Is the solar industry doomed?

Is the solar industry doomed? According to some observers, the answer may be yes. For example, see this article in seekingalpha.

However, I feel that article is fairly superficial and alarmist. Certainly, the factors cited represent a downside risk, but taken in a larger context, are not nearly as bad as represented, in my view.

First of all, he claims no one care about solar with oil at $60 / bbl. However, oil is still at fairly high levels by historical standards (compare prices hovering around $20 / bbl for most of the '90s).

Second, he cites a random statement by a scientist at Los Alamos about a nuclear shed that might create a lot of power within 5 years. However, that by itself does not represent a comprehensive energy solution that excludes solar. There is no product available for sale, and there are no statements about costs, feedstocks, operational safety, or waste disposal.

Third, he worries about pullbacks on subsidies in Spain, and a failed extension in California. While Spain has capped its subsidy program, it may be extended later, and many other countries, including Italy and the US, are considering more subsidies.

Fourth, he cited a slight drop in 6" wafer costs from $12 to $9. However, that hardly means that thin films are uneconomical. Even at the reduced price of $9 per 6" wafer, the wafer costs ALONE would be $3.29 per watt at 15% efficiency. That's much more expensive than First Solar's total cost of sales -- around $1.25 per watt. Not to mention the fact thin film companies are rapidly seeking ways to drive down the costs even further.

Fifth, he alleges solar factory utilization will fall to 56%. However, this number is extremely speculative and doesn't reflect the current state of the market, which corresponds to strong utilization and pricing reflective of a seller's market (see, e.g., solarbuzz.com 's solar PV module retail price survey).

Sixth, the argument can be turned the other way to argue that US and Japanese consumers can buy solar more cheaply than before -- is there a reason why only Germans would buy such cells? The current sales data doesn't support such a hypothesis: "Germany, Japan, and Spain rank as the top markets for solar power, but other Western European nations are coming on fast, as are China and the U.S."

In conclusion, I would encourage everyone to look at this industry carefully and avoid knee-jerk reactions to isolated headlines.