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Solar Gets GE Imprimatur. February 8, 2004  

Solar Gets GE Imprimatur. 

GE is buying the assets of AstroPower Inc. in bankruptcy proceedings. AstroPower Inc. makes solar electric power systems for the residential market and also manufactures solar cells and modules.

GE’s entry into solar power mimics its entry into wind power where it bought ENRON’s wind assets in bankruptcy proceedings. GE has also renamed its Power Systems business to GE Energy to reflect its entry into these new energy businesses.

PV (Photo Voltaic) solar power has two important shortcomings: It is expensive and most residential installations in the U.S. can only supply a portion of a homeowner’s needs.

Typically homeowners can purchase electricity for 8 cents per KwHr while electricity from solar power currently costs the homeowner three or four times that much. Silicon represents some 40% of total cost while the lack of long term reliability of inverters adds to lifetime costs. (Inverters convert the DC electricity produced by the solar panels into AC required for home use, represent 10% of the total cost of installation and have a typical life of 5 years versus 15 years for the remainder of the installation.)

GE with its strong electrical engineering prowess can address the inverter issue. Recently the price of silicon has jumped ten fold as the semiconductor industry recovered from recession. One approach to lowering the cost of silicon, used by Wacker Chemi of Germany, is to manufacture silicon having lower purity for use in solar panels: Other companies are trying to develop cells that have dramatically improved efficiency.

Because of the lack of sunshine in northern areas of the U.S., PV solar panels can only supply a portion of the needs of a typical household. It is only in the Southwest that insolation levels are high enough for PV solar to approach being economically viable. In addition, PV solar together with all other forms of renewable energy (excluding hydro) are not physically able to displace traditional power from fossil or nuclear in sufficient quantities to supply the increased electricity needed by the U.S. in 2020, let alone have an impact on reducing current fossil or nuclear power generation. (See TSAugust report “The False Promise of Renewable Energy.”)

Subsidies and government support are required for the PV solar market to be economically successful. Total North American revenues in 2002 were $499 million: The total market is expected to reach $4.24 billion in 2009, according to Frost & Sullivan consultants.

While wind power was an excellent fit for GE’s manufacturing and sales organizations, PV solar lacks the same synergy.  Selling to the residential market requires a significant shift in sales effort since GE Energy’s typical customers are utilities or large scale developers. Except for inverters and electronic controls, GE’s manufacturing capabilities will be of little help.

  February 8, 2004

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