By now most everyone agrees that the wind industry is in big trouble, not just in the United States, but globally, as escalating supply chain issues and the impacts of Biden-era inflation eat away at project economics, interconnection queues grow longer and harder to break, and formerly accommodating governments balk at constant industry demands for ever-rising subsidies.
The big troubles for Big Wind are especially acute in the offshore sector, as evidenced most recently by Monday’s Reuters story about an array of developers like Orsted and Shell, along with big investment house Mitsubishi threatening to pull out of announced projects offshore Japan unless the Japanese government refills the subsidy trough. As always, the demand by Big Wind to sort-of live up to its glowing promises of “cheap” energy for all is “but, more subsidies!”
Sadly, Reuters reports that Japanese officials eager to signal their net-zero virtues are preparing to fold as if they were the governors of New York, Massachusetts, or New Jersey, or perhaps the chancellor of Germany or Prime Minister of England.
“Looking to defy the troubles plaguing renewables globally as operators scrap or shrink projects in Europe, the U.S. and Asia,” Reuters writes, “the government is holding talks with industry players, who are pressing for a number of measures to reduce risks and help cut costs on their projects.”
Inevitably, the alleged “measures” to “reduce risks and help cut costs” will evolve down to renegotiated guaranteed power delivery rates whose higher costs will be borne by unsuspecting Japanese citizens on their monthly electricity bills. This is how this game always comes out.
But Big Wind is going to find the renegotiation of previously agreed-to guarantees increasingly difficult to achieve as governments in places like the United States, the UK, Germany and other formerly eager jurisdictions discover that piling up more and more debt to fund what remains intermittent and unreliable power generation is simply unsustainable. And now, as I wrote last week, onshore developers find themselves unable to be interconnected into regional power grids as they wait in interminable queues, a situation likely to be rendered completely unsustainable if Congress follows through on repealing their IRA subsidies.
That Trump driven sea-change in policy direction applies equally for the U.S. solar industry, as do the lengthy interconnection queues. Now, the FT reports that the solar industry’s financial struggles are going global, too.
In a story headlined, “Chinese solar billionaire steps back as industry turmoil deepens,” FT reports that Li Zhenguo has decided to step back from everyday management of Longi, the massive solar company he founded a quarter century ago. His decision to turn over management of the firm to senior executive Zhong Baoshen comes amid a cratering stock price, which has fallen by 80 percent from its 2021 peak.
Longi has reported losses in each of the last two quarters, a Chinese industrywide phenomenon which has enveloped peer solar companies like Jinko Solar, JA Solar, Trina Solar, Tongwei, and TCL Zhonghuan.
The central issue in China, according to analysts at Morningstar, is the same as it is in the U.S.: The capacity of planned solar developments and equipment production vastly exceeds the demand. “The current industry capacity across polysilicon, wafer, cell, and module production is more than double the projected 2025 demand,” said Cheng Wang, a Morningstar analyst quoted by FT.
In an earlier report, FT said that “China’s solar cell production capacity reached about 1,000 gigawatts last year — not only exceeding current global demand but enough, at the rate of last year’s growth, to exceed total projected demand through to 2035.” That is an overwhelming amount of spare capacity to unwind, a problem sure to be exacerbated as governments in the U.S. and elsewhere awaken to the fiscal mess they’ve created due to their religious obsession over atmospheric plant food and move to correct the problem.
In its report, FT observes that, “the latest solar boom has also led to massive market disruptions…” That may well turn out to be the most unintentionally hilarious understatement of 2025 where energy is concerned.
David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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