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Guest essay by Eric Worrall
h/t GWPF, JoNova – Global climate champion China just sent shockwaves through their domestic solar industry by slashing government support for grid scale and distributed solar projects.
Why The Lights Went Out On Solar Stocks Today
China threw solar investors for a loop today and the impact on solar manufacturers could last for years.
Travis Hoium (TMFFlushDraw)
Jun 4, 2018 at 3:15PM
What happened
Solar stocks took a beating Monday after China cut its national incentives to install solar projects. Shares of solar panel manufacturers Canadian Solar Inc. (NASDAQ:CSIQ) fell as much as 14.5%, JinkoSolar Holding Co. (NYSE:JKS) dropped as much as 17%, and Daqo New Energy Corp (NYSE:DQ) fell as much as 31.3% while inverter manufacturer Enphase Energy Inc (NASDAQ:ENPH) fell up to 13.5%. By early afternoon, most major stocks in the solar industry were down double digits.
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There’s also uncertainty as to when China’s solar market may recover. If local governments implement stringent rules on how solar installations are compensated, it could dampen demand for years. There’s simply no positive way to spin today’s news and that’s why solar stocks are falling across the board.
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Read more: https://www.fool.com/investing/2018/06/04/why-the-lights-went-out-on-solar-stocks-today.aspx
China has experienced a few energy policy upsets recently. A botched coal to gas conversion left people shivering in unheated homes and shuttered factories last winter. Perhaps the risks of embracing renewables – grid instability, upwards pressure on electricity prices – would have been too much on top of their other problems.
This should further “blunt the momentum” of climate change advocacy, as a very recent thread (reprinted from the WSJ) argued here:
https://wattsupwiththat.com/2018/06/has-climate-change-advocacy-has-run-its-course-it-sure-seems-so/
Advocates will no longer crow about how China is leaving us in the dust with its far-seeing, top-down, dirigiste, scientifically supported policy. That has been a big Greenie talking point.
There is a reason for chasing high-performance PV cells. As an ex-satellite designer, those are a requirement. Extension cords do not work. Diesel backup is not an option. Squeaking every measly 1% of performance reduced weight, reduced vibrations, with impacts on booster size and lifetime on orbit – both in orbit adjusts as well as power generation.
China has a growing space presence, and the US is helping to fund their solar development. Well, at least until (and if) Trump starts putting tariffs on them.
Why would China subsidise solar panel manufacture? Because it accurately noted that the West was going mad for these products, and wanted to be the de-facto monopoly supplier?
Let us hope that they have now accurately determined that the solar craze is over…
The solar craze will be over when governments stop subsidising solar. The Free Market doesn’t seem to like solar at this time
I’ve noticed a lot of advertising on tv over the last few months promoting wind and solar power and I wondered why they are doing this now, and I think the answer is they realize their industry is hanging by a thread when it comes to governments continuing to subsidize their products.
You’re going to be disappointed.
Solar panels must be on President Trump’s list of products that are being dumped in the USA?
Jo Nova (link above) says:
What a big black swan! This might have as much impact as Trump’s exit from the Paris Agreement. It will have revererations in many areas, and demoralize activists and UN bureaucrats.
Wow; demoralize activists and UN bureaucrats.
Severe butt-hurt. Imagine that.
If solar is making electricity so expensive they have to restrict it,
in China where they make their own panels and inverters,
then it must be much worse for the electricity price here,
where we have to import all the equipment.
The US withdrawing from the Paris agreement making green heads explode.
Trump taking direct aim at the EPA to free up the US economy.
Then steel and aluminium tariffs, exposing the EU as the vindictive, childish bureaucracy we Brexiters always knew it was. And fracking finally getting some traction in the UK.
Are these knock on effects of Trump fulfilling his campaign promises?
And if so, what’s the knock on effect going to be from this going to be I wonder?
The Donald has the world by the nut’s and is squeezing.
I reckon he’s put the cat amongst the pigeons in the full knowledge that it’ll consign climate change to the dustbin of history. The worlds politicians will be so concerned about bigger issues they’ll stop leveraging it as the excuse for taxing everything that moves.
The world will be forced to break into a political trot, then canter, finally an outright sprint to keep up with a US economy finally shaking off the shackles of political complacency, and subservience to minority group politics.
Instead of spewing money into renewables, the whole lot will have to be directed at economies, and investment in growth initiatives, like……….wait for it……..business and international trade…….. Shock Horror!
Perhaps it might persuade Mother Theresa May to listen to her Brexit Minister David Davis and tell the EU to take the most massive running jump and deal with the Irish border issue ourselves (yet another means the EU is seeking to deploy to force compliance).
If the EU don’t want Northern Ireland to be used as a back door for their goods and services into the UK, tell them to sort out the border problem themselves, and carry the can if they screw it up, it’s not our problem. Similarly Scotland, if they want to stay in the EU, give them the problem of dealing with the inevitable border issue that’ll arise. Perhaps they can rebuild Hadrian’s wall!
