Are Chinese suppliers selling Solar PV below cost?
Manu Sharma
Are the Chinese Using Predatory Pricing to Knock America Out of Solar Manufacturing?Climate Progress | Stephen Lacey
Armed with tens of billions in loans from the Chinese government, Chinese solar companies have scaled at a rate unthinkable only a few years ago. At the end of this year, there will likely be 50,000 MW of manufacturing capacity in place around the world, with much of that new capacity being developed in China and other Asian countries. (In the year 2000, there was only 100 MW of production capacity world-wide.)
In four years, the solar manufacturing sector shifted from being led by a geographically-dispersed number of companies to one dominated by Chinese companies. In 2006, there were two companies from China in the list of top-ten cell producers. In 2010, there were six, according to Bloomberg New Energy Finance. There are currently only two non-Asian manufacturers in the top ten, and those companies — First Solar and Q-Cells — have shifted a lot of their production to Asia.
So what happened? How did the Chinese come to completely dominate the solar industry in such a short period of time?
Bryan Ashley, the Chief Marketing Officer for Suniva, an American company that produces high-efficiency solar cells in Georgia, doesn’t mince words.
“The Chinese strategy is very clear. They are engaging in predatory financing and they’re trying to drive everybody else out of the market. When you’ve got free money you can out-dump everybody below cost,” Ashley said in an interview with Climate Progress.
That “free money” Ashley refers to is the cheap debt provided by the Chinese Development Bank (CDB). Here’s how the CDB works its magic:
The CDB was originally set up as a “policy bank,” to operate as an arm of the Chinese central government, doling out public funding to support central government development programs. Now it is a “joint stock company with limited liability” that often reports to China’s national cabinet on certain policy issues. This allows the Chinese government to get involved in CDB activities and direct loans toward projects officials want to support.
Unlike most regular commercial banks, CDB raises most of its money via long-term bonds. Funders cannot take that money back out until the term is up, so the bank can make longer-term loans to Chinese companies. CDB also gives borrowers very low interest rates, and, if the borrower cannot pay back the loan, it may be back-stopped by the Chinese government.
This makes it easier, cheaper and a lot less risky for solar companies to obtain financing.
In 2010 alone, the bank handed out $30 billion in low-cost loans to the top five manufacturers in the country. [See chart above.] This has enabled China’s solar producers to grow to GW-scale in a very short period of time, turning the country into a leading exporter of solar and pushing down prices dramatically.
From a project development perspective, those steep price drops are a very good thing. But manufacturers trying to make product outside of China and other Asian countries are getting hit hard.
“Free money is impossible to compete with,” said Ashley. “Even when global demand went down they were able to keep producing, producing, producing,” said Ashley. “And now they’re dumping. If something isn’t done, there will be no American product left on the market.”
Allegations of solar panel dumping have been made before in Europe and the U.S., but they have never been proven. In 2009, Suntech CEO Shi Zengrong explained in a conference call that his company was selling panels below marginal costs. But he reversed his statement shortly after, saying he misunderstood the reporter’s question.
With Chinese producers in a far more dominant position than in 2009 and a slew of solar manufacturing facility closures announced in the U.S. in recent months, concerns about dumping have resurfaced. Just yesterday, Oregon Senator Ron Wyden sent a letter to President Obama asking him to investigate whether or not Chinese companies are selling product below cost in order to push American producers out of the market. He also called on the administration to implement a trade tariff on Chinese modules:
Letting that happen is unacceptable. Please know that if your administration is unwilling to take the appropriate steps, with haste, I will advance a legislative effort, as provided by the U.S. trade remedy laws, to ensure that the American solar industry is not harmed by unfair trade.
Wyden’s letter comes after the high-profile bankruptcies of American solar manufacturers Solyndra and Evergreen. While a variety of technological and market-based factors contributed to the demise of these companies, the Chinese competition — driven by cheap, easy debt — played a central role.
Remarkably, even with all the pressure from China, the U.S. is a net exporter of solar products to the country. A new report issued by GTM Research and the Solar Energy Industries Association shows that America had a $247 million solar trade surplus with China in 2010, mostly because of polysilicon and equipment shipments.
“Yeah, that’s great. But we’re just sending the raw materials and buying back the finished goods,” explained Suniva’s Bryan Ashley. “That’s a going-out-of-business strategy. Pretty soon they’ll figure out how to produce quality polysilicon and they’ll be doing it all themselves. We need to re-learn how to make things in this country.”
Ashley would like to see a Buy America provision for certain installation programs and investigation into the dumping issue.
But rather than engage in trade battles, GTM Research’s Director of Solar Shayle Kann believes that America needs to put its focus on technological innovation. Testifying in front of the House Natural Resources Committee yesterday, Kann explained the strategy:
It will be difficult for the U.S. to compete with China at its own game — namely, high-volume manufacturing of a commoditized product — given the cost advantages available for Chinese manufacturing. However, the U.S. can and should continue to develop and commercialize innovative technologies that offer lower costs than traditional panels. These new technologies are generally proprietary, require a more skilled labor force, and are difficult to duplicate.
Suniva could be considered part of this category. Using a unique cell design, the company has created a high-efficiency mono-crystalline solar cell that could compete with SunPower. But with all the cheap debt that the Chinese government is throwing at domestic companies, Suniva is finding it increasingly difficult to stay in the U.S.
