The rift within the industry – which has pitted a group of seven solar panel manufacturers against major solar developers and power generators – underscores the complexity of the United States’ trade relationship with China on renewable energy.
SolarWorld Industries America, a solar panel manufacturer, filed petitions Wednesday with the Commerce Department and the International Trade Commission alleging that China is illegally subsidizing its solar industry.
The company alleges that China is flooding the U.S. market with underpriced solar panels and subsidizing its solar industry in violation of World Trade Organization rules. China’s efforts, the company says, are burdening U.S. solar manufacturers and are partly responsible for seven U.S. companies going out of business or downsizing in the last year.
Among the U.S. solar panel manufacturers that have collapsed this year is Solyndra, which received a $535 million loan guarantee from the Obama administration in 2009. The company declared bankruptcy in early September after laying off 1,000 workers, igniting a firestorm in Washington over investment in renewable energy.
“The Chinese industry is illegally seizing control of the U.S. solar market and manufacturing and our jobs,” SolarWorld President Gordon Brinser told reporters earlier this week when the company announced the petition. “Solar technology was invented here and we intend to keep it here."
The petition has caused a backlash in parts of the solar industry, with several companies raising concerns that the effort will hurt some solar companies by raising the cost of panels.
“Putting a trade barrier in place that would protect this market and keep it safe for a group of manufacturers who can’t compete would stop growth,” said Arno Harris, CEO of Recurrent Energy, a solar developer.
“These companies can’t compete in the market so they’re trying to use tariffs so they can sell their more expensive panels.”
Julie Blunden, vice president of external affairs at SunPower, echoed Harris’s opposition to the petition.
“We think it’s an unfortunate distraction,” she told reporters earlier this week.
Solar panel prices have dropped by more than 40 percent in 2011. That’s great news for U.S. solar developers and generators, who have access to an inexpensive product.
But U.S. manufacturers are struggling to compete with countries like China, which has invested billions to build its domestic solar industry and produces huge quantities of cheap panels.
Harris said lower cost solar panels are essential for the success of the industry.
“It’s a global industry and I think what you have going on here is an industry that’s having a tremendous amount of success in driving the cost down,” Harris said. “Those cost reductions are really key to the future of the industry and it’s what’s driving its growth and success.”
But companies like SolarWorld say that they simply can’t compete with the low-cost solar panels produced by China.
The company’s 3,000-page petition alleges that China subsidizes its raw materials, provides preferential loans and offers discounted land, power and water to companies, among other things. The petition also says China is “dumping” underpriced solar panels into the market, making it impossible for U.S. companies to compete.
“These subsidies are enormous in size and scope and they are illegal under U.S. law and World Trade Organization law,” Timothy Brightbill, counsel for SolarWorld, told reporters Wednesday.
Six other solar manufacturers have signed on to the SolarWorld petition. But all of the other companies remain anonymous, fearing backlash for challenging China.
Shayle Kann, a solar industry analyst at GTM Research, said cheap solar panels from China and other countries have been a boon for the solar industry in general, but have made it tough for U.S. manufacturers to stay in business.
“There’s been an extended trend of manufacturing of solar panels moving to China. It’s similar to other industries, a big part of that is that they’ve been able to manufacture cheaply,” Kann said.
“The upside of that is solar panels have gotten a lot cheaper over the last several years, the downside is that it’s come at the expense of manufacturers in Europe and the U.S.”
But Kann said it’s still unclear whether China is violating trade rules.
The solar industry’s trade group, the Solar Energy Industries Association, has not taken a formal position on the petition, noting that it has a broad membership that likely has differing positions on China’s role in the solar sector.
“Falling prices are good for consumers, we’ve said that and we think that’s a good thing,” Tom Kimbis, SEIA’s general counsel, told reporters on a conference call Thursday. “This case will determine if price reductions are a result of unfair trade activity.”
Solar industry executives say the industry is experiencing major growth in the United States, despite criticism from Republicans on Capitol Hill who have raised red flags about renewable energy in light of the Solyndra debacle.
They point to a recent study that says the U.S. solar industry employed more than 100,000 people in 2011, a 6.8 percent increase from last year. A separate study says solar panel installations increased by nearly 70 percent in the second quarter of 2011 when compared to the same period last year.
Harris says the petition distracts from the industry’s recent successes.
“Well, I think it’s a disappointment because it masks the success the industry has really seen,” he said.
Source: http://thehill.com/blogs/e2-wire/e2-wire/189219-china-trade-petition-divides-solar-industry
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