It must feel like running in quicksand.
This past Tuesday, U.S. Secretary of Labor Hilda Solis traveled to Hopewell Junction, New York (in the southeast part of the state) to bask in the glow of 37 new jobs at a new 60 MW SpectraWatt solar plant. SpectraWatt is a venture-backed start-up that makes high performance silicon solar cells. Over the next year and a half the firm plans to expand capacity to 200 MW and employ 150 workers. (See story from the Times Herald-Record)
But four days earlier, a much older and more venerable solar operation, BP Solar, announced that has ceased production of solar silicon wafers and cells at its facility in Frederick, MD. Jobs lost – 320. Almost exactly a year ago, BP Solar had stopped module assembly at the plant, costing the region 140 jobs. In Friday’s press release, BP blamed the shut-down on the up to 50% drop in prices for solar modules, and said it would shift all production to joint ventures and outsourcers in China and India.
BP Solar’s CEO Reyad Fezzani says it needs the “high quality, low cost supply base” in China and India to remain competitive given the lower prices.
Solar’s precipitous price declines, and the resulting over-supply of solar modules, is actually good news for the future of solar energy, for those who take the long view. Even compared to other alternative energies – like wind – solar is still very expensive. If the U.S. is serious achieving real energy independence and cutting its CO2 emissions, then the country will need very cheap solar modules. To achieve solar “grid-parity” with electricity from coal-fired power plants, the U.S. will need to stock the nation’s rooftops and deserts with modules made by profitable, large-scale solar manufacturers.
But what about those domestic high-tech manufacturing jobs? Because labor costs are more expensive in the U.S., technology manufacturing here is accomplished in highly automated plants. They don’t require many people to operate. But when prices drop, manufacturers cannot earn back those high fixed costs. In Asia, factories are both huge and productive, but owners can substitute more cheap labor (a variable cost) for pricey automation.
For policy makers, the SpectraWatt/BP Solar story suggests that green manufacturing jobs will be hard to create, and even harder to keep. For now, the same economic forces that destroy jobs in the U.S. are also bringing the renewable energy horizon a little closer.
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