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Published on February 12th, 2012 | by Andrew

14

Dumping Solar: Study Sheds Light on Solar PV Trade Flows, US-China Manufacturing

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February 12th, 2012 by  

 

Research and analysis of solar PV manufacturing costs and international trade flows shows that Chinese silicon solar PV manufacturers have only a slight cost advantage on their US counterparts, and that excludes transportation costs, the effect of inflation rate differentials, and other factors. Furthermore, the extraordinary rise in Chinese exports of silicon solar PV cells and panels to the US could only be sustained with the support of massive government subsidies, according to a US DOE National Renewable Energy Laboratory (NREL) presentation.

The results provide additional evidence in support of SolarWorld America’s and the Coalition for American Solar Manufacturing’s (CASM) international trade petitions against Chinese silicon solar PV manufacturers and Chinese government subsidies, asserts SolarWorld America’s president Gordon Brinser.

“This analysis from the renewable-energy research arm of the U.S. government corroborates our view that an export drive sponsored by the Chinese government is improperly intervening in the U.S. market,” Brinser stated in a news release.

“Highly efficient U.S. producers like SolarWorld can vie with any company in the world in legal competition. But the government of China’s illegal trade practices are neither economically nor environmentally sustainable for anyone. Free trade is trade free of illegal foreign government intervention.”

Silicon Solar PV: An Analysis of US-China Trade Flows and Competitiveness

Graphic courtesy Greentech Media/SEIA via NREL

Solar PV Manufacturing Cost Analysis: U.S. Competitiveness in a Global Industry,” the NREL analysis, highlights the extraordinary rise in Chinese exports of silicon solar PV cells and modules to the US, as well as the effects massive oversupply and extraordinary price declines have had on US silicon solar PV manufacturers over the past decade.

The NREL presentation concludes that Chinese producers have an inherent cost advantage of no greater than 1% compared with U.S. producers. When trans-ocean shipping costs are counted, they actually have face a 5% cost disadvantage.

It’s “massive government subsidies” that spur Chinese manufacturers to export about 95% of domestic production. That’s resulted in Chinese manufacturers capturing a 55% share of the global market in relatively short order, according to CASM and SolarWorld.

Global shipments of solar PV cells and modules increased at a 53% constant annual growth rate (CAGR) from 2000-2010, according to the Oct. 2011 research, which was conducted by NREL’s Alan Goodrich, Ted James and Micheal Woodhouse in conjunction with Stanford University’s Precourt Institute for Energy. While the market share of China/Taiwan manufacturers rose from less than 2% to 54% constant annual growth rate (CAGR) during this period, the market share of US manufacturers fell from 30% to 7%, a 115% CAGR decline.

Recent Surge in Chinese Silicon PV Imports

China’s exports of silicon solar PV have increased sharply in recent years, according to SolarWorld and CASM’s October trade petition filings, in which they assert China’s been illegally dumping silicon solar PV cells and panels in the US market, and that China’s been illegally subsidizing manufacturers and encouraging maximizing exports with the specific intention of wiping out competition in the US and other key solar energy markets.

As far back as 2009, a high-level Chinese solar industry executive even went on public record in a New York Times article stating that Suntech was dumping silicon PV panels in the US and that the Chinese government and state-controlled banks were pursuing a predatory manufacturing and export policy as part of its five-year national strategic plan.

“Import data reveal that in the first eight months of 2011 alone, Chinese exports have totaled $1.6 billion, more than all of 2010. The petitions represent one of the largest China-related dumping and countervailing duty cases filed to date and the largest case filed in the renewable-energy industry,” according to CASM.

Chinese imports accelerated further through 2011, ramping up yet again in the wake of CASM’s filings. Chinese silicon solar PV producers more than doubled their exports of crystalline silicon solar cells and modules in advance of potential U.S. government duties on those imports, according to an evaluation of PIERS’ reports, which are based on US Customs and Border Protection Automated Manifest System data.

“This significant increase in imports demonstrates that the Chinese know they have violated U.S. and international trade rules and are trying to evade the consequences,” SolarWorld America’s Brinser stated.

“Year to date, Chinese imports of solar cells and modules in 2011 are up 346 percent by quantity and 138 percent by value. Since 2008, Chinese imports have risen 939 percent by value and 1664 percent by quantity. This most recent surge of Chinese solar imports gives the U.S. Department of Commerce the evidence it needs not only to make a preliminary determination in our favor, but also to apply a critical-circumstances finding to address this last-minute import surge.”

