Where do you fall in the Great Solar Debate?

Nobody has quite laid it out in simple terms, but underlying all the activity within and media hype around the solar industry is a simple debate: Is solar actually on the cusp of grid parity, or does it likely still need years of subsidization? Many of the arguments going back and forth in the press all depend heavily on which side of the Great Solar Debate a person falls. The arguments for both are strong.

On the one hand…
The issue is not a simple one. It really depends on what one means by “grid parity.” Those who believe we are close to grid parity tend to argue for very rapid adoption of policies, tend to invest in the most advanced fourth-generation technologies and might press the hardest for stiffer environmental or greenhouse gas penalties for fossil-fueled industries. Such thinking is based on the assumption that solar power will be cheaper than fossil-fueled energy in the very near future.

Arguments for:
The Japan success story. After a 10-year declining subsidy program in the 90s, Japan is now practically subsidy-free. This, of course, is because Japan has relatively high energy prices. But even with a relatively weak solar resource, the world’s second largest solar market is evidence that replacing fossil fuels with rooftop solar is only a heartbeat away from “economic” at worst.

Billions in revenue globally. The industry is now solidly in the billion-dollar-per month club. Perhaps that was the tipping point? At worst, a fairly small global subsidy program is having an outsized affect in the market. The counter example is Exxon (NYSE: XON), which with about 2 percent global oil market share, delivered net profits this quarter and net revenues almost as big as the entire solar industry. The industry has a long way to grow to scale.

Applied Materials, First Solar and the CIGS mafia. From venture capital investors to major deposition process manufacturers such as Applied Materials (Nasdaq: AMAT) and IBM (NYSE: IBM), billions of dollars are currently flowing into the thin film sector. The push will likely decrease prices and drive both performance and manufacturing efficiencies through the system. Applied Materials’ entry alone has spurred close to a dozen estimated new thin film plants in just two years.

Major utilities joining the fray. We’ve finally seen the likes of Pacific Gas and Electric (NYSE: PCG), Duke (NYSE: DUK) and other major utilities putting their toes in the water. When utilities start convincing their regulators to add solar to the rate base, we’ll know we’re there. One could argue the trend has already begun, though it’s still in the early stages.