest growing private companies. He holds an MBA from Stanford’s Graduate School of Business.

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