Sun Spots
A couple months ago, I wrote about changes occurring at Tempe-based First Solar (When "First" isn't Always Best). The first shoe to drop was the abrupt departure of First Solar CEO Rob Gillette coming on the heels of reports that First Solar failed to secure government-backed loans for its Topaz solar plant in San Luis Obispo County, CA. Following Gillette's exit, the company issued a press release stating that it would reduce its capital expenditure budget for 2012 and look for ways to increase investments in market development, sales and research and development.
At the time, I wondered what this meant for First Solar's Mesa manufacturing plant, currently under construction with operational start-up projected for sometime next year. According to today's news, it appears the plant's opening will be pushed back to sometime in 2013 from its original start-up in 2012. Additionally, First Solar will reduce production at its other facilities due to the current glut of solar panels on the world market. The company also announced layoffs of 100 employees, mostly within California. First Solar CEO Michael Ahearn stated on a conference call with analysts that "the solar industry is structurally imbalanced" and that "easy entry of competitors will keep downward pressure on margins indefinitely."
The second shoe to drop at First Solar is a management shake-up that has several top executives leaving, including First Solar's chief accounting officer and the chief technologist of its advanced technology group, which was developing solar cell technology similar to that under development by ill-fated Solyndra, Inc. First Solar's stock price has continued to drop and is down over 20 percent since the beginning of the year.
In other Arizona solar news, the Arizona Corporation Commission sent shock-waves throughout the State's solar industry with its decision this week to scale-back incentives offered by APS for installation of small rooftop solar panels on homes and businesses. The ACC also reduced APS' budget proposal for recovery of certain costs like advertising and research and development for expanding its investment in renewables.
The ACC's action represents a significant change in policy direction for renewables. Not only will it affect the solar installation industry, but it also raises questions about whether the aggressive commitments by APS and other utility companies to increase their portfolios of renewable sources of energy can realistically be met.
So, are we seeing the beginning of the end for expansion of Arizona's solar industry? Some might think so, but not me. While the subsidies for encouraging and promoting solar might diminish over time (as they should), the sun will continue to shine most brightly in Arizona. Solar technology will continue to improve, and the cost of solar energy will move ever closer to the cost of the cheapest fossil energy.
A few solar flares along the way are unlikely to extinguish its long-term future.
