The following article is from our August 2006 issue.

'Nuclear Power Is Misdirected Capital' - SolarWorld CEO Frank Asbeck on where tomorrow's energy is coming from.

Oil and uranium are becoming more expensive. One day, supplies will be exhausted. And countries' dependence on conventional fuels can be exploited by others for political reasons. Jürgen Jeske spoke with SolarWorld CEO Frank Asbeck about the alternatives.



Jürgen Jeske: Mr. Asbeck, the price of oil and gas is skyrocketing thanks to the growing energy needs of China, India and other countries. The political risks attached to oil supplies from the Persian Gulf are multiplying. Can renewable energy sources like wind and solar power make a long-term difference in our energy supplies?

Frank Asbeck: That's easy to answer. They're the only solution to the problem. We've calculated that, within 40 years for gas and 60 years for oil, reserves will have become so depleted that the price for what's left will be astronomical. Also, we definitely won't have any fuel for nuclear reactors in 200 years and coal will also be gone. That means that alternative energies are destined to take over. There are no alternatives.



Solar and wind power currently cover only peak demand. What is going to supply basic needs?

Alternative energies will have to cover basic, average and peak demand. Wind energy for example will supply average and peak demand. The counterpart to wind energy is coal energy. We see energy supplies in the next 50 to 150 years as a combination of alternative sources with coal, which will last the longest among the conventional sources. Of course they will have to be "clean" coal-fired plants that separate the CO2, and be more efficient, meaning they must produce more electricity out of the coal.

With solar power it's utterly simple: its supplies rise and fall analogously with demand. In midday, when the most refrigeration systems and kitchens are running, the most solar power is available, and then tapers off toward the evening. In that respect, solar power is always a peak supplier and could, without losing that status, provide up to 30 or 40 percent of total electricity. We have far to go before reaching that level. We're currently at 0.2 percent globally. The basic supply will probably have to come from biomass once oil and gas have been used up.

Once truly all conventional fossil fuels are depleted, we will have to use a composite of the various alternative or renewable energies. And the most important thing will be to cut consumption. We have to insulate our houses and reduce fuel consumption.

In much of Germany we can also use geothermal energy to cover basic demand, like here in the Rhenish Trench, where the earth's own heat can be harnessed.



Nuclear power isn't an option for you?

Nuclear power is a completely different story. The Germans kept quiet on the subject at the G8 Summit because of the government's coalition agreement. Nuclear power has the disadvantage of leading to a misdirection of capital once the money and technology is committed.

The nuclear plants being planned today would go online in 20 years. When one considers that, given the reactors now being built in India and China and the rest of the world, nuclear fuel will not be as cheap as it was in the past. This year alone, it rose by $30 per pound of uranium to more than $50.

Today's average production costs in nuclear reactors amount to 5.7 cents per kW. Today's wind farms produce for only 7 eurocents. I believe that renewables will be the more economical of the two within 10 to 15 years.

Yet in the short term, nuclear power is a sign to Russia and the oil producing countries that "we've got our own too."



Solar power is still subsidized. When will it be competitive? Also within 10 to 15 years?

Every American knows the Manhattan Project. Three thousand scientists were locked up together and told to build the atom bomb. What we need is a solar Manhattan Project. One has to think in the magnitude of the $200 billion to $500 billion that the Iraq war has probably cost. One then sees that it makes no sense to fight for oil in the desert, but instead to use the desert to part company with oil.

One milestone would be ?1 billion ($1.2 billion) in research grants to be invested in solar energy, which the nascent industry cannot yet do on its own. In recent years we've had about ?30 million ($38 million) in annual research money in Germany. One wouldn't even have to equal the money spent on nuclear energy, just ?1 billion ($1.2 billion) and the world's best researchers, and we would be economical within two or three years.

We will break under the retail price in or around 2012. Today it's about 20 cents in Germany. Power produced on the roof costs about 38 to 40 cents, or double the amount. In the last five years, SolarWorld, as technological market leader, has become 5 to 8 percent cheaper annually. That means, by 2012 we will have achieved a 40 percent price digression.

On the other side, the price of electricity has become 50 percent more expensive in the last five years. A linear extrapolation of those two trends shows that 2012 will be the point at which we can make electricity from the roof as cheap as from the wall socket.



This year you bought Royal Dutch Shell's silicon-based solar technology production in California and Germany, making you the biggest producer in the United States and the third biggest worldwide. Shell justified the sale by saying it wanted to concentrate on non-silicon thin-film technology. Have you invested in old technology?

With silicon covering 21 percent of the earth's crust, we basically have a limitless supply. But refining capacities are only now being built up from the 30,000 tons we share with the semiconductor industry to 80,000 tons. That means silicon will no longer be in short supply. In the meantime, of course, people resorted to an "old" new technology like thin-film technology.

Neither I personally nor our researchers think very much of thin-film technology. But Shell was most likely using different criteria in its decision.



You are third in solar power technology after Japan's Sharp and BP of the U.K. You want to unseat both of them. How are you going to reach that goal against such powerful competitors?

Size was never a criterion. In our sector it's exclusively innovation and speed that count. We are a company that will make ?480 million to ?500 million ($634 million) in revenue this year. We pay above scale. We award our employees good bonuses. We have highly motivated people, worldwide about 1,300 by now. We are also well-equipped financially and believe we can win the race against Sharp. We're about the same size as BP now anyway.



Have you set any revenue targets?

Yes. We want to break the billion-euro revenue mark before the end of the decade and double our capacity over the same time period, definitely concentrating on the United States, in which we see a fast-growing future market.



Which are the most promising sales markets for you?

China is an enormous market. More than a million villages don't have electricity yet. It isn't worth setting up power grids there.

