The rise and fall of Arise
One of the early bright lights of the Canadian solar sector, Arise Technologies Corp. of Cambridge, Ont., spiralled into bankruptcy this past spring, its Ontario assets sold off and its flagship German plant shuttered.
The company, which went public a decade ago, had its fingers in a number of solar markets. It installed solar rooftop systems in Canada, developed a new technology to make panels, and even planned to make its own purified silicon feedstock for solar cells.
Its biggest move was to build a panel plant in Germany, where it was attracted by financial support from the government, skilled workers, and the hottest solar market in the world.
A few months after the plant was finished in 2008, however, the recession hit and lower energy prices soured interest in the solar sector. There was a brief resurgence in 2010, but when Chinese factories began to churn out panels and create a glut on world markets, the solar industry – and Arise – began its downward spin.
Arise closed the German facility in 2011, unable to get sufficient financing to expand and upgrade in order to make high-efficiency cells. The rest of the company held on until early this year, when it went bankrupt and was delisted.
Ian MacLellan, the founder and former CEO of Arise, said the downturn in solar – and the death of his company – was precipitated by a series of parallel events that hit almost simultaneously. These included the 2011 financial crisis in Europe, which eroded governments’ ability to subsidize the sector, and China’s heavy investments in solar panel production, which pushed down prices just as Western firms were experiencing financial difficulty. For Arise, and many other firms, the final blow was when North American financiers withdrew their support from solar companies. “The bank was not willing to support our expansion plans, and in fact it just wanted its money back,” Mr. MacLellan said.
But the underlying cause of all this upheaval in the solar industry – the precipitous decline in solar panel prices – is also a signal that there is reason for brighter days in the future.
“Prices are coming down ... and that has a positive impact on our business,” said Chris Stern, co-founder and vice-president of business development of Pure Energies Inc., a company that installs solar panels on homes in the Toronto region.
With panels now much cheaper to buy, the economic case for installing solar power is improving dramatically, Mr. Stern said. Eventually, he said, the Ontario subsidies that support his business will be unnecessary and solar will be competitive with other forms of power generation, opening up a vastly bigger market.
As panel prices fall, the power they generate becomes cheaper too. Already, solar power is competitive with nuclear or gas-generated power in some parts of the world.
In areas where there are no existing power grids – in parts of Africa, India, Asia and the Middle East – solar is also already viable, as it is in places where the grid is mainly powered by small diesel generators. In sunny Hawaii, electricity, now mainly generated from oil, costs more than 25 cents per kilowatt-hour, while solar power can be generated for as little as 15 cents per kwh.
Even in the southwestern United States, solar is now closely competitive with newly-built power stations fuelled by coal or gas, according to a recent report from consultants McKinsey & Co.
The report predicts that the cost of installing commercial-scale rooftop systems will fall another 40 per cent by 2015, making them economical, without subsidies, in many markets.
Stefan Heck, McKinsey’s clean technology practice leader, said many people still have a mental picture of the solar industry that is rooted in the 1970s, when solar power was roughly 20 times the price of other forms of electricity and required huge government subsidies. “Having a 10 to 15 per cent [annual cost] improvement compounds quite quickly,” he said. “People underestimate how much that can change things.”