Guest post by Tom Fuller

Something went terribly wrong with wind power. Preached to us all as a solution to climate change, it fell apart in one year. Some have blamed it all on the recession, ignoring the fact that other renewable energy sources and energy efficiency strategies have continued to grow.

I say it’s the business model. Wind power companies sell either to utilities or governments. There is insufficient pressure on them to lower costs–and indeed, during wind power’s moment of glory last year, prices went up 9%. Wind power companies are almost all divisions of large conglomerates, such as GE, or energy distributors such as utilties themselves. Wind power for some providers seems like a vanity entry into a PR sweepstakes–but there is no scope for reducing margins or searching frantically for innovative cost reductions.

And so their moment has passed, maybe permanently. While wind power tried to dictate terms to their captive clients (too often successfully), the cost of solar power and natural gas continued to fall, to the point where nobody could make a straight-faced case for wind as a competitive technology, and certainly not the offshore wind farms that are the new rage. Rage as in what customers will feel when they see their bills…

It hasn’t helped that the inefficiency of wind’s performance has been gleefully highlighted by those opposed to its expansion. If a turbine says it will give you 1 MW of electricity, you can only count on about a quarter of that being delivered. Maintenance issues are real, as are complaints about noise and bird kills. And they do take up a lot of space.

Contrast that with solar power companies. There are a lot more manufacturers, and they are increasing capacity continuously. Each new generation of fab provides 20% performance gains, and the next generation of wafers is longer, wider, thinner and less likely to break. Innovations for their balance of system peripherals come from a variety of outside companies in their supply chain, and the inexorable march to grid parity is nearing its goal.

They both get the same level of subsidies, which amount to a pittance overall. So what’s the difference?

Solar sells to consumers, too. Residential, small business, offices and plants. Solar scales down as well as up. And their customers are you and me–cranky and demanding if things don’t work, unwilling to sign long term contracts, wanting to see bottom line improvements rather than brochures showing acres of installations.

So solar will win. Not because they’re nicer guys, but because their industry is more fragmented and they have more demanding customers.

Which, I believe, is the way the system is supposed to work.

So, although government is not good at picking winners, it can identify losers, and should do so forthwith. Wind power sales have fallen through the floor this year, but the DOE should be making pretty stern announcements about price performance failures in the wind industry, and pointing out the advantages of alternatives to alternative power–not just solar.