Sunset for U.S. Solar Industry?

The emergence of a U.S. solar energy industry with leading edge technology seemed like a no brainer, especially given the Obama Administration's policy of favoring wind, solar and biofuels with taxpayer largess.  Recent developments reported by the New York Times are not encouraging, "In addition to Solyndra, Evergreen Solar of Massachusetts and SpectraWatt of New York also filed for bankruptcy in August. BP Solar shut down its factory in Frederick, Maryland, last spring. Those bankruptcies and closings represent almost a fifth of the solar panel manufacturing capacity in the United States, according to GTM Research"

Let's try to follow the economic chain on the solar industry.  Oil prices remain relatively high, especially compared to levels that would allow renewables to take a growing share of our energy portfolio--should be a + for solar.  U.S. companies seem to have developed collection technologies that increase efficiency compared to older panels--should be a + for solar.  The federal and state and local governments have been generous with subsidies for renewables--should be a + for solar.  Yet, the solar industry in the U.S. and even in Germany has been retrenching.  Why?

The NYT article also points out the rapid growth of Chinese solar companies, buoyed by cheap state loans and rock bottom labor costs.  Since China still produces electricity predominantly through coal, and since solar has an infinitesimal share in Chinese energy consumption, it seems clear that the growth in Chinese production is aimed at export markets and therefore the loans violate WTO agreements. This seems like a fairly unproductive use of Chinese government loan capital, as there is no significant demand for solar panel installations in the U.S., except for vanity residential projects by hedge fund billionaires or for corporate sustainability advertising by Google on a data center in the Mojave. 

The residential construction market is moribund, and will stay that way for a while as the issue of foreclosures is worked through the system.  Who would rationally put a solar panel into a remodel?  In this market, many traditional home improvement projects, like basements with pool tables and wet bars, are nor paying back.  New construction isn't focused on solar panels as an amenity either. 

The basic calculation is payback, and the payback isn't viable today.  Our city looked at a solar installation on a community center as a demonstration project, and even with some favorable state government cost-sharing, it was a non-starter.

Perhaps the biggest issue is that it's all off the grid anyway.  Again, if the administration is looking for a "moon shot" type of infrastructure project, it should be to rebuild the U.S. energy transmission grid which would benefit  both consumers and businesses.  Then, if Bono were to build his new recording studio in Joshua Tree Monument, he could just plug the solar panels right into the grid and sell his excess electricity to the utility! 

There's nothing wrong with pursuing improvements in solar panels, as it's a logical focus for science and engineering programs, but we should recognize that this source, along with wind and renewables, will continue to be marginal contributors to our total energy portfolio for some time, unless we are willing to accept both significant changes in life styles and higher costs.