Solar manufacturing lobbyists have won the latest round of a trade war with China, but the entire solar industry could pay dearly for a victory that could see heavy US tariffs on Chinese solar panels make solar pricing inaccessible and lead to a significant loss of industry jobs.
In the end, it comes down to the fact that solar power is finally becoming affordable and widely accessible, which is good news for green energy ambitions; but that good news is coming at the expense of US manufacturers. The tariffs may turn the tables in favor of the manufacturers but to the detriment of solar power overall.
Last week, the US Department of Commerce imposed tariffs of over 31 percent on Chinese solar panel exports after ruling that China was dumping its solar panels on the US market for less than it costs to manufacture them.
A total of 61 Chinese companies will see tariffs imposed of just over 31 percent imposed, retroactively for 90 days. The remainder of Chinese solar panel makers will face a 249.96 percent tariff on exports, specifically on crystalline silicon photovoltaic cells.
The Coalition for American Solar Manufacturing (CASM) led the lobbying effort for tariffs, based on a petition filed by SolarWorld, while the Coalition for Affordable Solar Energy (CASE) opposed the move as detrimental to the solar industry.
“Commerce’s ruling in the SolarWorld case is a bellwether decision,” Steve Ostrenga, chief executive officer of Helios Solar Works, a CASM member company, said in a statement. “It underscores the importance of domestic manufacturing to the US economy and will help determine whether the country will be a global competitor in clean technologies or outsource them China. It is also critically important for thousands of US workers.”
But major solar developers, generators and installers are against the tariffs, and the overall implications they will have for the future of the solar industry.
CASE has criticized SolarWorld and the CASM of hypocrisy over China, claiming that SolarWorld itself has admitted to selling solar cells below the cost of production.
The CEO of solar developer Recurrent Energy, Arthur Harris, was cited in The Hill as saying that the US solar manufacturers “can’t compete in the market so they’re trying to use tariffs so they can sell their more expensive panels.”
“Putting a trade barrier in place that would protect this market and keep it safe for a group of manufacturers who can’t compete would stop growth,” he said.
Indeed, US manufacturers have been unable to compete with Chinese manufacturers, with the Chinese government subsidizing solar production to the extent that its manufacturers can dump solar panels on the US market for the same price that it costs to make them.
This has caused a drop in solar panel production in the states from 2010 to 2011, while the value of Chinese imports nearly doubled during that same time. Unable to compete, a number of US solar companies shut down last year, despite heavy state subsidies.
This Chinese policy of heavily subsidizing its solar industry is also what has helped make solar energy affordable to the average American. The stiff tariffs will lead to significantly higher prices for solar panels and installation, and could reverse the progress made recently towards making solar affordable and accessible.
But solar manufacturers worldwide are struggling, including Chinese. The market has been flooded and many companies are selling at a loss. Solar developers and installers of solar panels have benefitted much from the fall in solar prices.
The Department of Commerce’s decision is only preliminary and could be reversed, or tariffs could be reduced or even increased. The final judgment is expected by October.
By. Charles Kennedy for Oilprice.com