Free Markets, Free People

First Solar

Another example of why government picking winners and losers normally ends with #FAIL

The other day this sort of slipped under the media radar:

First Solar Inc. will lay off 2,000 workers and close its factory in Germany following a collapse in solar panel prices that has erased the industry’s profits and forced some smaller companies into bankruptcy.

America’s biggest solar manufacturer said the layoffs amount to 30 percent of its global workforce.

B..b..but why!?  Green shoots, alternative energy, clean energy, what the frack?!

This is the future, the government says so!  How did it all go so wrong?  How in the world could solar panel prices “collapse”?

An influx of Chinese competitors has led to a rapid buildup in supply. At the same time governments in Europe, the biggest market for solar power, are reducing generous subsidy programs that had fueled demand. From March to December last year, solar panel prices dropped 50 percent, said Aaron Chew, an analyst with the Maxim Group.

Oh.

That damn “supply and demand” thingy again, right?

So let me get this straight … cheap foreign product (subsidized by the Chinese government) flooded the market created by government subsidized demand, driving up supply while lowering the price. Meanwhile the false demand that had been supported by “generous [government] subsidy programs” ended (thus ending the “demand”).  Consequently there is no demand for the current over supply and no one is buying the stuff?

Wow … who could have seen that coming?

And the current producer can’t make a profit and thus has to lay off people?

Oh.

You know, when you’ve seen the same thing over and over and over again (see Einstein’s definition of insanity), sometimes you just have to resort to sarcasm.

By the way for the terminally slow – news flash – that supply and demand thingy also seems to work in the petroleum market as well. 

Go figure.

~McQ

Twitter: @McQandO