Positive comments from a world class solar CEO....

Today's post: Wednesday, 7-20-2010

We need an 80% reduction in fossil fuel use by 2050 to avoid the worst global warming effects.

And, practically speaking, we need to also double our electricity generation and double the useful work done per unit of electricity & other energy sources as well during that same time to have a decent economy.

At some point, the oil that we’ve been using to power much of our economy will begin to run low enough that our world economy will shrink due to lack of supply or excessive costs or both. Kuwaiti scientists recently predicted peak oil in 2014 – just 3 years from now.

And, once the demand for oil picks up again with the apparent economic recovery or supply begins to plateau or drop, the prices will again go back up. That will cause more hard times economically unless we have enough alternative sources of energy to turn to.

Today’s post:

Positive comments from a world class solar CEO....

Suntech Power is one of the largest solar companies in the world. Its CEO and founder, Mr. Zengrong Shi is a world class CEO and entrepreneur.

As his name suggests, he and Suntech are from China. (His quotes appeared yesterday in the San Jose Mercury News.)

They have cut the cost per watt of solar cells from $6 per watt to about $1.60. “This is all manufacturing innovation….along the supply chain.” “…it is not revolutionary. It looks more incremental, but it is very effective.”

He is visiting the Silicon Valley which he does about every month and a half to also check out innovations and new technology or potential joint venture partners here.

He said, “There is a lot of R&D activity going on in the Silicon Valley. Results are encouraging. But we need to see a viable commercial solution because with solar we are talking about scale, costs, and reliability.”

So far, the largest market in the world is in Europe and Germany in particular. But Shi thinks that will change. “In the future, the Chinese and American market will be the major markets.”

He also said that if a company drives the cost down and the solar panels are “cheaper, the market is bigger.”

He also said that “The installation of one megawatt of electricity….creates 35 jobs, most of them locally.”

“From that perspective, protectionism is not a winning policy.”

When the United States was often building the best and most innovative products, we felt the same way.

But he has an added point that local jobs are created no matter who provides the solar panels.

But there are still other reasons for not being protectionist against superior or as good but cheaper products from outside the United States in the areas of renewable energy.

1. The need for more and affordable sources of renewable energy is huge. If we do get a lot more, our economy will expand instead of shrink and there will be more jobs.

It’s hard to understate how important that is. When effective energy use goes up the economy grows. Recently, when the cost of gasoline shot up, it became one of the two triggers of our current recession.

Putting up protectionist barriers in renewable energy fields will reliably remove more jobs than it adds!

2. Here in the United States, we also have a second traditional competitive advantage that is still intact. Even if things are not invented here or made here, if they do a good job where there is demand for them, we tend to be the best in the world at selling them. The money from doing so ALSO creates jobs.

So, if protectionism cuts our access to the best products to sell or makes them cost more, that too decreases jobs.

So, I like the way Mr. Shi thinks. He understands exactly what the worldwide market needs from the solar industry. And I sincerely hope his optimistic forecast about China and the United States becoming the biggest solar markets comes to pass.

I think he is a world class CEO. And we would do well to emulate him instead of throwing roadblocks in his path.