Tuesday, August 25, 2009

Solar update

Ze Germans are having a tough time of it.

Last year I wrote a blog post criticizing German efforts to develop a solar industry as wasteful and unlikely to work. It featured this quote from the chief executive of Q-Cells, a German solar panel manufacturer:
"To develop a technology, you’ve got to create an industry. You can wait and wait and wait for costs to come down, but it takes too long.”
Well, today's New York Times has an article on Chinese efforts to develop a solar industry that includes this nugget:
Western rivals, meanwhile, are struggling. Q-Cells of Germany announced last week that it would lay off 500 of its 2,600 employees because of declining sales. It and two other German companies, Conergy and SolarWorld, are particularly indignant that German subsidies were the main source of demand for solar panels until recently.

“Politicians might ask whether this is still the right way to do this, German taxpayers paying for Asian products,” said Markus Wieser, a Q-Cells spokesman.
Apparently our friends at Q-Cells are having a rough time of it, and are upset that German subsidies for the purchase of solar panels are being used to buy Chinese imports. If anyone is tempted to have sympathy for Q-Cells, or thinks that artificially cheap Chinese goods are unfair, I would recommend you go read Bastiat's petition on behalf of candle makers to block out the sun.

This part is also worth highlighting:
First Solar — the solar leader, in Tempe — using a different technology from many solar panel manufacturers, is actually profitable, while the new tax credits now becoming available may help other companies.
So First Solar -- perhaps due to a particularly innovative technology -- is making profits, which makes you wonder why government subsidies are needed. Further, why is the government providing tax credits that will assist First Solar's competitors? If they can't keep up with First Solar and have inferior products then they deserve to perish. If they can compete then the subsidies are unneeded.

Government involvement in alternative energy hasn't worked in Germany, hasn't worked in Spain, and it won't work here. The push to spend public money in this area is betting tomorrow on the failed policies of yesterday.

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