In the last two weeks, Idaho workers have gotten dismal news from two solar companies.
First, Hoku Corporation said it would lay off 100 workers at its polysilicon plant in Pocatello. Polysilicon is used in solar panels. Then, on Tuesday, Transform Solar announced it will close, cutting 250 jobs. Transform is a joint venture of Micron Technology and Australia-based Origin Energy. A spokesman for Micron Technology cited challenging market conditions.
Bloomberg New Energy Finance analyst Nat Bullard says it’s easy to take a dim view of the solar industry in light of competition from low natural gas prices, and the high-profile bankruptcy of solar company Solyndra. But there’s more than that to the story.
“If you take one view, yes the outlook is a little bit gloomy,” Bullard says. “At the same time, the market grew 50 percent last year. That doesn’t mean, however, that it’s going to be good for every company involved, and I think that’s what you’re seeing in the case of Hoku and in the case of Transform.”
Factory expansions and new entrants into the market have led to a glut of solar panels. According to Bullard, as the market grew by 50 percent last year, manufacturing capacity grew by 70 percent.
“There’s very simple economic math there, which says that if there’s more supply than there is demand, then you will be pricing very close to your cost of production,” he says.
In the other words, the market has gotten much more competitive. Recently founded and smaller companies are at a disadvantage. The announcements here in Idaho echo others across the U.S., as well as in Europe and Asia.