Solar's a bust?

[RuntheDamnBall]

Here's a Tom Friedman column on it. I'm finding his style grating these days but liking what he has to say here:

December 6, 2006

OP-ED COLUMNIST

 

China’s Sunshine Boys

By THOMAS L. FRIEDMAN

 

So here’s a little news quiz: Guess who’s the seventh-richest man in China today, with a fortune estimated by Forbes magazine at $1.43 billion?

 

Answer: Shi Zhengrong. Now guess what he does. Real estate? No. Banking? No. Manufacturing for Wal-Mart? No. Construction? No.

 

Mr. Shi is China’s leading maker of silicon photovoltaic solar cells, which convert sunlight into electricity. Yes, the seventh-richest man in China is a green entrepreneur! It should only happen in America.

 

Mr. Shi thinks, as I do, that renewable clean power — wind, solar, bio-fuels — is going to be the growth industry of the 21st century, and he wants to make sure that China and his company, Suntech Power Holdings, are the leaders. Only 43 years old and full of energy himself, Mr. Shi hopes to do for solar energy what China did for tennis shoes: drive down the cost so that millions of people who could not afford solar photovoltaic panels will be able to do so.

 

As an environmentalist, I wish him well. As an American, I worry that if we don’t start doing everything we can to develop our own clean power, we’re going to miss out on the green industrial revolution. Today, most of our hybrid cars are imported from Japan. Tomorrow, if Mr. Shi has his way, most of our solar panels will come from China.

 

What Mr. Shi understands is that China is going to have to go green. Its rivers and air are becoming so polluted it has no choice. In fact, as he and I spoke in his 66th-floor office in Shanghai, the air was so dirty you could barely make out the skyscrapers down the street. America, alas, still seems to think it has a choice in going green. So while China will be compelled to move into this industry, U.S. companies may or may not, depending on whether states, or Washington, require power providers to generate energy from renewables.

 

For years our brain-dead Congress thought it was helping our power companies and manufacturers by not imposing tough energy-efficiency standards on them. In fact, it was just helping some of them commit suicide. Congress’s idiotic decision not to impose higher mileage standards on U.S. carmakers helped Detroit miss the market and almost go bankrupt. China already has higher mileage standards for its autos than we do.

 

“People at all levels in China have become more aware of this environment issue and alternative energy,” said Mr. Shi. “Five years ago when I started the company people said: ‘Why do we need solar? We have a surplus of coal-powered electricity.’ Now it is different; now people realize that solar has a bright future. But it is still too expensive.”

 

Mr. Shi founded Suntech in Wuxi, China, near Shanghai, after earning a Ph.D. in engineering in Australia in 1992. As The Wall Street Journal put it in a recent profile, Suntech combines “first world technology and developing world prices” — so effectively it has become one of the world’s four top solar manufacturers, along with Sharp and Kyocera of Japan and BP.

 

The key, Mr. Shi explained to me, is that he uses more low-cost Chinese labor, rather than high-tech machines, to make his solar modules and handle the fragile silicon, and he takes advantage of the subsidies offered by different Chinese provinces dying for him to open a Suntech factory in their region.

 

Roughly 90 percent of his business today is abroad. But as he brings the price down, the China market will open up, and he expects to use that to gain much greater scale and drive the price of his solar modules down further.

 

“If we have a market here, we feel confident we will be a cost leader,” he says. “Now we are at around $4 per watt. In 10 years time, I’m pretty sure we will be below $2 per watt,” which would make solar competitive and scalable.

 

Thanks to Suntech’s success, “now there is a rush of [Chinese] business people entering this sector, even though we still don’t have a market here,” added Mr. Shi. “Many government people now say, ‘This is an industry!’ ” To help, the Chinese government just passed a law mandating that China get 10 percent of its energy from renewables, like solar, by 2020.

 

China is setting high standards for renewables, but is still weak on enforcement. America is better at enforcement, but still weak on setting high standards. We need to get our act together, because eventually China will bring its enforcement in line with its regulations — or it won’t breathe. And when that happens, China’s emerging green power entrepreneurs could clean our clock in the clean power business.

 

Oh, well, you can always buy a share. Suntech is already listed on the New York Stock Exchange.

