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Published on April 30th, 2014 | by Jigar Shah

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Status of US-China Solar Trade Petition, & What Needs To Be Done

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April 30th, 2014 by
 
Image Credit: China--US puzzle pieces via Shutterstock

In recent media coverage of the US–China solar trade petition, there has been an uptick in predictions that all parties are headed toward a negotiated settlement. I hear these sentiments echoed in my conversations with solar companies who are choosing to wait and see how the SolarWorld petition plays out rather than speak out in favor of a negotiated solution.

Unfortunately, despite these reports, recent events and evidence suggests that this outcome continues to be an uphill battle. In the current state of play, a settlement between the parties is more unlikely than likely, which means the solar industry will remain stuck with the frustrating status quo of legal uncertainty and higher prices.

This does not, however, mean that progress hasn’t been made. The Solar Energy Industries Association’s (SEIA) involvement in pushing for a resolution to this petition is very encouraging. And it is a positive first step that the solar industry has coalesced around SEIA’s proposed settlement.

In order to bring any measure of long-term certainty to the solar industry, the United States and China must begin settlement talks. But the two countries will not do this without SolarWorld’s cooperation. Although initial overtures are ongoing, full-blown negotiations are still not happening.

All the while, the US solar industry continues to face unnecessary price increases on solar products as we inch closer to the Department of Commerce’s June 2 deadline for a preliminary determination. If the new tariffs go into effect, businesses across the country will be forced to cancel projects and lay off workers. This is a message that will resonate with officials in the Obama Administration who have the power to bring the parties to the table and negotiate an equitable agreement.

Now is not the time to remain on the sidelines. Solar companies threatened by higher module prices must make their voices heard – by writing an op-ed for the local paper, meeting with their representatives in Congress or adding information about the trade case to their website. The Coalition for Affordable Solar Energy (CASE) is ready to help members with all of these activities, and I encourage you to learn more today.

The future of solar in the United States is not a zero sum game. By negotiating an equitable settlement, we can ensure the conditions for the industry’s growth, including SolarWorld’s, and reach a win-win solution for all parties. We still have a long way to go before a resolution to the trade petition becomes a reality, but with vocal support from the overwhelming majority of the solar industry, we will be that much closer.

Image Credit: China–US puzzle pieces via Shutterstock

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About the Author

is author of Creating Climate Wealth: Unlocking the Impact Economy, 2013 Icosa Publishing. Shah unlocked the multi-billion dollar worldwide solar industry with a business model innovation (Power Purchase Agreement), not a new technology. This model created SunEdison, the largest solar services company worldwide. Jigar Shah has shown that business model innovation applied to the biggest challenge of our lifetime – climate change – will unlock a $10 trillion dollar new economy. After SunEdison was sold in 2009, Jigar served through 2012 as the first CEO of the Carbon War Room —the global organization founded by Sir Richard Branson and Virgin Unite to help entrepreneurs address climate change. SunEdison and Carbon War Room proved that we could make positive change through business and financial model innovation in many industries. Today, as CEO of Jigar Shah Consulting, he works with global companies in a multitude of industries to deploy existing clean energy solutions fueled by new business models.



  • Tired Head

    Oh Jigar, for those in the know this just reinforces that you are no longer in.

    • Jigar Shah

      Well said, you should spearhead this battle for the 140,000 people in the solar industry instead so that I can retire :)

      • 61368

        Jigar, thoughts on tariff risk post Chinese hacking allegations?

  • Matthew Kirby Smith

    Many non-engineers are missing a major component to this argument, panel quality. Information asymmetry is a common neoclassical market failure that certainly applies to this situation. Customers are unaware of the “real” cost of these cheap solar panels, whereas in reality, Chinese panels are more expensive than SolarWorld panels because they will degrade faster and have a higher rate of malfunction. The low quality Chinese panels LCOE, if accounting for the aforementioned shortfalls, is actually more than SolarWorld panels. The problem is that consumers are unaware of these hidden costs and assume they are receiving the largest benefit (market failure = information asymmetry). If you truly want to protect solar consumer returns (the customers for many of the complaining solar installers!) you should pay for the higher quality product and read some literature to enhance your understanding of your technology and the economic of the returns. One of the primary goals on the US government is to institute policy to correct for neoclassical market failure and I hope they exercise their power in this situation.

    ps-Just a theory at the moment, I hope to further research to reduce current uncertainty. Mostly depends on an analysis of long-term panel performance for various companies, information that will be difficult to find to say the least

    • Bob_Wallace

      There are a couple of organizations that are doing panel quality testing.
      If you want to use decent quality panels yourself one tactic would be to see what brands are getting installed in the big projects.

