Tuesday, March 16, 2004

Solar Moves Mainstream
Last week General Electric announced it was buying the assets of the bankrupt solar power manufacturer, AstroPower. This follows GE's success in the wind power business.

In addition to giving GE an entree to a small but rapidly growing market, it may also be a signal that the global solar photovoltaic (PV) industry is approaching a critical threshold. As the scale of manufacturing increases, solar panels should enjoy similar "experience curve" effects as other technologies--though not necessarily as dramatic as Moore's Law for computer chips. Costs will continue to fall, and as they do, solar will expand out of its current niche applications, such as powering remote devices not connected to the power grid.

While the dream of clean solar power replacing large central power plants may never be realized, due to environmental objections to covering the landscape with the vast area of solar collectors that would entail, economical PV could create new markets that are additive, rather than competitive with traditional power. Besides expanding the growing range of options for homeowners and businesses seeking to reduce their dependence on the electric grid, it may find an even larger opportunity in the developing world, where people making only a few hundred dollars a year buy the most expensive form of power on the planet: disposable batteries.

What will be required to develop all these markets? Topping the list are manufacturing excellence, marketing expertise, and financial creativity. GE appears to have all of these skills in abundance, but it has no monopoly on them. Smaller players should see GE's entry to this market as legitimizing in the eyes of investors and potential customers. That can only benefit the industry as a whole.

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