It is a little as if the 19th century industrial powers had decided to push railroad construction by pushing more steel development, and left the rest to fate. Without the seed money for constructing, which in the 19th century came from a combination of government policy and support, and a huge stock bubble, the steel would just sit unused.
Glut of Solar Panels Poses a New Threat to China
Keith Brasher, New York Times, 4 October 2012 (Hat tip: MR)
BEIJING — China in recent years established global dominance in renewable energy, its solar panel and wind turbine factories forcing many foreign rivals out of business and its policy makers hailed by environmentalists around the world as visionaries.
But now China’s strategy is in disarray. Though worldwide demand for solar panels and wind turbines has grown rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a ferocious price war.
The result is a looming financial disaster, not only for manufacturers but for state-owned banks that financed factories with approximately $18 billion in low-rate loans and for municipal and provincial governments that provided loan guarantees and sold manufacturers valuable land at deeply discounted prices.
China’s biggest solar panel makers are suffering losses of up to $1 for every $3 of sales this year, as panel prices have fallen by three-fourths since 2008...
The Chinese are hoping for some consolidations.
In the solar panel sector, “If one-third of them survive, that’s good, and two-thirds of them die, but we don’t know how that happens,” said Li Junfeng, a longtime director general for energy and climate policy at the National Development and Reform Commission, the country’s top economic planning agency.
The problem is that once you built the railroad -no easy task granted- it was the cheapest land transportation. That is not the case with solar panels. They have come down considerably in price, but electricity generated by them is still three-times as expensive as fossil fuel alternatives. That makes a duplication of the railroad, or more recent telecom, bubble difficult.