The excitement over solar power, which once attracted billions in private investment and public subsidies, has waned recently, underscoring the limitations of renewable energies and the unchallenged dominance of fossil fuels.
Some of the $75 billion sector's high profile names have fallen on hard times recently – most notably Suntech Power. The China-based solar panel company rattled the industry when it filed for bankruptcy last week. In its heyday, the stock traded just shy of $90 and had a market capitalization of $16 billion: on Thursday, the last day U.S. markets were open, the shares traded around for 42 cents each.
Alternative energy advocates point out that Suntech's difficulties were specific to its business model, exacerbated by a trend of compressed industry prices that have squeezed profit margins for solar companies. The company's failure belies a U.S. market where solar panel installations grew by 76 percent last year, according to the Solar Energy Industries Association (SEIA).
"The overall story is about growth and declining costs," said Arno Harris, chairman of the SEIA Board, in an interview. Much like the way low-cost natural gas is transforming the U.S. energy market, "[solar] costs have come down so dramatically, it's created a Darwinian environment," Harris added.
He pointed to the collapse in silicon – a linchpin of solar panel manufacturing – which has led to a steep drop in prices per watt of solar panels. That amount is now less than a dollar, down sharply from $4 per watt a few years ago, making it difficult for companies to make money.