INDUSTRY I ISSUES
on the front burner with a plan to reduce solar prices to $1 a watt by 2014, a goal that has partially been met in sunbelt areas. The many millions of dollars announced for research is seen as an instigator for China to invest seven times that amount over the next few years enabling them to build the edge that has driven them to a leadership role. Despite the heady undercurrents of intrigue, all companies, regardless of their origin, will be impacted by the current oversupply of product in an inconsistent market place. Every company will look at its options to keep itself afloat through the coming consolidation of the market. This is seen in every market and the market leaders are the ones most evident in their abundance.
placing pressure on every other manufacture to compete with the cheaper Chinese imports.
From the long term goal of developing cheaper alternative energy sources the speedy growth was a boon with a rapid succession of innovative advances across the board but from a financial perspective it was a dangerous over investment that was not sustainable. The number of companies continued to increase and governments were suddenly changing their subsidy polices leaving many companies, who had based he business plans on the subsidies continuing, short of funds to cover the initial debt.
Longer term goals also took a hit from price fluctuations of raw materials. The energy market relies on coal, oil and gas predominately but solar technology is made up of a number of raw ingredients that have their own price fluctuations. A major lesson came with polysilicon, a key raw ingredient that is also the key ingredient for the semiconductor industry. The massive growth in solar led to fears of a lack of silicon with competing industries and many thought thin film technologies would be the better financial alternative. Prices soared to hundreds of dollars a kg instead of the usual 30 – 50 dollars leading to a massive investment in other forms of PV, most notably in the USA. There is now such a glut of silicon that prices are expected to drop below 30 dollars this year. This compounds problems for the USA industry which has seen a number of bankruptcies from thin film companies no longer able to compete with silicon based technologies.
Within China itself there are too many companies competing for too little space and the global market will shrink in many of the areas that have just experienced the most growth. In a market so impacted by local policies areas of growth will remain as they try to emulate the growing desire to supply renewable sources. The business reality is a great many companies need to move stock to survive so there has been a global drop in prices leading to increased uptake with better price entry into a subsidised market. The cycle has been slowed or stopped in many of the larger markets leading to differing reactions from the local industries with the only common thread being division of opinion from the market place. In part this division is based on whether someone views the market from a longer term technology perspective or from the short term financial view. The current USA President Barack Obama has put renewable energies back
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www.solar-international.net I Issue I 2012
Sour grapes or cause for concern There is no doubt that the recent market turmoil has been very tough on companies whose business plan was sound and there was reason to trust in the process that enabled early growth. The changing dynamics left many on the wrong side of the financial fence and the apparent easy risks available evaporated as companies suddenly found themselves unable to compete in a market that was clouded by financial supports at different and differing points of the value chain.
Last October the USA Department of Commerce accepted a request by SolarWorld Industries America and six other companies in the USA for an investigation into whether Chinese solar-panel manufacturers had obtained export subsidies from the Chinese government, or had dumped solar panels in the USA for less than it cost to manufacture and distribute them. On one hand it was no surprise considering the state of the market and a decline in USA domestic sales as product originating from China was quickly gaining market domination. On the other hand it appeared not everyone agreed with the action and felt market dynamics are the cause.
SolarWorld did not just petition the government but announced the formation of a coalition of seven US manufacturers specifically to tackle this issue. The Coalition for American Solar Manufacturing (CASM) states that it represents a significant majority of U.S. production of crystalline silicon solar cells and panels but as yet only SolarWorld has publically acknowledged membership. There are now 150 or so associate members and are all listed on the website. SolarWorld is a German based company creating the unusual situation where the company that is seen as the instigator of the trade dispute does not originate in either country. However the USA arm is the largest US producer of solar modules.
The petition claimed there was an ever-rising tide of heavily subsidized solar cells and panels that China’s state-supported solar industry is illegally dumping into the American market. The petition alleges that the Chinese government, its state-controlled financial, utility and other institutions intermingled with its solar manufacturing industry, has deployed an arsenal of land grants, contract awards, trade barriers, financing breaks and supply- chain subsidies to advance its pricing and export aggression. China exports nearly all of its production to benefit from other markets’ consumption incentives while increasing output and impeding imports.
SolarWorld America is based in Hillsboro, Oregon and the parent company from Germany made deliberate choice to set
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