Solar in the U.S.: A House Divided

Just when solar power was starting to gain tremendous momentum in the U.S., the industry has hit a colossal bump in the road. Surprising to some, that bump is not in the form of oil tycoons funding politicians threatening to cease government subsidies to solar companies (though post-Solyndra, many would expect that to be the demise of the solar industry). No. The bump in the solar industry is the solar industry itself, which has become a house divided over the last couple weeks.

Much like the NBA, the solar industry is spiraling into an inward debacle. In October, SolarWorld and six unnamed solar panel manufacturers filed a complaint with the Department of Commerce and the U.S. International Trade Commission (ITC) alleging that Chinese solar panel makers and cell manufacturers are making it hard to compete in the U.S. market. The companies claim Chinese panel makers and cell manufacturers are receiving unfair subsidies from the Chinese government and dropping their prices to artificially low levels.

Meanwhile, more than two dozen solar companies formed the Coalition for Affordable Solar Energy (CASE) last week in response to SolarWorld’s filing. CASE asserts that the competitive PV prices the U.S. has benefitted from over the last couple years has…well…benefitted us.

Kevin Lapidus, senior vice president of legal and government affairs for SunEdison, and one of the coalition founders, said that the companies filing the complaint have not taken into consideration a number of issues that have caused the continuing price decline of solar modules. These issues include declining incentives for solar developments in the U.S. and the continuing price decline of polysilicon, which has fallen 40 percent this year.

“In order to succeed, each step in the production chain must reduce its cost,” Lapidus said. “Only if this is achieved across the entire solar industry can we be successful.”

CASE members are not the only ones opposed to SolarWorld’s filing. Just yesterday, Semiconductor Equipment and Materials International (SEMI), a global industry association for the manufacturing supply chain for the micro- and nano-electronics industries, including semiconductors, PV and other industries, released a statement saying that the trade dispute’s potential impact on U.S. solar could result in the escalation of prices and a reduction of solar industry jobs.

The crux of SolarWorld and crew’s argument is not just that Chinese modules are cheap, but that the prices have been dumped at illegal rates. According to a report by investment bank Jefferies, the Department of Commerce is looking at a few factors to determine whether or not panel prices are being illegally dumped:

1) Has money been granted outright, or below market rates

2) Are taxes lower for targeted industries, or by regions.

3) Is land given, or

4) Are there other subsidized inputs.

In the end, it won’t matter if the U.S. is simply benefitting from low prices. What will matter is if illegal dumping has indeed taken place. If the case goes through, SolarWorld and friends may end up looking like the goody two-shoes kid in class tattling on the bad kid. And even if the case does not end in SolarWorld’s favor, the company has paid a heavy price over the last month as its stock has dropped dramatically. But more importantly, if their case does go through, the cost of modules will go up and solar jobs in the U.S. will be impacted.

Randy Bishop, CEO of U.S. solar manufacturer Verengo solar, said his company has added 400 jobs just this year. He said that if panel prices go up as a result of the filing against Chinese manufacturers, that momentum would drop significantly.

“The solar industry's rapid cost reduction curve, unprecedented in the history of energy technology, remains its primary source of credibility in the U.S. and globally. We must not put that at risk.”

About a month ago, before any of this frenzy began, Tom Doyle, president and CEO of NRG Solar, took part in a Renewable Energy Executive Roundtable, which will run in the January/February 2012 issue of Renewable Energy World North America. His point of view – the developer’s point of view – is ultimately what should matter to PV manufacturers. Here’s what he had to say about the matter:

“What’s important to developers right now is the intense competition to drive down PV panel pricing,” Doyle said. “It’s such an aggressive market that it’s significantly surpassed our expectation of what we thought we could see as a buyer of PV products.”