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Thursday, November 29, 2012

No Green for Green...

Brad_in_MA sends in yet another "green success story"...

AMSC cuts 25 percent of workforce, consolidates offices
Devens-based provider of wind energy technology American Superconductor Corp. (Nasdaq:AMSC) has cut 25 percent of its workforce and will consolidate its offices, a move that will save AMSC $10 million, the company said Wednesday.

The restructuring was a result of adjusted growth plans based on constrained cash flow and financing for wind farm and wind turbine manufacturers, AMSC President and CEO Daniel McGahn said in a release. The company will now operate with 340 employees.
Now, I hate to sound like I'm making light of the layoff - I don't mean to. I've been through it, it sucks, I don't wish it on anyone. I'm sure that many if not all the folks that work for companies like AMSC really believe in their product, both in the ability to produce clean electricity and as a viable business. Some certainly enjoyed the engineering challenges inherent in turning wind into power - something that has been done for centuries, of course, but on a larger scale; some, almost assuredly, felt like they were helping the environment.

At what point, though, do we start to re-evaluate the market for so-called "green" technology? We've seen dozens of companies - many of which have received quite a bit of taxpayer largess - simply fold up the tent after being unable to make a profit. Wind power, solar power - it just doesn't seem like there's a lot of green in green power. And we know it's not about making "green" energy more readily available to consumers - the tariffs hastily slapped on Chinese solar panels are more than proof of that. If the goal really was to lower our energy dependence and use more "green" electricity production, it wouldn't matter where the solar panels came from, would it?

I guess the larger question is why isn't there a bigger market for alternative energy? Some point to traditional sources being cheaper - a point that is valid but becoming less and less so as time goes by. The high cost of equipment is another - hence the attractiveness of inexpensive solar panels. I would love to install a bank of solar panels in my extremely sunny backyard to power my house - but at last check, I'd wind up dropping anywhere between $20 and $30K on a system that could reliably power my house. My monthly electric bill varies between $100 and $200 a month - so at a minimum it's close to a 10 year payoff before I break even.

I would love to have power generation independent of the standard power grid. My #1 blogson has done a number of posts detailing how vulnerable our power generation and supply system is, and I'd much rather be independent - but not at the price of a decent new truck. There's only so many wealthy guilty liberals and off-the-grid preppers to go around, and it appears that they are not sufficient to maintain a viable demand for alternate energy.

Of course, it doesn't help that as fast as a company can get set up and take fat .gov $$$, they fold faster than a house of cards in a hurricane...

That is all.


lelnet said...

"Where your treasure is, there shall your heart also be found".

When "green energy" startups are focused more on attracting government subsidies than making and selling products that customers want to buy (which may not be the case for AMSC, if they're only cutting 25%, but does seem to have been the case for some of the larger failures), then you're probably going to get very good at politicking, and conversely _not_ get very good at making stuff people want or selling it to them.

And the follow-on effects of this are going to hurt even the companies that focused on the _right_ things, as losers go bankrupt and the market gets flooded with their surplus inventory at fire-sale prices.

The same phenomenon happened even without the heavy hand of government, to tech companies in the late '90s, when too many got too focused on impressing investors, at the expense of impressing _customers_. But at least private-sector investors have some incentive to eventually align their desires with those of real customers...politicians and bureaucrats have no such incentive.

Geodkyt said...

Also, Jay -- with a ten year (at least, if you include ongoing maintenance costs) payoff period, will the capital investment equipment LAST long enough to get you your ten year payoff?

I suspect, to ensure full power comsumption coverage, you'll need to either install about 20% overage up front, or continue installing new panels over time, as efficiency goes down with exposure to the elements. (Basically, Mr. Sun breaks the photovoltaic cells down.)

Probably by year ten, you'll have put enough dollars into maintaining the system and upgrading the power output to maintain the level you started with, that your payoff period will have stretched out another three to five years, at which point you'll be looking at another capital investment of whole scale replacement of elements that are frankly not cutting it anymore. . . pretty much all at once.

Phasing IN "renewable power" incrementally at least avoids the big lump cyclic replacement costs, spreading them out into an ongoing outlay, roughly comparible to what your electric bill would have been anyway.

Two advantages, however. . .

1. Grid independance is a really nice thing to have, especially if you live in areas subject to power outages during really inconvienient times (you DON'T want to lose power in July-August in coastal Virginia, and I'm guessing losing power in January in your neck of teh woods would be particularly sucktastic).

2. If kW/hr costs shoot up, the whole "break even" game changes. With the Obamessiah opposed to dirt burning plants because they are polluting, and opposed to nuclear plants because his supporters can't grok basic science, including simple geology, I expect electricity prices to shoot up faster than 3 gallons of used beer and tacos after a frat party.

Jake (formerly Riposte3) said...

" will the capital investment equipment LAST long enough to get you your ten year payoff?"

Combine that with the way these companies keep going out of business, and you've got yet another disincentive to making that initial investment: Uncertainty.

If you buy your initial setup from Company X, will they still be around when it's time for the expected replacements or add-ons? If not, will Company Y's equipment be compatible with what you have? Will any company's, or will you have to completely replace all or most of your system?

Geodkyt said...

Oh, yeah -- you've GOT to design a system so each componant is "stand alone" and doesn't require propriatary interfaces to other kit in your system. For that very reason. . .

Which likely runs up teh initial install price, as you can't get a "package" system from just anyone. . .