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As jobs in solar power boom, R&D investment falls

Lucas Mearian | July 14, 2014
Research and development is often seen as too risky by private investors.

Job growth in the renewable energy market is related to installations and sales — not investments in technology development, according to Jordan.

"All the trends indicate that solar is becoming a more economical and competitive technology," Jordan said. "But the financing is all about big solar farms rather than early stage R&D for concept work. Clearly, there's been a drop in that kind of investment."

Ironically, because the price of photovoltaic (PV) modules (the building blocks of solar panels) bottomed out last year, investors worldwide became concerned that profits would also drop. PV prices plummeted after China saturated the market with low-cost solar panel modules. The result: PV capacity rose from 31 gigawatts (GW or a billion watts) in 2012 to a record 39 GW last year, even as investments in solar capacity dropped, according to a 2014 report by Bloomberg New Energy Finance.

The total global investment in renewable power (excluding large hydroelectric projects) fell for the second year in a row in 2013, reaching $214 billion worldwide — 14% lower than in 2012 and 23% below 2011 levels, when there was a record high in renewable energy investments.

As China continues a flurry of solar installments, it will likely devour its own surplus, allowing the price of solar panels to recover, Jordan said.

However, adding to the skittishness among investors are the few high profile corporate bankruptcies by solar power developers, such as Advanced Solar Technologies and Solyndra, which had received a $535-million Energy Department loan guarantee.

"[With] many of the high-profile bankruptcies that happened...there were a lot of different reasons, but it's also very hard to try to invent a better mouse trap," Jordan said. "At the moment, we can certainly get more efficient than the typical PV unit that goes on rooftops, but the prices have come down so quickly that there's a significant moving target that has scared away a lot of investors."

In 2013, U.S. solar firms received just $92.2 million in series A and B financing, down from $164 million the year before; that compares with 2008 when the industry saw peak $1.4 billion in seed money, according to Jordan.

The ongoing decline in investment, according to Bloomberg, reflects not only the drop in solar system prices, but also government policy uncertainty in many countries.

Government policies that cut solar subsidies or capped them in nearly a dozen countries, including the U.S., Germany, India, the U.K., France, Sweden, Romania, Italy, Bulgaria and Poland, also killed off private investment, Bloomberg noted in its report.

Private and government investments are going toward lower risk projects, such as massive utility installations instead of research and development, Jordan said.

 

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