Part 2: How Tariffs Could Impact Solar Industry

They are both appreciative of the work that has been done and the effort it took to get the industry to where it is today. Yet, from their perspective, there’s a fork in the road, and they remain divided over which direction America’s solar industry should go. Regardless of the path taken, there appear to be plenty of bumps ahead.

While many are offering predictions in how the SolarWorld trade complaint will end, and what the impacts may be, there is one undeniable reality. The allegations that China is illegally dumping its products into the U.S. market has become a highly emotional topic within the industry. Individual companies on both sides of the issue are quickly moving to protect their position while others are anxiously awaiting resolution.

While the past month has often been about finger-pointing, we set out to ask key members in the industry for their thoughts on how we got to where we are and where we go from here.

Last week, we spoke with Andrew Beebe, Chief Commercial Officer for leading Chinese panel manufacturer Suntech, and Mark Simmons, Chief Operating Officer for ClearEnergy, a distributor who recently decided to sever ties with panels coming out of China because of difficulties associated with volatile prices.

Today, we hear from Ben Santarris of SolarWorld, the company that filed the trade complaint — and yes, the company that has taken a lot of heat for doing so. We’ll also hear from Jigar Shah, who co-founded SunEdison before moving on to his present role as CEO of the Carbon War Room.

The American Manufacturer

SolarWorld bristles at the notion that it filed the trade complaint because it couldn’t keep up with the competition. Cost and efficiency gains have fueled the industry since the early days, the company says, and much of that innovation has come from polysilicon panel makers in Japan and Europe, as well as many U.S. companies. This is the type of healthy competition, says SolarWorld Head of Communications Ben Santarris, that has sparked innovation in companies across the world, including SolarWorld.

But China’s entry, he says, has never been about innovation — it’s been about domination. And, as the petition suggests, China’s manufacturing capacity has been built solely for exports. To SolarWorld, the issue is black and white. If China is doling out subsidies only to Chinese companies to allow them to enter a new market and put the domestic competition out of business, then that has been determined to be illegal according to international trade rules.

Santarris understands that companies have bet their businesses on the cheap panels coming out of China, but he says that doesn’t mean the law shouldn’t be followed. More so, he contends that those who adamantly oppose the complaint are looking too short-term and don’t really understand what’s at stake: If China is allowed to dominate the industry, there will be disastrous implications and it will undermine all the work that’s been done to build the industry.

“We’ve seen robust international competition,” said Santarris. “We’ve seen wholesale price decreases in double digits, sometimes 30 percent. But in the last year, the massive overbuilding of China and its constant rush to drive products down our throat has derailed that healthy international competition.

“Providers of many other countries, not just the United States, are at risk. If China succeeds, a couple things will happen. You’ll no longer have that pressure for innovation and efficiency, you’ll have a unilateral price-setter, and you’ll be depending on a foreign country for yet another form of power. That is not going to be good for the long-term health of our industry, or our country.”

The short-term impact of more expensive, or perhaps prohibitively expensive solar panels, is perhaps a bit harder to gauge since it could mean broken contracts, lawsuits, stalled projects and general reordering of supply and demand.

“I think the competition is robust enough to get to an equilibrium price that is in keeping with a price that can keep many nations competitive,” said Santarris. “Prices have fallen precipitously [since the spring]. We’d like to see a 10 to 20 percent drop in wholesale prices every year, and while that is huge, it’s more sustainable than what has happened in the last year. What is the natural supply and demand when played by the rules?”

At least publicly, SolarWorld has framed its complaints in many ways — as a legal issue, a jobs issue, an environmental issue and a moral issue. Ultimately, though, it will only be judged on its legal standing. But that hasn’t stopped the company from pushing the other factors as central to why more companies ought to jump on its side of the fence.

“How can we let go of the solar manufacturing industry and give it to a country that has no investment in jobs, and [no environmental responsibility],” said Santarris. “This is supposed to be a green energy industry and we’re talking about shipping panels across the globe? If we’re not willing to defend this, then what industry and what jobs are we willing to defend?”

The Fight on Carbon

The American solar industry won’t come to an end over this trade dispute. It’s come too far and made too many inroads for that. But Jigar Shah of the Carbon War Room is concerned that the industry could lose something that it has only recently gained — and that’s relevance.

Solar is now surpassing the big boys like coal and nuclear when it comes to utility expenditures for new power plants. A severe spike in prices, though, could harm that momentum, and it could jeopardize expansion plans built on those falling costs.

“If this happens today, it will create more uncertainty and make our ascendancy as a technology at risk,” said Shah, who also co-founded a coalition of solar-based companies opposed to the trade complaint. “There are actual companies that have bet their entire life savings into the development of solar projects that will be negatively hurt by this, and they will go out of business because the panel prices that they have locked in with a supplier will go up substantially. That puts some negative pressure on solar in the U.S.”