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
“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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