[Orton's Arm]

A good article. I hope that the cost of solar does end up getting cut in half.

[Ramius]

A good article. I hope that the cost of solar does end up getting cut in half.

858819[/snapback]

 

then there'd be more money for paying those ghetto residents to get their tubes tied.

[Orton's Arm]

then there'd be more money for paying those ghetto residents to get their tubes tied.

858820[/snapback]

You know what we need around here? Fewer threads about solar cells, emerging industries, and the environment. We also need more threads about eugenics, regression toward the mean, and generally throwing insults at each other. I thank you for moving this thread from the badness of the first group of things toward the goodness of the second group. You're really on top of things today, aren't you Ramius? I'm sure RTDB appreciates your efforts to hijack his thread.

[Ramius]

You know what we need around here? Fewer threads about solar cells, emerging industries, and the environment. We also need more threads about eugenics, regression toward the mean, and generally throwing insults at each other. I thank you for moving this thread from the badness of the first group of things toward the goodness of the second group. You're really on top of things today, aren't you Ramius? I'm sure RTDB appreciates your efforts to hijack his thread.

859074[/snapback]

 

notice how there had been no responses in this thread after you responded? thats because people saw that your dumb ass was trying to say something, and knew that you would inevitably butcher it and !@#$ it 40 ways from sunday, and thus decided is wasnt worth reading the incorrect gibberish that you were going to spew

 

RTDB, sorry for the thread hi-jack. Have one on me...

[bartshan-83]

You know what we need around here? Fewer threads about solar cells, emerging industries, and the environment. We also need more threads about eugenics, regression toward the mean, and generally throwing insults at each other. I thank you for moving this thread from the badness of the first group of things toward the goodness of the second group. You're really on top of things today, aren't you Ramius? I'm sure RTDB appreciates your efforts to hijack his thread.

859074[/snapback]

You serious, Clark?

 

I'm going to assume you have already forgotten that you started a new thread about regression towards the mean about 18 hours ago instead of posting it in one of the two current trainwrecks...

[Orton's Arm]

notice how there had been no responses in this thread after you responded? thats because people saw that your dumb ass was trying to say something, and knew that you would inevitably butcher it and !@#$ it 40 ways from sunday, and thus decided is wasnt worth reading the incorrect gibberish that you were going to spew

Instead of responding in kind to these insults (and thus hijacking the thread), I'm going to say something about the original article.

 

On the one hand, I'm glad solar power is apparently being developed. On the other hand, I'd rather see it developed here than in China. Once an industry gets going in a particular place, it's tough to transplant it to some other place. For example, think of how nicely set up Silicon Valley is if you want to start a high tech firm. You've got lots of talented, motivated people right there, venture capitalists ready to fund high tech firms, suppliers, customers, everything all right there.

 

Suppose this same support structure were to be built for solar companies in China, but not for solar companies in the U.S. Do you think that if we fell behind early on, we could catch up later? It'd be awfully difficult.

[Orton's Arm]

 

You serious, Clark?

 

I'm going to assume you have already forgotten that you started a new thread about regression towards the mean about 18 hours ago instead of posting it in one of the two current trainwrecks...

859091[/snapback]

I was hoping the regression toward the mean discussion could stay confined to that thread, instead of bleeding over onto the whole PPP board.

[bartshan-83]

I was hoping the regression toward the mean discussion could stay confined to that thread, instead of bleeding over onto the whole PPP board.

859093[/snapback]

Fair enough, but I think you missed the boat on that one say about 700 posts ago.

[molson_golden2002]

I really like Thomas Friedman on this topic. He seems to get it. The GOP congress that is about to thankfully expire was so tied to big oil that nothing could get done. The big oil companies were basically using America to make as much of a killing as they could and screw the rest. The Democrats will probably be tied to big coal but hoepfully there will be enough wiggle room there for them to spend some serious money on alternative energy. For the hundreds of billions wasted on this Children's Crusade to Iraq we could be well along the way to having a new economy built on reliable American sources. We could have said "Take your oil and stuff it Iran!" Oh well, so goes the world.