“If something isn’t done, we won’t be manufacturing here,” said Ashley.
The situation is a difficult one. China’s domestic efforts are helping drop the price of solar at an astonishing pace — something that everyone in the solar industry wants. But it’s also making it extraordinarily difficult for American solar manufacturers to compete.
The United States invented the modern solar cell over a half century ago. As China continues to boost domestic solar companies, the American solar industry will be asking some hard questions about how — and if — solar manufacturing can ever make it in a big way in the U.S.
Melanie Hart, Policy Analyst for Chinese Energy and Climate Policy at the Center for American Progress contributed to this report.
Santosh Kumar Patnaik
Chennai- 600 113
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Manu Sharma
Manu Sharma
Santosh Kumar Patnaik
Sandeep Rao
http://www.youtube.com/watch?v=duuk_r--lqU (Tamera - SolarVillage Testfield 2011)
By the way the Indian ocean is also not spared
http://articles.economictimes.indiatimes.com/2011-08-03/news/29846473_1_mining-rights-china-ministry-of-earth-sciences
Coming back to the topic, what could be the cost of panels per watt, I mean chinese SPV. Are there any distributors in Bangalore.
Thanks,
Sandeep
It is really good for the earth & people to have more sustainable & clean energy solutions.. But we have to take the business as business, china has not taken stand to help the world rather there interest is to create monopoly, kill all other players and then enjoy the market at own terms.. Just to showcase of the example china has done to world..China is not doing any charity and they don't follow any ethical values neither internally (workers) nor externally (business).. But still for short term, it's beneficiary to the world.. but quick challenging & dangerous in long run..Regards,Dhaval ThakkarOn Sat, Sep 10, 2011 at 8:14 AM, Jeevan Palani <jee...@gmail.com> wrote:
I am quite sure that china is the most dominant force when it comes to the solar module manufacturing.I have been to inter solar 2011 the biggest solar exhibition and now the IGEM 2011 in Malaysia. In both places the common theme has been the chinese module manufactures with an increasing trend where european companies have shifted their manufacturing to china. So i don't think there is any doubt that the chinese are the most dominant player in the solar module production market.I do not see this as a problem thought as long as they are able to produce it at a low price, this will only help encourage the use of solar energy around the world some thing which is of paramount importance. If the chinese dominance means reduced cost of solar energy, then I think this is a good thing in the long run as this should encourage adoption of solar power.I believe that this is good news for those looking to encourage the use of solar power.RegardsJeevanSustainable Synergies.
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Manu Sharma
We wrote to about 6 major panel companies in India and didn't even get a single reply.
Teckkee shih
hunny agarwal
Ravindra Dubey
Vinod Sharma
Teckkee shih
hunny agarwal
Bharath Kumar Makkapati
For example, engineers with freshly issued bachelor’s degrees can be found here in Hunan Province for a salary of only about $2,640 a year — not significantly more than blue-collar workers with vocational school degrees can make. But the fuel propelling clean energy companies in China lies in advantages provided by the government, executives say.
And also Suntech CEO claim in an interview with Thomas Friedman they use mostly manual labour instead of using automation since labour is cheap and abundant in China.
Manu Sharma
Obama questions China's clean energy practicesBy Wendy Koch, USA TODAYUpdated 2011-11-02 6:03 PMPresident Obama, asked about a trade case U.S. solar manufacturers have filed against China, said China has "questionable competitive practices" on clean energy and his administration has fought "these kinds of dumping activities."Oregon-based SolarWorld Industries America Inc., the largest U.S. maker of solar cells and panels, and six unnamed U.S. solar manufacturers petitioned the U.S. government Oct. 19 to halt what they said was the dumping of heavily subsidized products by China's state-supported solar industry into the U.S. market.Obama, in an interview Tuesday with KGW NewsChannel 8 of Portland, Ore., responded to a question about whether he'd be willing to look at "any kind of actions" to protect green jobs in the U.S. He answered:We have seen a lot of questionable competitive practices coming out of China when it comes to the clean energy space, and I have been more aggressive than previous administrations in enforcing our trade laws. We have filed actions against them when we see these kinds of dumping activities, and we're going to look very carefully at this stuff and potentially bring actions if we find that the basic rules of the road have been violated.The Solar Energy Industries Association, an industry group that represents foreign as well as domestic companies, has not taken a position on the petition, which seeks anti-dumping and countervailing duties against Chinese manufacturers to offset alleged violations of trade laws."Just because a company receives subsidies doesn't mean it's unfair," John Smirnow of the SEIA told reporters about the petition. China-based Suntech, which has a manufacturing plant in Arizona, issued a statement saying "anyone can file one of these actions" so a petition doesn't validate the merits of a case..SolarWorld's Ben Santarris told USA TODAY that China's subsidies are decimating the U.S. solar manufacturing industry. He said there are only three U.S.-based companies still making solar cells, and none -- like SolarWorld -- have received federal subsidies."We definitely can compete if everybody obeys the law," Santarris said in an interview. At the time of filing, he said the other six participating U.S. manufacturers were not ready to be named in the petition, because "the situation was deteriorating so fast in the U.S. that we were scrambling to put a stop to this onslaught."