      “Chinese panels are more expensive than SolarWorld panels because they will degrade faster and have a higher rate of malfunction”

      You have some findings to share or is that an opinion?

      • Tired Head

        Unfortunately the infant mortality is covered…it’s the 10 years from now on you 25 year product….People who think that Chinese quality is ok are either naive or lying.

        • Bob_Wallace

          How about providing some data to back up your claim?

          I ask that because some people just bash Chinese made products for reasons of self-interest.

          • Matthew Kirby Smith

            It took me about 5 minutes on google to confirm my theory. Of course, I am a research scientist, so I understand that task may not come as easily to you. However, I do plenty of my own research and have no intention of doing yours for you.

          • Matthew Kirby Smith
          • Bob_Wallace

            You can’t be a research scientist, at least a competent one, if you think that linked piece brings any significant data into the conversation.

            ” While the solar panel quality control firm SolarBuyer reported defect rates of 5.5 to 22 percent in an audit of 50 Chinese manufacturers, PV Evolution Labs has conducted rigorous reliability testing on hundreds of solar panels, with a majority of those performing considerably well, Meydbray reveals.”

            What sort of defects? Meaningful or blemishes? What sort of failure rate might be expected?

            BTW, are you “Tired Head” who made a claim and was asked to back it up?

          • A Real Libertarian

            BTW, are you “Tired Head” who made a claim and was asked to back it up?

          • Matthew Kirby Smith

            I said try this “to start”. Now dig a little deeper to answer your own questions. I made a hypothesis and answered it to my own satisfaction. Those questions you asked are perfect, now how would you go about answering them? I encourage to read and formulate your own opinion. I only wanted to spark your curiosity. And no, I am not tired.

          • Bob_Wallace

            Are you auditioning for Jerk of the Day?

            Someone made a questionable statement and I asked them to back it up.

            If you’ve got something of value to add to the conversation then add it. I don’t need my curiosity sparked. Especially by someone who doesn’t read with a critical eye or follow up on the “evidence” they provide. Did you bother finding out who made the claim? Perhaps discover that they are attempting to sell their services?

          • Matthew Kirby Smith

            Bob, I am just trying to help you think about an important topic in another light. Massive system failures 10 years out would be a devastating blow to the solar movement. SolarWorld has been chastised for their efforts and I understand the pricing issue, but quality is a topic often neglected. Consumers are short-sighted, installers, producers, policy makers etc. need to ensure quality product reaches the market. The true cost of solar is heavily influence by product lifetime and I would hate to see the industry suffer from poor long-term panel performance.

          • Bob_Wallace

            Matthew, thank you for your attempt to help.

            Now, is quality an actual or imagined problem? So far no one has brought the data.

            My assumption is that there is/was a problem at some level. That’s why a couple of testing labs got into the business.

            Is/was the problem significant?

            Is it an ongoing problem or an artifact of the industry shakeout we’ve just gone through and failing companies trying to recover as much of their investment as possible as they shut down?

            Are you comfortable with “.People who think that Chinese quality is ok are either naive or lying.”? Does that meet your threshold of a valid claim?

          • Matthew Kirby Smith

            “Now, is quality an actual or imagined problem? So far no one has brought the data.”

            That is a good question. I would say it is a potential problem, but there is a lack of data.

            “Are you comfortable with “.People who think that Chinese quality is ok are either naive or lying.”? Does that meet your threshold of a valid claim?”

            I think we are all naive on this one.

            All in all, lifetime will come down to the performance of each individual production facility and the materials they use. Only time will tell if on average Chinese products have significantly reduced long-term performance. My hunch remains, however.

          • Bob_Wallace

            You started here -

            “It took me about 5 minutes on google to confirm my theory.”

