MIT Researchers Weigh In On US–China “Solar Duel”

Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!

Editor’s note: For years, we’ve been covering the China–US solar trade controversy. For the most part, this has involved covering the reports and commentary from industry associations and politicians. It has taken awhile for any academic institutions to chime in on the matter, but some MIT researchers have now done so. Their study is linked in the MIT article reposted below (images added). However, before that, here is one key concluding paragraph from the report: “We conclude that the US–China PV competition is best understood not in terms of a bilateral clash between government-led policies, but instead in terms of a global PV industry structure within which US and Chinese firms play roles consistent with their strengths. Each country extends different assistance mechanisms and each country has conflicting purposes for such assistance. Both countries lack a transparent, quantitative evaluation methodology to assess the cost effectiveness of the assistance. We suggest some policy changes to make government assistance more consistent with the global character and long-term opportunity of this important technology.”

In the past decade, the massive expansion of China’s production and export of silicon photovoltaic (PV) cells and panels has cratered the price of those items globally, creating tension between China and the United States, and, more recently, China and the European Union. In a new study (see PDF), MIT researchers explain why these tensions could harm the broader solar industry and have spiraling effects for China–U.S. trade relations.

Image Credit: A Duel in the Sun report by John Deutch and Edward Steinfeld
Image Credit: A Duel in the Sun report by John Deutch and Edward Steinfeld

“China and the U.S., and China and the E.U., are in the midst of a blame game as the solar industry is on the brink of collapse — and the tensions could infect technology and commercial development globally,” says John Deutch, the lead author of the study and Institute Professor at MIT. “All the players should understand that the PV industry is globally linked, and jobs and profits are available for those who manufacture and for those who innovate. Given the complex but productive relationships, nations need to find a way to better work together rather than flirt with protectionist measures.”

Over the last decade, manufacturing of PV cells and panels expanded in China, boosting supply globally. The flood of solar panels, combined with a slipping subsidized demand for solar energy (especially in Europe), lowered the global market price to unsustainable levels, the study shows. Between 2009 and 2012, the price of crystalline silicon panels decreased from more than $2.50 per watt to less than $1 per watt, as China supplied 30 to 50 percent of U.S. PV imports.

The result? PV manufacturers globally haven’t been able to compete, Deutch and the study’s co-author, MIT professor of political science Edward Steinfeld, explain. In response, the U.S. Department of Commerce and the International Trade Commission imposed substantial anti-dumping duties — tariffs imposed on low-priced foreign imports — on some Chinese manufacturers last November, following complaints from U.S. PV manufacturers who alleged that the Chinese were selling their products below fair market value. Around the same time, Europe issued an anti-dumping inquiry; it has also threatened to announce tariffs by June 6.

China has responded with its own allegations, also threatening to issue tariffs — this time, on the materials and technology imported to make the panels. Many of those imports come from the United States. China threatens these tariffs as its PV industry also faces trouble, according to the study: Net margins of panel suppliers in China fell to double-digit negative values in 2011 and remain there now, more than a year later. The study reports that Suntech Power Holdings — the largest PV-panel maker in the world — posted a loss of $495 million in 2012. (The company declared bankruptcy at the end of March.)

Image Credit: China--US puzzle pieces via Shutterstock
Image Credit: China–US puzzle pieces via Shutterstock
Deutch and Steinfeld explain that the two nations — China and the United States — are interdependent and form a “potentially productive global ecosystem for innovation.” When one side declines — as is happening in China, with its PV manufacturers — so will the other side, as is happening in the United States, with its technology and manufacturing tools, the study says. The researchers explain that there are opportunities for the two nations to together accelerate the worldwide deployment of solar PV for electricity generation.

“The two countries have different strengths and weaknesses,” Deutch says. “The U.S. is creating the technology and manufacturing tools and China is successfully, but not profitably, manufacturing devices based on today’s technology. If both countries look at the big picture, choose to focus on their strengths, and put aside the blame game, they have a real opportunity to boost global deployment of solar.”

