Jan 28, 2012

Solar panels are the next space race - China produces more than 10,000 MW of solar cells annually. United States, 1,000 MW

...As a portend of things to come for the solar industry, solar power is now cheaper to acquire and use than diesel fuel in India. As a result, Indian manufacturers are exchanging diesel fuel for solar panels to power their operations. That’s a big deal for the environment, as well as the solar industry at large. However, this presents a serious problem – and opportunity – for the United States.

“But wait, you just said solar is cheaper than diesel! That’s great!”

I urge you to hold your enthusiasm and ask an important question: Why is solar power now cheaper than diesel in India?

“That’s easy, solar panel prices have dropped over 50% since last year”

Good, now tell me why solar panel prices have dropped that much.

“Uhh, because… I don’t know. They’re just less expensive.”

Panel prices have come down so much because of Hu Jintao’s decision to massively subsidize the cost of producing solar panels in China.

Those subsidies allow Chinese manufacturers to produce panels at a net cost much lower than American companies can. There is now a huge amount of solar panels produced in China, as those solar subsidies were the equivalent to throwing gasoline on an already stoked flame:

china solar production Solar panels are the next space race

China now has an extreme global advantage in an industry where panels on roofs are sure to become as ubiquitous as handles on doors.

Their low cost of labor and subsidized production have already tightened the vice on several American manufacturers. Last year, Evergreen Solar had to shutter one of its plants because it could not continue to compete with Chinese imports.

solar factory china Solar panels are the next space race

A solar panel manufacturing plant in Wuxi, China

On the other hand, solar installers love the decreased panel prices from China, as they are able to present much more financially compelling reasons why homeowners should go solar with a lower net cost of installation.

Meanwhile, American solar installers and manufacturers are at odds with one another as talks of tariffs on Chinese panel imports bubble up in congressional hearings.

American manufacturers are seeking protection from panel prices they cannot compete with, and installers want to protect their rosy sales and installation forecasts by being able to offer the most affordable solar solutions to their clients.

In the end, not much is happening to help domestic manufacturers and we’re starting to see a prosperous window of American opportunity start to close.

There’s plenty to find issue with regarding the philosophy of the Chinese government on many accounts over the course of human history. Though, I simply can’t help but admire China for their ability to take action instead of quibble and be locked in stalemate as is commonplace in Washington...

Please continue reading at: