Photo: Jason Blackeye / Unsplash
What’s happening with renewable energy in the United States?
It seems solar power can’t make up its mind about being at the top or the bottom, and reactions to renewable energy have been perpetually mixed.
Early December saw San Jose-based SunPower announcing 2,500 job cuts following “turbulence in the renewable energy business.” The move comes after a similar occurrence just last summer, when 1,200 layoffs depleted SunPower’s workforce by nearly 15 percent. This latest string will cause SunPower to lose up to 40 percent of its team in less than a year.
“This comprehensive restructuring program will enable us to successfully navigate the current challenging industry conditions, while positioning us for success over the long term,” explained CFO Chuck Boynton. “In the short term, we remain focused on improving working capital and maximizing cash flow, which will strengthen our balance sheet while providing the resources necessary to fund our strategic growth plans.”
Some are raising an eyebrow in concern. SunPower is clearly undergoing tumultuous times, but how rough are they? Some wonder if the company has a future in renewable energy at all.
Executives say extensions of installation tax credits have hurt revenue. These extensions have prevented the company from earning income when it should, and delayed year-round profits as a result. Aside from employee cuts, the company will also reduce capital spending over the next 12 months. Restructuring costs are likely to exceed $200 million, though if all goes well, the year could end with profits surpassing $300 million.
Whether SunPower succeeds or not is hard to predict, especially when it’s paired against fellow Silicon Valley competitor SolarCity. The San Mateo-based firm has risen through the ranks to become what some call a true industry leader. How can one company be struggling while the other is doing so well?
SolarCity claims low prices are the secrets to its success. The company has encountered minor dips in its road to the top, but SolarCity still managed to turn in a positive 2016, so the need and desire amongst customers are obviously there.
SolarCity’s prices and the alleged affordability of clean energy over fossil fuels are two things to consider, but they’re small beans compared to the famous faces behind the company’s operations. The firm was established by Peter and Lyndon Rive, cousins to Tesla Motors founder Elon Musk. Musk’s involvement in the company has been somewhat limited since it first arrived, but things changed last November when the entrepreneur announced a merger between SolarCity and its parent company.
Wall Street has criticized SolarCity’s business plan for “running dry,” and Tesla is planning to up the ante on its energy offerings. So far, positive change is occurring; SolarCity’s stock jumped nearly 11 percent following the merger, which Musk later described as a “no-brainer.” SolarCity’s newest venture will be a panel factory in Buffalo, New York. Slated to begin in early 2017, construction will cost a total of $900 million, and likely employ over 1,500 people.
In addition to solar power, wind is also proving quite popular. Home to the country’s first offshore wind farm, Rhode Island contains five newly-constructed turbines along its decorated coast. The farm comes by way of partnerships between GE and Deepwater Wind, who claim their windmills can operate up to 17,000 houses at once.
“We’re more confident than ever that this is just the start of a new U.S. renewable energy industry that will put thousands of Americans to work, and power communities up and down the East Coast for decades to come,” said Deepwater CEO Jeffrey Grybowski.
As history would have it, wind power has proven more prominent in regions of Europe, which now use wind energy to operate fleets of cargo ships, but the U.S. has made stellar progress over the last several months. The windfarm will provide up to 30 megawatts of electricity each year, and plans for a second farm near Long Island are currently underway.