Arun Majumdar, the vice president for energy at Google and former director of the Department of Energy’s Advanced Research Projects Agency-Energy, says, “Deutch and Steinfeld’s factual and data-driven analysis shows that in the interdependent global market and supply chain of the solar industry, policies of individual governments that foster and leverage their domestic strengths to openly and fairly compete in the global market are better off in the long term to reach national goals of economic growth.”

Majumdar adds, “On the other hand, policies that distort the market via undue protectionism or disproportional investments to reach national goals could backfire and produce opposite outcomes.”

The study will become part of a larger report on the “Future of Solar,” to be released by the MIT Energy Initiative at a later date.

Have a tip for CleanTechnica? Want to advertise? Want to suggest a guest for our CleanTech Talk podcast? Contact us here.

CleanTechnica Holiday Wish Book

Holiday Wish Book Cover

Click to download.

Our Latest EVObsession Video

I don't like paywalls. You don't like paywalls. Who likes paywalls? Here at CleanTechnica, we implemented a limited paywall for a while, but it always felt wrong — and it was always tough to decide what we should put behind there. In theory, your most exclusive and best content goes behind a paywall. But then fewer people read it!! So, we've decided to completely nix paywalls here at CleanTechnica. But...
Like other media companies, we need reader support! If you support us, please chip in a bit monthly to help our team write, edit, and publish 15 cleantech stories a day!
Thank you!

CleanTechnica uses affiliate links. See our policy here.

Guest Contributor

We publish a number of guest posts from experts in a large variety of fields. This is our contributor account for those special people, organizations, agencies, and companies.

Guest Contributor has 4313 posts and counting. See all posts by Guest Contributor

11 thoughts on “MIT Researchers Weigh In On US–China “Solar Duel”

  • Sounds like neoliberal hogwash to me. China has been dumping products of all kinds on the US for years now and we just watch it happen, watch our jobs and profits and dollars go overseas. I’m suspicious that the only reason THIS tariff was imposed was because it indirectly supports big political donors in coal and natural gas by raising the price of solar panels. But what these professors are suggesting is that we should unilaterally disarm in the trade war China has been waging since the nineties. Bull crap.

    • Whatever. It does not matter. Like jburt56 says: “Time for panels at $0.10 per watt.”

    • spot on

  • Modelling the world solar production system as a two-country thing is absurdly reductive. Where’s Germany, the biggest installer and the US’ rival in solar manufacturing equipment? Or Japan?

    • The MIT boffins say this in their Exec Summary

      “We conclude that the US–China PV competition is best understood not in terms of a bilateral clash between government-led policies, but
      instead in terms of a global PV industry structure within which US and Chinese firms play roles consistent with their strengths.”

  • That’s something I’d LOVE to see! Could you provide us with some URLs to explore? Do you have an idea of how close this technology is to marketability?

    • It would take some sort of breakthrough.

      Right now First Solar, the largest thin-film manufacturer, is predicting their manufacturing costs to fall to $0.42/watt by 2017.

      Bringing down the cost of the film could happen. It’s going to be hard to bring down the cost of the frame and glass. That would likely require major improvements in efficiency so less of each is used per watt.

      • I’m lovin’ it! My two fave technologies – 3D printing and solar power in one delectable gumdrop. I want ’em on my roof. Right now!

  • 40c/Wp to 50c/Wp panels and installation costs down to 80c/Wp should be good enough to light world solar installation on fire …and leave room for company profits, part of what will drive the expansion. Some people are just never happy with what they have.

    • Cell prices are running from $0.34 to $0.52/watt with an average of $0.41.

      Silicon panel prices are running from $.0.60 to $0.99 with an average of $0.73.

      That gives us some idea of what it costs to turn a cell into a panel. Somewhere around 30 to 40 cents. Ten cent thin film would probably not go under $0.40/watt unless efficiencies were greatly increased. It’s a floor set by the cost of frame and glass plus labor and stuff.

      Panels at 50 cents and installation costs a a dollar would produce electricity in the lower 48 for about $0.07/kW. Since that would be production during highest demand hours it would rip things up.

      40 and 80 cents would take the cost of electricity under six cents.

Comments are closed.