For a clear-eyed analyst, it was obvious for all to see: High polysilicon prices were keeping module costs above the learning curve and surging demand from Spain and then Germany was propping up prices. Additionally, the high prices were allowing non-Asian crystalline-silicon manufacturers to remain viable, despite their higher production costs. Once this equilibrium no longer held, prices would crash and major disruption to the solar industry would occur.
With the value of hindsight, the 2008 solar module demand slump and the subsequent extended period of precipitous price declines should hardly have come as a surprise. Yet at the time few foresaw the imbalance in supply and demand and the related market adjustment. Except that is for BloombergNEF solar analyst Jenny Chase, who sets out the circumstances that lead to the crash in her 2019 book, “Solar Power Finance Without the Jargon.”
In it, she retells the process by which her team came to publish a report, at the behest of New Energy Finance co-founder Michael Liebreich, predicting a module price decline of 40% once polysilicon supply could be ramped to meet supply. From a stable price point around $4.20/W, prices collapsed as Chase forecast (“it is amazing how people missed the fact that pricing was unsustainable”) a downward trend that is still far from over. Indeed even today, many European and U.S. PV module makers and investors will likely still be ruing the fact that they did not heed the warning.
Chase’s book is targeted at solar industry outsiders, although it contains anecdotes and information that are of value even to industry veterans who have lived through many of the events adroitly recounted throughout its pages. The approach taken is both to inform and entertain, and the jargon with which solar insiders keep others at bay is cast aside with relish. And at times, as Chase’s withering wit is applied to even the driest of themes, there are multiple opportunities to LOL – no mean feat when finance, physics, business strategy and energy markets are the subject matter.
“The phrase ‘feed-in-tariff’ is a clumsy term,” Chase writes, “translated directly from the German word Einspeisevergütung (it doesn’t sound better in German. Nothing does.)” And as this sentence indicates, the book walks the reader through the solar basics – across all solar technologies, most relevant policy measures, and the financing and business principles that get solar built.
In a move that provides welcome light to the foundational shade, Chase also sets out the process by with New Energy Finance was founded, its acquisition and integration into Bloomberg in 2010, and the way in which the business built its data sets, analytics team, and reputation. “We [the NEF team] adapted … by getting used to all the proper Bloombergers assuming we were programmers. There is nothing wrong with being a programmer, but their dress sense is distinctive.”
The process by which what is today BloombergNEF developed its polysilicon pricing indices, at the almost belligerent behest of founder Liebreich – who comes off as both a crazy brave entrepreneur and insightful leader and sector observer – is particularly engaging. It culminates in the correct call of the savage price correction that proved so formative in the cheap and intensely competitive PV industry of today.
History and beyond
The hours spent with Chase’s unique voice and insights are likely ones well spent, although she also taps the knowledge of industry leaders throughout – in particular, she sets out the events and technologies that have driven the development of solar PV. And looking beyond what has been, the book also looks forward to potential “next-generation” technologies, such as perovskites, big data, and solar’s role in providing energy access, as well as electrification across sectors. All of these topics are addressed with economy.
As to the big picture as to the modern solar industry’s role in fighting climate change, Chase’s conclusion is both hopeful and tempered with the limitations of the technology. PV can and will very likely play a significant role in efforts to avoid catastrophic climate change, but realism is required as to how far solar can go – for the analyst, unsurprisingly, there is no silver bullet.
While there is no doubt that “Solar Power Finance Without the Jargon” is of great value as a historical document, as an entertaining and analytical retelling of solar technology and the industry, it is perhaps for the newer entrant to the industry that it would prove truly invaluable. The basics, nuances, fundamentals and the cutting edge are synthesised in ways that are easy to digest.
But it is Chase’s endearingly awkward rendering, and “how to guide” to business networking functions that will elicit particular delight, because, when post-pandemic events resume, we’ll bound to be back there again.
“Escaping a conversation which has run its course with grace and elegance … is a good time to visit the bathroom so it doesn’t look like you were desperate to ditch … with no replacement conversationalist lined up. Unfortunately, there are only so many times you can reasonably visit the bathroom in a given timeframe.”
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