Solar power is looking a lot less bright these days, and large layoffs from a prominent panel supplier are only the latest example of the industry’s dimming prospects. First Solar, an Arizona-based solar panel manufacturer, just announced it would be cutting 1,600 jobs—27 percent of the company’s workforce—as it struggles to adapt to a changing market. The Wall Street Journal reports:
[First Solar’s] restructuring, announced Wednesday in response to steep price declines and lower demand in China, includes about 1,600 layoffs out of the company’s 6,000 workers in the U.S. and abroad…In addition, company officials slashed their 2020 solar target in China to 9 gigawatts, from 20 gigawatts, to account for further projected demand declines in that country. […]
Shares of the Tempe, Ariz.-based company, down more than one-half this year through Wednesday’s close, fell 13% in after-hours trading to $28.55, trading at 2013 lows.
First Solar’s latest projections for its sales next year are nearly half a billion dollars below what most analysts were expecting, and represent a sharp departure from the rapid growth the company has experienced recently. In fact, First Solar now expects to sell 14 percent fewer panels in 2017 than it did this year, generating 16 percent less in sales.
In First Solar’s case, this dramatic course adjustment can partially be put down to a decision to skip a generation of its panels in favor of a more advanced, efficient panel that the company’s CEO claims can be manufactured for 40 percent less than the current crop. But that doesn’t tell the whole story, because the industry as a whole is facing a dismal 2017, with plateauing sales and mounting debts. Rooftop solar installations grew by 71 percent in 2015, but are expected to manage just 16.5 percent growth this year. It’s only going to get worse for these solar producers, as next year’s installations are projected to grow by just 0.3 percent.
First Solar’s response—to scrap a line of costly, non-competitive panels in favor of investment in a better replacement—is a step in the right direction, but it doesn’t go far enough. In their current configuration, solar panels simply cannot compete with fossil fuels on price, and must instead rely on government subsidies like feed-in tariffs or tax credits to gain a foothold. Rather than propping up these fledgling technologies, policymakers would be far better off diverting taxpayer money towards the research and development of the next breakthrough in solar technology that would allow panels to thrive without outside assistance. That’s how shale gas is helping to reduce American emissions, and it’s the only way renewables will be able to follow suit and sustainably make an impact in the global energy mix.