Solar module prices have rapidly decreased during the last five years due to several factors, including the economic recession and resulting lower demand for solar energy, an increased supply of polysilicon, expansion of manufacturing capacity, and, during the last year, increased competition from low-cost Chinese manufacturers.
The emergence of Chinese photovoltaic cell manufacturers that can produce solar cells at a lower cost than American companies has forced some American solar panel manufacturers to reduce prices, decrease margins, close some manufacturing facilities, or even declare bankruptcy–as was the case for Solyndra.
In reaction to this situation, seven U.S. manufacturers of crystalline silicon solar cells, led by SolarWorld, formed the Coalition for American Solar Manufacturing, with the aim to hold China accountable to U.S. and international trade laws by filing antidumping and countervailing duty trade remedy petitions.
As a result, on May 24, the Commerce Department slapped stiff tariffs on imports of Chinese solar panels, imposing tariffs of 31 percent to 250 percent on Chinese solar-product imports. However, import duties on Chinese solar panels can have negative effects on the solar industry in the United States.
Since the enactment of the Energy Policy Act of 2005, the U.S. government has invested in providing tax incentives and loan guarantees with the aim to promote solar energy system installations and reduce its installation and generation cost.
Government incentives and renewable energy standards have been important drivers for solar energy deployment and cost reduction.
However, lower solar module prices from Chinese manufacturers have also helped reduce the price of solar energy, making solar more affordable for U.S. customers and more competitive with other forms of electricity generation. Average selling module prices have decreased 28.1 percent in 2011 (with respect to 2010) in the United States.
The Commerce Department's decision, coupled with the recent expiration of the Section 1603 cash grant (in lieu of the Investment Tax Credit, is projected to increase solar electricity prices in the United States, affect demand for solar panels (which may exacerbate the current oversupply of polysilicon in the industry), hurt U.S. jobs, diminish the competitiveness of solar energy relative to conventional and non-solar renewable sources of energy, and may also lead China to take retaliatory measures against U.S. solar panels manufacturers.
These projections are supported by the Coalition for Affordable Solar Energy led by Sun Edison, which predicts that a 50 percent tariff would eliminate 14,000 jobs in the United States.
The solar market has grown more than 100 percent during 2011. It is difficult at this point to forecast the precise effects the new tariffs will have on solar panel demand and prices, but Frost & Sullivan expects a deceleration in the industry’s growth in 2012.
--Georgina Benedetti, Frost & Sullivan senior industry analyst
Unfortunately, I don't think protectionism works. I can understand the desire for tariffs such as this. It's difficult or impossible to compete against someone that has a lower cost basis, whether the disparity is fair or unfair.
I remember anti-dumping legislation against Japanese LCD and memory chip manufacturers back in the 90's. It didn't keep either of those industries thriving here in the U.S.
In theory, anti-dumping legislation should just buy time to allow domestic companies to become more efficient, but I don't think that happens. Ultimately, if a company isn't strong enough to compete in a world economy, it will fail. We may not like it and we may morn the loss of jobs and tax revenue, but doing so won't help. The only long-term answer is to figure out how to lower costs or increase value.
The problem is the subsequent redistribution of wealth. If some people do well out of importing cheap products from China (as you said that's a good thing for consumers as they benefit from other people's hard work at low price) then some of these benefits should go to those who lose out as a result. This has not been happening however and as a result an underclass of society (formed mainly by relatively low skilled workers) has emerged as a result of globalisation. In theory, politicians talk about upskilling etc. but in reality this is not working for many people in society.
In general, US solar industry NET gain is positive. The properly run & cost/technology competitive companies are making money like Helmlock, GT solar, Applied Material, first solar, SunPower and many instaler companies. This trade war will push some of surviving companies lose the biggest China solar manufacturing market. Fair ??? A well-run company might go under because of US trade policy issue? Win or Loss for US? Who knows?
One thing for sure - made in US? We all wish. Tough since it is the fundamental competiveness, not just labor cost issue. Most likely just another "tire" case. US citizen paid double the price for tires, but tires still made from India,Indonesia,Mexico... somewhere else. US wants to start the trade war w/ the whole dveloping world? This won't work since biggest buyers for US made product are going to be the people from developing world soon. Want more well-run and still surving US companies go under for government policy? How can this help job creation?
I have been wondering this question for a long time, which one is cheaper? setting up exactly SAME standard fab in developing countries or in US? How many accountants,lawyers and so called "safety or environmental" checks does a company need to pay just to get a manufacturing facility setup in US? How many paperwork needed for setting up a facility handling simple chemicals? You definitely need to have millions to be able to afford just the entry ticket for doing manufacturing facility in US.
Start addressing the fundamental US policy, education, even work/management ethic issues. Make yourself more marketable is always better than forcing smaller countries to accept you as it is. As US is waking up, China might not be as "easy-going" as Japan or Korea, you can push around so easily.
This is completely obvious stuff.
In a very real sense, benefitting from supercheap Chinese-manufactured products means that the US consumer is benefitting from Chinese workers' very long work weeks and substandard living conditions. Like, you know, the dorm life associated with Chinese manufacturing plants.
On the other side of the coin, this takes manufacturing jobs from the US.
I've long asserted that imposing stiff import tariffs will mean a reduction of the standard of living for many in the US, but it should bring back some of the manufacturing jobs. A mixed bag. Those chronically out of work will clearly do better. Those who have decent jobs will find that their paycheck won't go as far.
There's no free lunch, is the moral of this story.
Due to the cost of solar panel in the last few years, solar industry has been thriving. To American companies, I believe the importers and installers, together with the consumers, are all benefit from it. The demand have created jobs in the import and construction business. However, the import hurts the American manufacturers.
The tariff may help American manufacturers to stay in business. Importers will get hurt. So do construction companies. There is no doubt you will need to pay more if you decide to install solar panel in the next few months. So, which direction is better off to the big picture?
Sad to know that Commerce Department slapped stiff tariffs on imports of Chinese solar panels. This will push the price of the solar panels higher in US. In this era of globalisation steps like this will definitely hurt the end customers because they cannot reap the benefit of low-cost technology.
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