Solar Market: Chinese solar imports Vs US solar industry

by Dino Green on December 7, 2011

Chinese solar imports in the US energy market have increased by some 350% in the last 2 years, controlling half of the US energy market and benefiting from government subsidy-funds and loans, currency exchange opportunities and tax incentives.

Following an investigation, initiated by US solar panel manufacturers and lawmakers, whether Chinese imports compete fairly with domestic US products, on Dec. 2nd the US International Trade Commission concluded that Chinese imports are indeed hurting US energy manufacturers; thus a deeper investigation may continue which may lead to imposition of anti-dumping and/or other “protective”  measures.

However, there has been a controversy amongst US solar market stakeholders about the Commission’s decision and/or the validity of the outcome.

On one side the Coalition for American Solar Manufacturing (CASM), formed by several solar-panel manufacturers, claim that Chinese manufacturers are tactically working towards a Chinese Monopoly on solar products in the US; they argue that Chinese manufacturers are illegally ‘dumping’ solar products into the US market thus creating unfair competition against US manufacturers who will eventually be forced out of business.

The coalition demands immediate imposition of import tariffs as countermeasures to alleviate unfair competition which, as they claim, has cost almost two thousand US jobs.

On the other side, the coalition of Affordable Solar Energy (CASE), formed by some 132 solar companies, shares a different view of the reality about Chinese solar imports in the US energy market. Opposing CASM, CASE claims that imposition of any such tariffs would be equal to “protectionism” against the free market.  CASE believes that tariffs will hinder international competition whereas China and other competing markets are the factors that have drastically contributed towards cost-reductions of solar panels and towards Photovoltaic market growth.

Essentially, the position each “solar energy stakeholder” may take largely depends on where each one is positioned on the solar-energy supply chain. Consequently, lower solar-panel prices may have different impact on different levels of the solar energy supply chain. In the Area of Manufacturing, companies are faced with extremely tough competition forcing them to layoffs and other measures towards lowering their prices in order to survive. On the other hand, solar panel distributors, technology integrators and installers perceive lower solar panel costs as an opportunity to grow their margins and their business. Similarly, the opposite effect of high solar panel costs will essentially squeeze their profit margins and lower their sales.

A third, and perhaps most important, stakeholder group is that of consumers who are expected to benefit from lower prices brought by Chinese and other international competition.

Reduction of solar panel prices has been an expected, missing link, towards rapid solar market growth globally. Lower costs for solar installations can lead to increased investments in renewable green energy for homes or for commercial or green power generation installations.

The market potential for solar energy is huge; focusing on lowering prices in the long run may facilitate beneficial exploration of this potential. However, the end receiver on the supply chain may not necessarily benefit directly from such lower costs depending on consumers’ negotiating power in the market. In an indirectly “protected” environment, the consumer may “take”, in the form of “cost-savings”, only the “leftovers” from earlier stages on the supply chain (manufacturers and distributors).

Consequently, cost reductions of solar panels brought in by Chinese imports in the US energy market undoubtedly has different effects amongst the solar energy stakeholders: manufacturers, distributors, employees and consumers. As illustrated above, benefits from solar-panel cost reductions may not be equally allocated.

About the Author

Dino Green

Dino green is a Mechanical Engineer and a qualified accredited expert in certification of energy performance of buildings. He is a green technology fan and an advocate of environmental sustainability. Beyond his professional curriculum he is a main editor in www.RenewableGreenEnergyPower.com and a contributing Author in www.GreenEnergySavingTips.com You can connect with Dino @ Google+

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