A group of large solar panel producers from the U.S. have petitioned President Biden with a call to impose import tariffs on panels imported from Cambodia, Malaysia, Thailand, and Vietnam. The reason: low prices that are killing the petitioners' reason to exist.
"America's solar manufacturing industry is on the cusp of tremendous growth that will create jobs and change the trajectory of our clean energy transition for decades to come," the petitioners, grouped in the American Alliance for Solar Manufacturing Trade Committee, said.
"However, this manufacturing renaissance is being threatened by China's industrial policy, which has led to massive subsidization in China and Southeast Asia. This is resulting in high volumes of dumping on global markets including the U.S., injuring our domestic producers."
The petition is the latest sign that not all is well in the solar power industry-at least in some parts of the world, notably Europe and the United States. These are, ironically, the same places where governments are being increasingly generous with state support for the industry as it constitutes a key element of the energy transition that the EU and the Biden administration are championing.
Yet it appears that for all that support, the transition is moving along more slowly than planned. Per the solar panel manufacturers, cheap Asian imports-made by Chinese companies-last year exceeded actual installations in the United States by over 25 GW. Because of this imbalance between supply and demand, there is now a year and a half's worth of solar panels in the U.S., per International Energy Agency data.
Naturally, excess supply has led to a price crash and that price crash is coming at the worst possible time for Western solar panel manufacturers both in the U.S. and Europe. Interest rates seem to have been the main culprit for the industry's troubles, which have since last year involved stock crashes, bankruptcies, and plans for relocation in the name of survival. Yet the prices of raw materials have also risen, adding to solar panel manufacturers' woes and deepening their resentment of cheap Chinese panels.
One of the companies that chose expansion abroad is a case in point. Swiss Meyer Burger, a member of the new American Alliance for Solar Manufacturing Trade Committee, recently announced plans to build new panel factories in two U.S. states: Arizona and Colorado.
"We made a bold move in the absence of any industry policy support in Europe and shifted a solar cell expansion project from Germany to the U.S.," the company's chief executive told Reuters.
Meyer Burger is not the only one taking advantage of the fatter subsidies that the U.S. federal government is offering. Yet the fact that Meyer Burger is one of the seven signatories of the petition to that same federal government suggests that even the IRA is not enough to help compete with Chinese panels.
According to critics, including most recently U.S. Treasury Secretary Janet Yellen, the reason is that the Chinese state is throwing billions at the industry in subsidies. The truth, however, is a bit more complex. It involves the fact that Chinese companies-and the state-have been working on solar panel development for decades. They have also been able to take advantage of cheap energy inputs from coal power plants that have helped lower costs significantly.
This cannot be replicated in Europe where electricity costs have surged over the past decade or even in the United States, despite cheaper electricity thanks to local natural gas abundance. The sad truth about solar panel manufacturing is that it is non-competitive with Chinese products. Subsidies are certainly one part of the equation. But they are not the whole equation. Until the industry-and its state funders-acknowledge this, the equation will not become solvable.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More