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Comment: why is GE pulling away from the solar table?

Liz Nelson

Liz Nelson discusses General Electric's solar deal with First Solar and what it says of the solar industry.

Although the cost for solar technology to the consumer is decreasing, it's not always a good sign from a corporation's perspective.

The world of solar technology is currently a turbulent one and China's influence on producing cheaper solar panels isn't making matters easier for those that are in the market.

Many previously high-flying solar companies have suffered, and more recently General Electric decided to pull itself out of the race to develop solar products, and sell its own patents and technologies to First Solar, the Arizona-based giant of solar power development.

Amongst other things like the scale back of some incentive schemes, cheap panels coming from China continue to cause problems for manufacturers in the EU and the U.S., and despite recent agreements with the EU, this is a situation that continues to put pressure on solar product margins.

Global markets

In 2011, GE planned on creating one of the world's largest solar panel manufacturing sites in Colorado bringing 355 jobs to the state.

As the race for bigger and better solar arrays swept across the planet, the electronics giant decided against following through with its future plans. Instead, GE plans to continue investing in its developments in wind turbines and purchasing First Solar panels for its customers.

Stock drop

Although it is true that the stocks pertaining to solar developers has recently performed lower than some expectations, companies such as First Solar continue to bite into the market any way they can. The decrease of some subsidies and rebates that have been offered in the past to consumers has made it difficult for most installers to rely on sales.

Stocks for First Solar dropped to a five year low towards the end of 2011 but have seen some growth as 2012 brought a great deal of innovative developments for solar arrays. This could also be motive for GE to put investments elsewhere and benefit from the almost two per cent holding it now has in First Solar from the sale of its technologies.

Uncertain future

For example in the US, although there is great support from US Federal and State Governments for solar power, it's curious that the electronics developer would not invest in the opportunity.

By 2020, California plans to have a large portion of power generated by solar panels. Coal and oil-based power plants are beginning to incorporate small arrays to help offset some of the need for electricity. As with most major cultural and life changing developments, it all boils down to money.

It doesn't matter that solar is a cleaner and more cost effective method of power generation over a 10-year time-span. It's about how companies can profit from it now.

Market saturation

Another aspect that could be pushing GE to pull out of the solar panel business is market saturation. When there are too many of a particular item, sellers try to drop prices in order to entice sales. Eventually, the price could drop so low that it no longer becomes practical to make the item. Again, it all boils down to profit margins. Many people would rather buy a cheap and inefficient item over one that is superior quality.

Although GE would rather not invest the time and money to build the solar panel manufacturing plant, it doesn't mean that the company is no longer vested in renewable energy products. In fact, wind and small scale solar projects are still slated for the company.

The tradeoff for First Solar is greatly beneficial, for now it can incorporate all of the developments and research that GE has made in solar technologies, which may help First Solar overpower its own competition.

About: this guest post was written by Liz Nelson from She is a freelance writer and blogger from Houston. Questions and comments can be sent to:

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Photovoltaics (PV)  •  Policy, investment and markets