That the Commerce Department did. Based on information provided by CASM and data provided by Chinese silicon solar PV manufacturers Suntech and Trina Solar as part of its investigation, the Commerce Dept.’s International Trade Administration (ITA) on Jan. 27 issued a preliminary determination that “critical circumstances exist for imports of solar cells from the PRC for Suntech, Trina, and all other producers or exporters.”

The preliminary determination paves the way for countervailing duties on Chinese imports to be imposed at estimated preliminary subsidy rates 90 days prior to a preliminary subsidies determination published in the Federal Register. Final determinations on anti-dumping and countervailing duties are expected in late March.

Devastating Effect on US Manufacturers Now Spreading Upstream

The sharp rise in Chinese silicon PV imports has had a dramatic effect on US manufacturers of silicon solar PV, as well as manufacturers in other WTO member countries. At least 12 US manufacturers have laid off employees, shut down plants or filed for bankruptcy during the past two years, CASM notes.

“There’s going to be a lot of blood in the coming couple of years,” Lux Research analyst Fatima Toor recently stated. “Whoever survives will do well.”

The supply glut and precipitous price decline is affecting thin-film solar PV manufacturers as well as crystalline silicon PV producers. Last week, news broke that Arizona-based thin-film market leader First Solar plans to idle half its production at its factory in Germany, which would put some 1,200 employees on a part-time schedule.

Falling prices and oversupply are also spreading upstream, pressuring margins of producers of polysilicon, the raw material used to manufacture mono- and multi-crystalline silicon solar PV wafers, cells, and panels.

Sanyo Electric Co. Ltd. just announced it will close its relatively small, aging silicon solar wafer plant in Carson, California, laying off some 140 workers in the process, as it prepares to start up production at a new plant in Malaysia. That’s just one of a growing number of cutbacks and closures recently announced by silicon producers.

Assuring Fair Trade and a Viable Industry Long-Term

SolarWorld and CASM’s trade petitions aren’t intended to hamstring or eliminate competition in the US and global solar industry—rather, they’re intended to redress illegal international trade programs and practices that will help assure the longer term viability of the industry, according to Brinser.

“We are countering the illegal trade practices of China and its state-sponsored industry only as a first step to reviving renewable-energy competition, manufacturing and jobs and augmenting national energy security and world environmental stewardship,” Brinser stated. “All of the advantages of solar should be available to the United States and to the competitive U.S. industry that pioneered this technology.”

China’s alleged violations of agreed-upon WTO rules governing international trade have become a priority on President Obama’s national agenda. In his recent State of the Union address, the President announced the formation of an inter-agency task force tasked with investigating international trade violations. He also unveiled “Blueprint for an America Built to Last,” a policy proposal aimed at revitalizing US manufacturing and job creation focused on scaling up clean energy production capacity in the US.

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About the Author

I've been reporting and writing on a wide range of topics at the nexus of economics, technology, ecology/environment and society for some five years now. Whether in Asia-Pacific, Europe, the Americas, Africa or the Middle East, issues related to these broad topical areas pose tremendous opportunities, as well as challenges, and define the quality of our lives, as well as our relationship to the natural environment.



  • Futureone-1

    what a weird world we live in, why argue about sustainable energy , when we should firstly address sustainable world population ? it seems China has addressed this with a one child pollicy , it is not about money , it is about population and sustainability of our planet one would think ? as for every person on the planet it will take more energy and it seems that people are the problem here !!! we need to think as one , the human race and where we will be in the future , it is time to stop wars and to make rules that apply to everyone evenly and for the good of the planet , not one nation or one company or one person after all we only need food in our stomach to live another day !!!! maybe we should get rid of our governments and start again with a better process ??? the question is how much energy does it take to produce solar energy over other energy sources ? but will anyone be honest about that ? certainly not the fuel industry , nuclear , hydro etc ….if people put as much energy in telling the truth than they do lying , that may be a good start !!!!

    • http://cleantechnica.com/ Zachary Shahan

      solar panels produce more energy in a very short time than is used making them.

      as for the other topic, it’s simply not the focus of this blog (CleanTechnica).

  • Anonymous

    um nothing in the NREL slide deck suggests that NREL is supportive of CASM’s case. that’s the author’s subjective read of the deck. also that one chart is from GTM research, as NREL notes in their slide deck. aaand can we talk about the picture at the top of the article? what the hell is that? and what does it have to do with solar?