Mobile communications pioneered that road. Nowhere do people use landline networks anymore. Anything connected to a mobile communications network today uses phone masts. Solar energy is the means of choice there. That means that the poorest of the poor constitute a gigantic market. Microsoft recognized that. MIT also developed that small $100 computer. Two billion people who don't have it want Internet access. But it can't cost $1000. It has to be small and compact. Our "First Aid Set" for the developing world costs less than $100. It has a solar module and an adapter cord. You can hook up your computer and cell phone to it, disinfect water, and have some light. That's what the developing world needs, and the market is unlimited.

Then of course there's the whole market for technological equipment. Oil - and gas fields, pipelines, all controlled units, all measuring, monitoring and regulating stations - you don't lay down an electrical line next to the pipeline. All have to be supplied autonomously.

These are gigantic markets. Then there's the grid-connected sphere. Here, the United States, Germany, Spain and all other Mediterranean countries including North Africa are the focus. Anywhere there's plenty of sun and the people pay a lot for electricity. We are in most of the markets today without any subsidies for electricity costs, which are about 25 cents in these countries, because they have 50 percent more sunlight.

California has almost double the sunshine of Germany. There, power costs just under 20 cents. The peak price in California is far higher than these 20 cents. This by itself is sufficient reason to produce electricity through photovoltaics, especially since California has very weak grids. There are also only a few power stations there.

Putting solar panels on roofs throughout the land takes the burden off power grids. California had no electricity because of air conditioning. But one needs air conditioners if the sun is shining and it's hot out. All that speaks in favor of solar energy.



California now has a subsidy program.

Yes, they put together a $3 billion subsidy program there. That's not uninteresting.



Back to Germany. Your production is concentrated in Freiberg, in Saxony. That's a town that was long ago a center of silver mining and which still has a famous technical school, the Bergakademie. Will you continue to invest there given the region's high unemployment rate?

In July, we celebrated the roof-raising of our biggest investment to date of ?80 million ($101 million). This building will house 200 new jobs. In all likelihood, we will double our total production in Freiberg before the end of the decade.



Are the jobs in Freiberg sustainable over the long run?

As long as we keep our wage costs to beneath 10 percent of revenue, yes. Then I don't need to go to the Czech Republic or anywhere else. That's why I can also produce in the USA.

My employees have to be qualified. They have to be able to operate our high-tech machines. That's why the old production facilities in Camarillo are being modernized, to make them competitive. We don't have to export jobs from California to Mexico or from Freiberg to the Czech Republic.



Energy was a big part of the G8 Summit. How do you see German energy policy and what's your opinion of America's?

I have the privilege of taking part in the energy summit of Chancellor Merkel. There, for the first time - which may be something symbolic of Germany's energy policy - representatives of alternative energy producers took part. Not just the heads of the big utilities like RWE and E.ON, but of SolarWorld as well. I concentrate, however, more on the foreign policy aspects in the corresponding working group.

German energy policy is, of course, currently marked by supply security. But in my opinion people don't sufficiently recognize that we are trading in dependence on the Persian Gulf oil for dependence on Russian oligarchs. It's clear that Russia's energy policy will one day be used as an instrument of power.

In my opinion it's symptomatic that Putin wrote in the Frankfurter Allgemeine Zeitung that we Europeans shouldn't occupy ourselves so much with alternative energy sources because that would disqualify us as a dependable long-term client for Russian oil. If he says something like that, it's all the more reason to go ahead. The best contribution we can make to foreign policy would be making ourselves able to say we are not or only marginally dependent on oil and gas. Today alternative energies constitute 11 percent of the German power supply. Every year it's 1 percent more.

German Foreign Minister Frank-Walter Steinmeier - whom I was allowed to accompany to Korea - has often been asked, "What kind of response do you have to these geopolitical conflicts that are increasingly carried out militarily?" The answer is: we also have alternative energy. These alternative energy sources are also an export product. SolarWorld exports 50 percent of its total production to the world.

America's energy policy is practically a relaunch of its policy during the 1970s. People already had a feel for alternative energy during the oil crisis. But that's vanished because oil became cheaper again. People become forgetful if they're not under "oil pressure." Now we're back to where we started, with pseudo-solutions like nuclear power being pulled out of a hat.

New nuclear power stations haven't gone on line in the United States in a long time. I don't know whether Americans remember Three Mile Island. That was a Western Chernobyl of a lesser magnitude, but it was still a big reactor accident.

When people say today that nuclear power is the answer, how can they say to Iran that they're not allowed to have it? How do we expect to restrict the proliferation of nuclear terrorism if we regard nuclear power as the energy of the future? On that issue I'm with Governor Arnold Schwarzenegger, who says, let's use the sun and make money available for the effort.


- Jürgen Jeske is a well-known German economic journalist and former executive editor of the Frankfurter Allgemeine Zeitung (FAZ). He is currently president of the Frankfurter Gesellschaft für Handel, Industrie und Wissenschaft (Frankfurt Society for Business, Industry and Science). His interviews with business leaders appear regularly in The Atlantic Times.


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The Realm of the "Sun King"

SolarWorld AG, based in the former German capital Bonn, has become the biggest producer of solar energy technology in the U.S. and the third biggest globally, through its acquisition this year of Shell's solar energy operations.

The takeover will propel 2006 revenue to just under ?500 million ($634 million) (after ?360 million or $456 million in 2005) and the number of employees from 760 to more than 1,300.

Q1 2006 return on ?83 million ($105 million) revenue equaled 19.8 percent and results before taxes and interest 32.2 percent.

SolarWorld AG was founded in 1998 by Frank Asbeck, 46, an agricultural engineer who has been in business for himself since 1988. The Asbeck family still holds over 25 percent of the company stock, which has been a high flyer on the Frankfurt Exchange. Main production base is Freiberg in Saxony, in eastern Germany.