            And followed it up with this -

            ” Now dig a little deeper to answer your own questions. I made a hypothesis and answered it to my own satisfaction. Those questions you asked are perfect, now how would you go about answering them? I encourage to read and formulate your own opinion. I only wanted to spark your curiosity.”

            Three hours later you’ve come to this -

            “That is a good question. I would say it is a potential problem, but there is a lack of data.”

            In other words you were firing blanks….

          • Matthew Kirby Smith

            Big day for bobby. Tell your cats I said hello.

          • Bob_Wallace

            Best to not brag about your credentials when you don’t have the goods, Matthew.

            You moved from pompous to petty in only half a day….

          • A Real Libertarian

            Bob’s cats say “Hi”!

  • No way

    Anyone want to give a short summary of what this problem is about?

    • NorskeDiv

      China heavily subsidizes their solar industry – just as the US does – and on top of that they dump their waste directly into farm fields and rivers. So Chinese solar panel makers have dirt cheap electricity sourced from coal power, low labor costs and almost no hazardous material disposal costs. When locals in China complain of the cancerous effects of a nearby solar panel plant or rare earths processing plant, they are more likely to end up in a black prison than be listened to.

      Solar panel installers like cheap Chinese panels, because it raises their margins on installed systems and allows them to offer more attractive pricing. Solar panel manufacturers in the rest of the world don’t like them, because they are being put out of business. Governments are also not so hot on Chinese panels because it is making politicians look quite bad, instead of developing domestic manufacturing capabilities, the west as seen them decline quickly. Every single German owned solar manufacturer is now out of bankrupt or bought by a Chinese competitor for their patent portfolio.

      • No way

        Thank you for that. :) I’d normally research it myself but I have a week abroad for my work with more or less 24 hours work per day, so my head and energy are elsewhere :)

        So it’s more or less about if they should allow a free market or if they should put up protectionistic trade barriers to ensure local production.

        • http://zacharyshahan.com/ Zachary Shahan

          Yep. Sorry if you missed the context. A story we’ve been covering for years, but been quiet on it for the past few months.

      • http://zacharyshahan.com/ Zachary Shahan

        Love this 1st-grade-level summary. Probably the most comprehensive summary I’ve seen in 2 paragraphs.

      • Bob_Wallace

        Do you have any recent information about industrial wastes for Chinese solar panels? My understanding is that the government has been requiring cleaner processing.

      • AldivosTarril

        You should be careful putting that much clean energy FUD in one comment otherwise people will think you are a nuke / fossil shill!

        In reality, a solar (or wind) manufacturing plant is utterly benign in comparison to the alternative toxic fossil / uranium mining / burning / waste alternative.

    • LookingForward

      China was selling cheap solar in the US, US is saying China is dumping solar in US, because US is losing solar revenue in it’s own country

      • Bob_Wallace

        It’s a little more complicated.

        A lot (~600) of solar panel manufacturers sprung up in China. China does have cheaper labor which meant that they had a market advantage.

        600 was too many for the demand at the time. The market was flooded. Prices dropped (the invisible hand visits China). The least efficient/poorest capitalized companies started failing and apparently were dumping product in an attempt to recoup as much money as they could as they were shutting down.

        The more efficient/better capitalized companies rode the price curve down. Once about 150 plants went out of business supply roughly matched demand and prices moved back to where the remaining companies were once again making profits.

        Was the Chinese government funding panel manufacturers in order to destroy manufacturing in other countries? I’ve never seen any proof of that nor have I seen reputable people in the business make the claim.

        Anyway, that’s the version I’ve read in several places. As it was happening.

        • LookingForward

          If that price/quality problem in China has been solved, why is there still a problem?
          I read articles about China’s manufacturers and the quality over there has indeed drasticly improved, but they are still cheaper because of cheaper labor costs.
          I think that’s still an issue for the US, who wants to get more manufacturing back home, opening the gates for Chinese solar could potentially destroy US solar manufacturing.
          PS I don’t think the Chinese government intentionly wants to destroy foreign manufacturing, otherwise they wouldn’t have raised the quality, I think it’s unintentionly just because they are cheaper.

          • Bob_Wallace

            On cost, I suspect it will take some time for the new reality to be acted on.

            On quality, is there a continuing problem with substandard panels? I haven’t read anything about that.

          • LookingForward

            no, China has mostly removed substandard quality and still they are cheaper.

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