On June 13, the German municipality of LÃ¼chow-Dannenberg in Lower Saxony granted planning permission for a 10 MW utility solar PV plant on the site of a former sawmill. The first phase of 4.7 MW has just been completed. German company ib vogt (capitals fashionably omitted) built the thing in 15 days.
This is certainly a carefully planned stunt. The rest of the plant will be ready in September, which I take it to represent a more normal pace (3 months). Clearly vogt had every reason to expect the permit would be forthcoming, and drilled their own staff and their suppliers. Still, the feat is real; like the Liberty ship SS Robert E. Peary that Henry Kaiser built in November 1942 from keel laying to launch in 5 days instead of his typical 14, and the British Wellington bomber built by Vickers in 1943 to first flight in 24 hours. These are stunts that demonstrate a formidable everyday technical capability: and in causes of similar importance.
Solar PV panels are a global commodity and prices don’t vary much between countries. Where Germany stands out is its lower installation costs. The German Solar Industry Association’s index of installed cost of PV per watt, for systems up to 100kw, stands at â‚¬1.78 ($2.24).
ib vogt is a typical German Mittelstand company, except that the patriarch is a matriarch (Dagmar Vogt). It’s highly specialised – all they do is build PV plants; big enough to be stable (annual turnover â‚¬48m) but not too big to lose the cohesiveness of a family business. What is of wider interest is that vogt is much too small, unlike Kaiser and Vickers, to internalise many of the economies of scale we are looking at. The economies are spread throughout a thriving solar PV ecosystem: every stage in their German supply chain – pile drivers, mount and panel frame makers, module and inverter manufacturers – has built up a lot of experience and can evidently respond quickly and economically to a rush order.
There is no magic to any of this. It is surely being replicated today in China, California, Australia, and Italy; and it will be replicated in Mexico, India, South Africa, Florida and Brazil, as long as they do not frustrate it by protectionist regulation.
The current wave of bankruptcies of higher-cost solar panel manufacturers is not the sign of an industry in real trouble, just the invisible hand at work in a cyclical slowdown marking optimistically purchased assets to market and changing their managements. It won’t reduce overcapacity: the scenario of massive capacity reductions only makes sense under an international cartel, which doesn’t exist and would have to be organised in the worst possible conditions. I’m therefore much more inclined to believe the same forecaster’s prediction of a 40% cut in panel production costs by 2015, realistically benchmarked on the most efficient Chinese producers today. Prices will continue to drop fast, well below grid parity in many markets. The vagaries of subsidy policy – though not regulatory obstacles – will become widely irrelevant.
Â¡Viva la revoluciÃ³n!
BTW, whatever happened to hard-driving but decent and public-spirited American tycoons like Henry Kaiser?