[John Adams]

China has a big advantage on things like this. Central planning can mandate and drive ideas that capitalistic systems are slower to adopt. China can, for instance, displace a few hundred thousand people to divert a river because it makes sense for a big city.

 

So I'm not sure the Chinese or that guy are smarter than us--their government has just made solar a priority and personal freedom less of one.

[Pine Barrens Mafia]

China has a big advantage on things like this. Central planning can mandate and drive ideas that capitalistic systems are slower to adopt. China can, for instance, displace a few hundred thousand people to divert a river because it makes sense for a big city.

 

So I'm not sure the Chinese or that guy are smarter than us--their government has just made solar a priority and personal freedom less of one.

859361[/snapback]

 

Facts suck. Excellent post.

[Alaska Darin]

I really like Thomas Friedman on this topic. He seems to get it. The GOP congress that is about to thankfully expire was so tied to big oil that nothing could get done. The big oil companies were basically using America to make as much of a killing as they could and screw the rest. The Democrats will probably be tied to big coal but hoepfully there will be enough wiggle room there for them to spend some serious money on alternative energy. For the hundreds of billions wasted on this Children's Crusade to Iraq we could be well along the way to having a new economy built on reliable American sources. We could have said "Take your oil and stuff it Iran!" Oh well, so goes the world.

859098[/snapback]

You mean because the Democrats didn't control Congress for 40 years before 1992 and there wasn't any evidence that oil was going to be a problem? Yeah, it's all because of the Republicans. You know, because the left is such a group of action taking visionaries.

[Pine Barrens Mafia]

Not so fast... Score one for American Capitalism.

[UConn James]

Yeah, it's all because of the Republicans.  You know, because the left is such a group of action taking visionaries.

859399[/snapback]

 

Well, granted that a number of the left's 'action-taking visionaries' in that time period were assassinated for said action-taking....

[Pine Barrens Mafia]

Well, granted that a number of the left's 'action-taking visionaries' in that time period were assassinated for said action-taking....

859420[/snapback]

 

*rolls eyes* Never mind that RFK was killed by a leftist loonie of a different sort and that JFK was killed by a guy who sympathized with the Soviet Union...

[RuntheDamnBall]

China has a big advantage on things like this. Central planning can mandate and drive ideas that capitalistic systems are slower to adopt. China can, for instance, displace a few hundred thousand people to divert a river because it makes sense for a big city.

 

So I'm not sure the Chinese or that guy are smarter than us--their government has just made solar a priority and personal freedom less of one.

859361[/snapback]

Really good answer. Other one is, and I can't believe Friedman let this slip so easily, but his whole spiel about the reason this is possible being due to low-cost labor; well, that's not reality here, and a lot of people think it shouldn't be over there, either.

[RuntheDamnBall]

Not so fast... Score one for American Capitalism.

859401[/snapback]

This is kind of my point in posting this, though, JSP --

You've been a champion of technology, yet I've noticed you shoot down the possibility that technological advancements will ultimately allow us to do completely clean and safe energy like this on a large scale.

 

For me, this is score one for everybody -- if it happens to be us, that's immeasureably better because I feel like we have the most potential to do good for the rest of the world.

[Pine Barrens Mafia]

This is kind of my point in posting this, though, JSP --

You've been a champion of technology, yet I've noticed you shoot down the possibility that technological advancements will ultimately allow us to do completely clean and safe energy like this on a large scale.

 

For me, this is score one for everybody -- if it happens to be us, that's immeasureably better because I feel like we have the most potential to do good for the rest of the world.

859451[/snapback]

 

Mine is a short-term vs. long-term issue.

 

Short-term solar is not the answer. Long term it might be.

[RuntheDamnBall]

Mine is a short-term vs. long-term issue.

 

Short-term solar is not the answer. Long term it might be.

859456[/snapback]

You may be right. At the same time, technological breakthroughs can change everything -- just look at how the net has changed the dynamic in a very short time. Implementation is another story, though, and obviously there is so much planning involved.

 

I think what we all need to realize is that most market change is glacial. That goes for job markets as well. What works for China right now may be what worked for us in the latter half of the 19th century. Obviously we can't go back there, yet we share a world and that's what makes competing difficult.