    • Akbweb2

      Wrong-o…the results of the analysis do support CASM’s case…Picture at the top of the article has to do with justice, in this case as applies to the rules and laws governing fair trade…

  • Roma

    Irrespective of the extent of accuracy of the numbers, this article shows why we need an economy-wide carbon tax. Wouldn’t then need the government to institute piecemeal legislation to address these issues…..

  • Info

    Solar electric energy is ten times more expensive, $1/KWh, than typical utility electric energy $.10/KWh.

    Attacking China for dumping solar panels is like a sail boat race without the wind. No one ever crosses the finish line but each says the other guy is cheating.

    PV factories are notorious for not making money. It has been going on for 25 years, before the NREL even existed.

    There are better ways to develop the PV industry right now than throw more American money away. Who would say the industry would be around tomorrow if incentives were gone, even with the current price of Chinese dumping.

    I can buy a container of Chinese Suntech modules for $.95/watt plus shipping from China $.05/watt = $1/watt.

    I can buy a container of Advanced Solar Photonics modules in the USA for $1.15/watt plus $.02/watt = 1.17 with immediate delivery instead of 45 days.

    Solar World tries to make everyone believe their modules are far superior than the rest of the world’s because their German engineered and owned. They try to make their distributors sell at preset levels. They are some of the highest priced modules in the United States.

    The whole solar industry is a joke. Grid connected systems make absolutely no sense. Solar farms are the most disgraceful wastes of tax payers money of them all.

    I have been in the Photovoltaics industry for over 25 years and I have never known of a single manufacturer who has made money they have been going out of business way before the Chinese showed up Solavolt, Mobil, ARCO, Photowatt, Solarex.

    NREL depends entirely on US DOE funding and therefore Congressional funding. Is there any reason why they wouldn’t rally behind US PV manufactures no matter how insipid it might be?

  • Muchos Huevos

    In actuality, they should make mandatory that every new home would come with solar lanels.

  • ldn3000

    A fine example of unbiased reporting (not!)

    Of course SolarWorld is prepared to manufacture the quantities of high-quality solar modules the US market demands at $0.04 less than Chinese manufacturer’s costs.

    It appears that reliance on studies by NREL is one more reason the US solar industry is non-competitive. The only rational explanation for NREL’s continued missteps is an underlying desire to kill the solar industry.

    • Akbweb2

      “NREL’s continued missteps is an underlying desire to kill the solar industry.”

      Yes, no doubt that’s there intention…

      • Edward Kerr

        When trying to analyze why HREL would want to kill (or at least hobble) the solar industry I’m reminded that our congress is largely obligated to their “daddies” (as in who’s your daddy now?) that put them in office. Of course, anything that helps the fossil fuel industry would be part of the actual motivation regardless of the “official” reasons stated for their existence.

        Maybe I’m just being paranoid but I smell a rat here.

        Ed

  • Bingbangvroom

    Gosh, I wonder why exports accelerated at the end of the year? Has that ever happened before? Wait, just a minute, a little birdy just flew into my house… what now, she’s talking about how imports surge at the end of every year in markets all over the world. Apparently, Germany, the U.K. and Italy had import surges too. What’s that? The surges happened last year and the year before as well. This is the normal trade flow?

    This little bird is a chatterbox. There’s more… NREL’s study is bogus – they cherry picked specific inflation numbers despite having more up to date and accurate information to build their arguments upon. Blue Bird says that’s pathetic – I agree.

    Note that REC recently came out and was honest about how their uncompetitiveness was forcing them to close down some of their factories and reorganize production. The U.S. manufacturers should be honest about how competition works rather than cherry picking numbers and slinging around emotional accusations.

    • Akbweb2

      Looking into the details of the year-end imports from China, and not only those, as well as the scope and scale of Chinese subsidies clearly reveals that “competitiveness” is not defined by open, fair trade and adherence to internationally accepted trade rules…Whether China can continue to subsidize at the scale and scope raises the very real question of whether this recent price decline and ramp up in production is sustainable or healthy…

      • Akbweb2

        “…how competition works”!?

        You must be kidding!? We’re barely even playing the same ‘game’.

        Let’s look at the ‘competition':-

        – central gov’t controlled economy w/mandated mfg, production targets
        – illegal mfg and export subsidies on a scale never seen
        – restricted access to domestic mkts for foreign cos who must take on a local jv partner to have any chance of success
        – a managed currency pegged to biggest trade partners…

        Yes, by all means, let’s compete…

        but I’m afraid your notion of competition will have Americans move faster into the poor house, and a polluted one at that…

        • MonkeySmart

          Show me the evidence for your arguments?

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