Protectionism or Expediency?
America is currently embroiled in a trade dispute with China and facing allegations of protectionism from both outside and within the US. The government are preparing to charge Chinese companies who are involved in the manufacture of solar panels a penalty of between 18-250%, accusing them of ‘dumping’ their products onto the fledgling US solar market.
The Chinese are accused of selling their products below production costs and flooding the market with cheap solar modules, forcing down costs and providing unfair competition with their US counterparts. Many in the renewable energy industry feel that this exhibition of ‘over enthusiastic protectionism’ will be an own goal for the American solar market, leading to even higher prices for the consumer who already faces paying 100% more than UK customers for their solar solutions.
The Chinese Rationale
The major expense involved in the manufacture of solar panels comes not from the materials, labour or transportation, but from the construction of the plant which manufacturers the products. The Chinese know that the larger the factories they build, the lower the actual production costs will be. They have made the decision that it is preferable to continue manufacturing, creating an over capacity in the global market and selling their solar panels at the cost of production plus a small percentage, than to leave their huge factories laying idle.
Still in its infancy, the US solar industry is, unfortunately, hampered by red tape which is primarily the reason why their home owners and businesses face having to pay double the cost for their solar installations than their UK and European counterparts. A possible solution would be to follow our example by cutting the unnecessary bureaucracy surrounding the industry and focus less on home grown manufacturing, but concentrate on bringing down the cost of solar installations to bolster the market, providing growth in associated employment opportunities.
Where the UK Solar Market has Succeeded
The UK and European solar market have responded to the problems of over capacity and the attendant reduction in the costs of panels by lowering the subsidies available to consumers; for example, the Feed-in Tariff, thereby still getting the same amount (or more) of renewable energy for the same costs.
Through statistics released by Compare-my-solar, it is clear to see that, despite the uncertainty caused by the reduction of the Feed-in Tariff in late 2011 and early 2012, the UK solar market is still showing periods of growth:
April 2010 – October 2011 (FIT at 41p) showed a 4% weekly growth.
April 2012 – July 2012 (FIT at 21p) showed a 12% weekly growth.
August 2012 – October 2012 (FIT at 16p) showed a 10% weekly growth.
These findings clearly indicate that consumers are still confident that, when off setting the new Feed-in Tariff rates against the savings to be gained from the reduction in panel costs, the financial returns provided from a solar installation still offer a good investment. Industry insiders are also convinced that, despite the challenges faced by some in the solar installation market by the current low demand in absolute terms, with a predicted rise in growth of 10% per week, the market could see the number of installations rise back to numbers similar to those seen in the heyday of the 41p FIT by the close of 2012.
US Resistance to Solar?
With the American people facing an election in a matter of weeks, it may be timely to look at the views of the two opposing candidates for the race to the White House; incumbent President Barak Obama and Republican candidate, Mitt Romney. Many will agree that before President Obama was elected to office in 2008, the solar industry played little or no part in the US economy. Despite supportive legislation for the renewable energy sector, federal incentives for solar power are a fraction of those for gas, oil and coal and the overall capacity of solar generation in the US currently stands at just 5GW – not too impressive when compared against the ‘tiny’ UK which has a capacity of 1.3GW.
Tax credits for those using solar power were, at one time, routinely renewed with bi-partisan support but are now viewed as controversial by many in the government who view the renewable energy industry as a threat to the fossil fuel status quo. US consumers also have to pay up to 50% of the expense for a rooftop solar array on so-called ‘soft costs’ like permits, grid connection and installation.
For those who are pinning their hopes for the future of US solar power on Mitt Romney, he suggested in an interview that both solar and wind power were ‘imaginary’ sources of energy; not too much hope from that quarter then!
Author bio: Ian Wright is a strong supporter of renewable energy in the UK and around the world. You can learn more about solar panel in the UK from The Eco Experts.