INDUSTRY I ISSUES
70% of the global market and the USA concerns could seem like small change to Chinese manufacturers if Europe is to follow a similar path. At this stage
SolarWorld have not being able to raise the fifty signatures required to submit a European complaint.
A lighter future
One of the key aspects of the CASM argument is that if China is allowed to gain a monopoly they will increase prices at their whim so the short term price increase would be offset by a longer term global industry. Unfortunately the coalition cannot supply facts on this issue and only suggest a fearful response. In any other industry that China has taken a lead role in commodity manufacturing this is not the case and global market conditions tend to keep prices down once they are there. There will be fluctuations once the supply and demand chain are more finely balanced giving all suppliers of raw materials and manufacturers the opportunity to increase profits in more positive times.
Before all of these trade problems the solar industry was already divided as financial realities rather than technological differences led to the increased focus on silicon based technologies. Much of the recent industry concerns with solar have stemmed from too many options as the industry moved forward. Technologies other than silicon have found it difficult to compete on cost alone and have either discovered and cemented a niche position or disappeared completely.
Many of the high profile collapses, predominately in North America were the result of thin film technologies unable to financially compete against silicon. Solyndra being the most famous. Despite the obvious situation that led to such problems it was viewed as an industry problem and the whole industry suffered with fears from analysts infecting government and investor decisions. The solar industry has not helped by remaining a divided force and sending out mixed messages to the delight of those determined to maintain their hold on the energy markets.
SolarWorld was clever enough in their petition to deliberately remove thin film production from their activities knowing full well that the issues that sector faces are very different to the trade accusations in the silicon sphere. However, rather than crystallise the issues facing the industry and balancing the local needs with the global vision, the recent trade actions have only served to increase tensions between the two countries and further muddy the message the solar industry is giving to the world. One of the key arguments against the solar industry by large energy companies is the cost of solar does not merit the return. The oversupply that has been created by too many
players, the well intended and the greedy, in a market that cannot maintain all the players is natural in any industry. The solar industry has matured faster than many people would have predicted and the early commoditization of the PV product is as much a result of the huge input by China onto the world stage as any other business metric.
The outcome of all this will be decided within the ambiguity of legal speak using complicated trade laws and documents. With such heady growth I feel such a microscope on any section of this industry could probably fall foul of some hidden addendum to an obscure rule but both countries will have their chance to prove otherwise as it appears the petition will go ahead.
On Dec. 2nd 2011 the U.S. International Trade Commission issued a unanimous preliminary determination that Chinese trade practices are harming the U.S. domestic solar manufacturing industry. The next step in the trade case will be Commerce’s Feb. 13 preliminary determination on whether to levy countervailing import duties to offset the effects of any illegal Chinese subsidies. CASM is suggesting this is a victory but there is no indication whether tariffs will be introduced.
The initial findings are based on the massive upsurge in Chinese product into China in the last two months of 2011 but with global market pressure as well as extreme competition within China this level of sales were witnessed around the world and areas that had potential changes to government involvement saw huge increases in imports as companies tried to take advantage of more favourable conditions. It is a key reason the USA saw an increase in polysilicon exports to China.
A more pertinent question both coalitions could be asking is to wonder why, despite the extraordinary price drops in solar cells and PV modules in 2011, very little of those savings managed to make it to the consumer. Except in areas of high competition. Distributors of Chinese panels have brought up massive amounts of Chinese panels with a view to cash in. CASM’s actions will ensure such distributors and installers will have their American jobs threatened.
The rest of the industry must wait and hope that the situation does not trigger a larger trade war that would reek havoc on the world economy or the malaise does not spread to Europe, India and the rest of the world. At present the USA makes up around 10% of the market but that will change. Any tariffs imposed will see China develop their own market more intensely and increased competition will improve innovation and reduce costs.
Other industries have shown that the greatest steps forward come when there is strong competition biting at the heels but there is no doubt that the global market place requires rules of engagement but the solar industry needs to realise how much their divisive stances impact on their global efforts.
And not in a good way.
© 2012 Angel Business Communications. Permission required.
Issue I 2012 I
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