Meanwhile, the rest of the UK can get on with dealing with America, as we should have done in the 1970’s when we signed up for the Common Market which, we were promised, wouldn’t turn into a political union.
Why did we ever swallow that effing great whopper!
Welcome Donald. There is growing support for you here, even the BBC is gradually changing its tune. Welcome back America, sorry we left you.
HotScot….As always your comments are well worth the read…..and this is no exception. I agree completely with almost everything you say in your comment EXCEPT that I still don’t see any major shift from the BBC over President Trump. They are just as nasty, petty and desperate for him to suffer a fall from grace as they have been since before he was even elected. Their US correspondents (whether British or American) just can’t hide their glee whenever ANYTHING with a whiff of dirt or a hint of ignorance over any matter can be used to besmirch the President. I don’t think there has been a SINGLE day since he won the election when Trump has not been in a story on the BBC front page, usually with all kinds of scurrilous innuendo and speculation. Frankly, I find the BBC’s coverage grossly biased and I’m embarrassed that it comes from this once-venerable institution. It’s a real shame!
BTW, your comments on the EU are spot-on, too, as is the need to pass the buck to them on Ireland and (hopefully not) Scotland in the future.
Phil
Don’t recall anybody in the USA (or anywhere else, for that matter) voting for the BBC.
Thens of millions voted for Trump.
Trump is showing people a new way of operating. A basically anti-socialist way of operating, and people around the world are starting to see where Trump is going and are deciding they want to go there, too, because Trump is Winning.
Trump has shown people how to win and others will start to immulate him. It won’t start with the Leftwing Media accepting Trump, it will start with politicians who see Trump winning and say to themselves, “I/we can do that, too by doing what he is doing. And we should, because we also want to be winners.
The Populist movement is growing in Europe and it is a result of Trump’s alternate winning vision and from backlash over the EU allowing unrestricted immigration of millions of people who will not integrate into European society.
Tom- did you mean “emulate him”, or “immolate him”? usually typos are obvious- thimk or ruvved out.
No, I don’t want anyone injuring him. It should have been an “e”.
HotScot:
Excellent statement!
There’s a recycling renewables jolt hitting the marketplace right now.
“Trash Talk: Price of Recyclables Sinks After China Bans U.S. Scrap”
A change that will force most “recycling” businesses to send citizen separated recycling trash straight to trash pits.
Now, where are all those people who claimed that China’s one party state was best placed to push through climate action quickly? It seems like they were right, just not in the way they thought.
However one characterizes the current government of the PRC, they are anything but stupid. Cutting their losses on solar is an example of pragmatism, which is unknown to western greens.
Exactly. They were fine when the American president is a credulous boob like Obama, whom they could play like a fiddle. Under his administration, they knew could say just about anything, and the lefties and Progressives in the West, the leftist media would swallow it down. All the while knowing they’d never really be bound by any GHG obligations, and that they can make up any rule or law they want, instantly.
But now they might be starting to think THEY will get played, THEY will suffer for playing along with CAGW climatetists. Instead of increasing their competitive advantages over the West by selling us more solar and wind, they become hoisted with their own petard, with expensive “green” energy costing their company’s jobs and their opportunities. I don’t think they ever intended to switch to renewable energy, but were thrilled that we would do it, and sell us the solar panels and windmills. They were smart enough to join the brainwashing of the West in CAGW thinking and to sell us their crap. They were smart enough to join the brainwashing of the West in CAGW thinking. But they’re not stupid like the politicians in South Australia, pretending rising costs and failing reliability are GOOD things.
Isn’t this what American Leftists wanted? At some point I remember a call for tariffs on Chinese solar panels. I mean, we can’t have ordinary Chinese citizens subsidizing the saving of the planet!
Years ago, someone I did some minor business deals with suggested we start a solar panel business in Illinois. But when the state subsidies disappeared, so did our business model.
China really is a capitalist nation, now, isn’t it?
Not sure that “capitalist” still means anything nowadays. Berlin Wall collapse & China economic U-turn basically destroyed the meaning of the word. Pretty sure a man awakening form a coma from 30 years ago in USA would wonder why and when USA became so USSR-like (massive surveillance, media control, dissidents targeted by IRS, FBI and other administrations, etc.)
China is a one-party dictatorship, with a personality cult similar to North Korea. China actually has only two things that North Korea does not have: a high intelligence of its leaders, its industry managers, and a better foreign department that sells the critical social order in homeopathic doses to the world public. In addition, China is bigger, there are always a few niches. These were present even in the Soviet Union under Stalin. In North Korea, however, these are also missing, due to the smallness of the country.
30 years ago, China started allowing small scale capitalism. In the years since, they have started to allow some medium scale capitalism.
All the big industries are still owned by the state, and everything is still heavily regulated.
2/3 of all the GDP creating enterprises are state owned in China.
Further evidence of how dependent on subsidies and other market distortions solar power is.
If “renewable” energy was required to compete on level terms every solar and wind farm would go bankrupt almost immediately.
Solar power will be economical in 10 years, and always will be.
We’ll probably have practical fusion before we have economical solar
GOOD ! The GOOD NEWS is spreading !
