Heat Over Chinese Panels
For years there have been charges of unfair trade practices and unfair advantages in trade with China across many industries. Domestic solar panel manufacturers have cried foul. They claimed that unfair trade practices in the manufacture of solar panels result in an unfair advantage.
It seems the US Department of Commerce agrees. The Commerce Department has recently imposed tariffs on Chinese solar panels after determining that Chinese manufacturers have received illegal government subsidies and trade incentives. These would be exemplified as cheaper power costs, massive loan incentives, and actual cash disbursements.
The U.S. federal government has also assisted domestic solar production with incentives; but the help quite different from what China has offered its manufacturers. The US Department of Energy has offered loan guarantees and tax incentives in many cases, which basically made the government a guarantor on loans. The Chinese government’s actions had a far more direct effect upon the actual price of finished product. The Tariffs punish the primary violators in a simple breakdown:
• Suntech: 2.9%
• Trina: 4.73%
• All other companies: 3.59%
This will not be the end of the imposed penalties. The Commerce Department is continuing its probe and will consider “dumping” charges. “Dumping” means that solar panels would have been sold at a loss to affect pricing. Some industry experts figure when all is said and done final penalties may be as high as 10%.
The Chinese were surprisingly understated about the imposition. China’s state media said U.S. import tariffs imposed on Chinese solar panels are “sensible” and a “result of compromise” but warned that bilateral ties are still in jeopardy because of Washington’s tougher stance on trade.
It is thought that China will continue to be somewhat low key. However, this could change when the announcement comes in May as to the rest of the impositions due to the “dumping”.
The solar industry worldwide has been beset by overcapacity in China’s panel production sector. The U.S. government estimates that 95% of China’s solar panels are exported to countries with more favorable incentives. Prices for solar panels have fallen creating great hardships for U.S. and European competitors that manufacture solar equipment.
The fact is that Chinese-made solar panels are not only used heavily in the U.S., but they have, in fact, been a large part of the U.S. solar energy industry. Such imports have contributed to the U.S. overtaking China last year by making $56-billion worth of investments in clean energy, compared to China’s $47.4 billion. Yet, according to figures from the Guardian, U.S. imports of Chinese solar panels grew exponentially in recent years too, from $21.3 million in 2005 to $2.65 billion last year.
The overall economics of solar won’t change drastically, as technology, increased demand and manufacturing efficiencies continue to slowly move the price per watt lower over the balance of this decade.
U.S. solar manufacturers are likely to see this as a victory, not just in solar but in U.S. trade in general. Overall this will likely be a blip on the radar for solar panel prices with most U.S. companies feeling that the sanctions were far too small to make a significant impact.
The outlook for solar power is still bright, and with global economic recovery in process, that outlook will only get better.