A weird kind of phoenix analogy

You hear U.S. Republicans mention the so-called Solyndra boondoggle all the time. They’re not really interested in solar energy or that company in particular, and the story is just a cudgel to try and hit the Obama administration for bad decision-making. It’s quite disingenuous, of course, and government guarantees for the company would be a good opportunity to digress on energy industry subsidies in general. But Republicans have long lost the utility for substantive debate.

But this Technology Review article suggests that a quite a few more solar energy companies need to die so that the industry can rise:

If Suntech fails and shuts down its factories, that might not be a bad thing. Some industry experts say that hundreds of solar companies need to fail to help bring solar panel supply back in line with demand. That would slow the fall in prices and, as demand recovers, allow companies to justify buying new equipment and introducing the innovations that will ultimately be needed for solar power to compete with fossil fuels.

But there’s a good chance that Suntech, and many other companies in China, will be bailed out by local governments, which would delay the much-needed reduction in production capacity. Worldwide, solar companies have the capacity to manufacture between 60 and 70 gigawatts of solar panels a year, but demand in 2013 is only expected to be about 30 gigawatts.

The worldwide glut of solar panels—which has lasted nearly two years—is partly the result of big government-backed investments in solar panel factories in China, where two-thirds of solar panel production capacity is located. The surplus has been good news for consumers and solar panel installers because it’s helped drive a precipitous drop in solar panel prices. They’ve dropped 60 percent since the beginning of 2011, according to GTM Research. Solar panels sold for $4 per watt eight years ago. Now it’s common to buy solar panels at 78 cents per watt, says Jenny Chase, an analyst at Bloomberg New Energy Finance.

There is all kinds of disfunction about late-stage capitalism, and among them is that supply and demand aren’t allowed to work as they should; people, d/b/a corporations, scream about free markets but want protection and bailouts for bad-decision making; there’s moral hazard for the poor but not for the rich and never for big banks or hedge funds; and of course ‘competition’ is actually defined as monopoly in everything from cable TV and wireless broadband to chips, beer, soda pop and office supplies.

You can see how the mighty solar industry might work if left to find its market equilibrium. Although it can’t compete with the built-in advantages enjoyed by the poor little fossil pollution industry, which is under attack from those mean ole externalities and hence, needs our support.

But there’s some poetry to a solar industry rising from flames, if you’re still interested in poetry and solar energy. And I think you are.