PERHAPS “common sense” will begin to “kick-in” again SOON !!!
First the USA , now China , perhaps Australia ????????
Here is hoping !
How the mighty have fallen.
China went from the same diesel power backup level of need that India has been in to higher capacity from all sources. It does not need the subsidy today. It does need to cut overcapacity in solar, steel, aluminum, cement…….
And what is more is the simple fact that if you want to WARM the planet then plaster it with Solar Panels. They are more efficient than CO2 for that. You only have to look at the Stephen-Boltzmann equation to see it. -:(An equation by which the temperature of all the heavenly bodies are determined.)
Would be interesting to see some calculations on heating from a large solar panel installation compared to the cooling it would provide via reduction of CO2 generation.
There will be wailing and the gnashing of teeth. The tantrums induced by the withdrawal of the taxpayer’s teats will be with us for a while.
Meanwhile back at EU subsidy land….
A decade after debut, first A380 jumbos to be broken up
A German investment company said it would strip two unwanted Airbus A380 superjumbo passenger jets for parts after Singapore Airlines decided not to keep them in service.
The Dr. Peters Group made the decision barely 10 years after it went into service hailed by heads of state as a symbol of European ambition.
Back in the EU subsidy country. According to the Kraftfahrt-Bundesamt, the number of newly registered electric cars in Germany in 2017 was approximately 25,000. In 2018, there were about 12,300 units so far. The subsidy box for EVs launched in 2016 has not even been used half. There is even a downward trend, as the number of registrations declined again in May. One would not even imagine what the number of EVs would have looked like without the state subsidy.
The approval numbers for hybrid drives look a little better, but in comparison with internal combustion engines, they are negligible.
So much for the claim that China is “all in” in regards to global warming and renewable energy.
“a Chinese academic explains that the main reason to cut solar subsidies is to “make electricity cheaper“.
What a brilliant idea! If only we could persuade California’s state government to follow China’s lead, we could “make electricity cheaper” for all Californians.
China understands industrial need for energy and above all wants to maintain their advantage in the “Globalization” game that’s been tilted in their favor. Watching the West undermine their economies with subsidies and stifle their productivity with a false CO2 narrative was OK while it lasted but now playing in that game is no longer to their advantage.
In other news….
https://www.bloomberg.com/news/articles/2018-06-07/u-k-wind-drought-heads-into-9th-day-with-no-relief-for-weeks
Noted.
It’s the British Isles.
We get variable weather – that’s why we talk about it so much.
Sometimes it’s too wet – or too dry.
Or too windy – or not windy enough.
It happens.
some times three seasons in an afternoon.
Sometimes one season for ten days.
And predictable for all of two days . . .
I still have not discovered how – at present knowledge – we can power an electrically-lit cat flap when there is no wind – and, hush, Myrtle – it’s dark!, too
Better batteries are ten years off, still.
Still.
Auto
I was wondering what was going on with FSLR. Their stock has dropped about 14 dollars in the last 4 days.
A quote from Wiki page named:
” … Solar Cell Research
Silicon wafer-based solar cells
Despite the numerous attempts at making better solar cells by using new and exotic materials, the reality is that the photovoltaics market is still dominated by silicon wafer-based solar cells (first-generation solar cells). This means that most solar cell manufacturers are currently equipped to produce this type of solar cells. Consequently, a large body of research is being done all over the world to manufacture silicon wafer-based solar cells at lower cost and to increase the conversion efficiencies without an exorbitant increase in production cost. The ultimate goal for both wafer-based and alternative photovoltaic concepts is to produce solar electricity at a cost comparable to currently market-dominant coal, natural gas, and nuclear power in order to make it the leading primary energy source. To achieve this it may be necessary to reduce the cost of installed solar systems from currently about US$1.80 (for bulk Si technologies) to about US$0.50 per Watt peak power.”
https://en.m.wikipedia.org/wiki/Solar_cell_research
—
That’s how allegedly “economically competitive” the best mainstream solar PV cells today are, or 360% more expensive as generators, than coal-fired electron makers.
The price of solar panels has been falling at only about 20℅ per decade (on average-ish). So don’t hold your breath waiting for solar PV panels to become genuinely economically competitive, sans subsidies, and concerted political vandalism of traditional baseload electron manufacturers.
Even Communism, pretending to be Socialism, with “Chinese Characteristics”, eventually runs out of other people’s money.
Just to be pedantic, they are electron pushers, not electron makers.
Cost is irrelevant if you cannot supply energy to supply consumer demand at the correct time.
Free would not be cheap enough. That is why you have to pay to get rid of surplus renewable generation.
Hopefully, Chinese government has finally realized this.
Damn – this isn’t good for us personally. We’re building a house on a mountain top. Getting city power to it will cost upwards of $75k. So, we’re going solar/inverter/batteries/diesel generator. A lot cheaper. Even with maintenance. If the price of solar goes up, that will hurt, but probably won’t change the equation.
We NEEDED privacy (and a view), but it ain’t cheap!
The privacy will be worth every penny!