The solar industry has boomed over the last few years, with the demand for clean energy fueled by government-sponsored financial incentives in several countries. Solar panels and power systems have been installed in many homes and businesses as a result. Companies around the world have installed solar systems for free, and the excess power has been sold to the grid. Many solar panel owners have actually profited from their installations. Government feed-in tariff programs in many countries have sparked a surge in demand, and businesses have sprouted up overnight to become lucrative enterprises. However, many countries have cut these incentives just as demand was reaching the highest levels seen yet. Since July, some solar businesses, which were thriving at the time, are now struggling to stay afloat. Australia, the United Kingdom, Germany, and even Ontario, Canada are facing similar dilemmas.
Australia cut its incentive program in August. This has hurt many thriving businesses, including a solar panel company run by Joe Darby, whose business reached a growth rate of 20% each year. Not only have ties with subcontractors been cut and jobs lost, but Darby’s business may completely go under and he may lose his house. A national survey said that the majority of the country’s solar energy firms have laid off workers or plan to. Renewablelogic, a solar company based out of Perth, reported that business between August and October declined by 90%. Half of the company’s workers have been laid off, while it may have to drop 25% more of its staff soon.
While proponents of the cuts suggest government rebates for solar panels still exist, and the investment is still a wise decision, a similar pattern is being seen in other countries. In the UK, the government is planning, as of October 2011, to cut the feed-in tariff rates in half. Experts say as many as 25,000 solar jobs may be lost. The cost of solar technology has decreased, according to UK Energy and Climate Change Secretary Chris Huhne, and that his department was looking for “appropriate levels of subsidies.” Solarcentury founder Jeremy Leggett said that the act is a “Spectacle of a government destroying jobs it had only just created to save next to nothing.”
As a result of threatening cuts, some installation companies are seeing a rise in orders as consumers seek to get what they can. This threatens the Parliament’s budget for the year in regards to solar energy, while a similar pattern could emerge in Germany which plans to cut the feed-in-tariff program in January 2012. Analyst Martin Simonek of Bloomberg New Energy Finance, in London, suggested that there could be a surge in German installations toward the end of the year. Shipments to Germany by a Yingli Green Energy Holding Co., in China, have increased, while other manufacturers of solar panel components were caught off guard when demand dropped. They had previously increased capacity to keep up with the demand, but government actions in many countries have had unpredictable results that have hurt most businesses.
Government action on a multi-national scale has seemingly reversed the optimal environment for business growth. The economic situation for many industries is dire, but solar system manufacturers and installers were experiencing a boom. Some think politicians were frightened by the fast pace in growth, but whatever the reason, the actions have changed the lives of business owners and dedicated workers who had reason for optimism.