US Had $1.63 Billion Clean Energy Surplus with China

Andrew Herndon, Bloomberg
March 06, 2013 | 9 Comments

The U.S. sold more renewable energy and power management products to China in 2011 than it imported, contradicting wide-held views that the Asian nation is becoming the world's dominant supplier, according to the Pew Charitable Trusts.

U.S. suppliers had a $1.63 billion trade surplus for solar manufacturing equipment, specialty materials, power-management control systems and other high-margin products, according to a report today from the Philadelphia-based nonprofit group. A total of $8.5 billion of clean energy goods and services were exchanged between the two countries in 2011, the last year for which data are available.

The finding challenges assumptions about competitiveness between the two nations, which are the world’s largest economies, electricity markets, greenhouse-gas emitters and recipients of clean energy funding, according to Michael Liebreich, chief executive officer of Bloomberg New Energy Finance, which compiled data for the report.

“The United States is viewed primarily as a services economy and an insatiable importer,” Liebreich said in the report. “China’s dominance in complete solar modules obscures its meaningful imports of higher-margin capital equipment, specialty materials and polysilicon.”

China’s advantage is in large-scale manufacturing and high- volume production, including wind-turbine towers and solar cells and modules, according to the report. U.S. companies lead in manufacturing equipment and specialty materials for renewable- energy systems,

Solar products accounted for more than $6.5 billion in trade between the U.S. and China, with a $913 million surplus for the U.S., according to the report. China and the U.S. exchanged more than $1.1 billion worth of smart meters, LEDs, advanced lithium-ion batteries, electric cars and other energy efficiency products, with a U.S. surplus of $571 million. The wind industry generated $923 million in trade, and U.S. companies had a $146 million surplus.

Lead image: Shipping crates via Shutterstock

9 Comments

Dennis Heidner
March 10, 2013

We will not see significant long term growth in the US solar industry if we are willing accept the sacrifice of jobs from several areas of the product value stream in exchange for equal (or marginal) growth in the final installation stage. The whole vertical product stream must grow! The study by "The Solar Foundation" has a table on page 17 (table1) which really tells the story. Between 2011 and 2012, there was an increase of 8521 installation jobs, but a decrease of 8199 jobs in the solar manufacturing sectors. With all the low cost solar modules coming into the country – sacrifice of on portion only resulted in a gain 321 jobs.

In October 2008, as the US economy was grinding to a stop, the Energy Improvement Act was extended the 30% Investment Tax Credit (ITC) to solar projects. (http://www.occ.gov/topics/community-affairs/publications/fact-sheets/fact-sheet-solar-energy-invest-tax-credits-grants.pdf ) The credit is scheduled to expire in 2016. I doubt that it would be extended beyond 2016 if Congress feels that only the installation sector of the industry benefited while the rest of the industry shutdown and the jobs moved overseas.

The impact of the low cost Chinese modules may have driven a short term boom resulting in a long term bust for the industry.

Dennis Heidner
March 9, 2013

Buyers of solarPV systems almost always want to know the long term support and warranty - and of course the standard response is the modules are warranty for 20+ years with the output still being at least 80% of the original specifications. But how is that tested? If you've only been making modules for a couple of years how can you prove it? Worse yet is if there is a problem -- lets say the encapsulation fails and water enters between the glass and the backing... who covers the warranty? The manufacturer or the installer? If it was my home I would go after the installer! The manufacturer may no longer be in business but worse yet -- many of the manufacturers want you to go through their distribution chain. Only the installer would know who they are!

Solar manufacturers everywhere are hurting, US, German, Japanese and Chinese manufacturers have all been losing money! We've seen the lost of the industry in the US, we are seeing the loss in Germany, even though Chinese manufacturers may have had access to low cost money from their governments - it doesn't mean that all those manufacturers will stay in business.

In I were an installer, I would be worried about possible litigation over product defects discovered two or three years down the road - think gypsum wallboard. It was the builders and the US side of the supply chain that took the beating on the reputation.

If the Solar industry has a similar problem - how much long term damage will that have for future growth? Growth that will be needed after the 30% investment tax credit expires...

Dennis Heidner
March 9, 2013

The 119,000 jobs referenced in the Bloomberg news article are based on a study done by "The Solar Foundation" (thesolarfoundation.org). The jobs are not only for installers but are for the WHOLE solar industry which would include research and development (R&D), manufacturing, distribution, sales, jobs related to the equipment built specifically for solar manufacturing, concentrating solar, solar hot water. It also counts individuals that worked only 50% as a "job".
Study is at: ( http://thesolarfoundation.org/sites/thesolarfoundation.org/files/TSF%20Solar%20Jobs%20Census%202012%20Final.pdf )

From the study->

"As in years past, this report includes information about all types of companies engaged in the production, sale, installation, and use of all solar technologies, ranging from PV to CSP to solar water heating systems across the residential, commercial, and utility market segments." (page 12)

The study also notes that while there are an increase in jobs from the installation, that has been a trade for other jobs ->

"the focus of this report is on current trends and short-term growth, which has not been without setbacks. The same price declines that have helped to fuel a solar installation boom have led to steep declines in employment among solar manufacturers. Generally speaking, employers throughout the value chain reported several major obstacles to growth, including general economic conditions" (page 11)

In 2010, prior to the large scale importing of Chinese solar panels, the solar industry had 93,502 employees.(page 15), while you could argue the lower module prices increased employment, you can only argue that for the DIFFERENCE, which is 25,964 jobs. Thus the massive import of low-end Chinese panels AT THE MOST may have helped create 26,000 jobs. But with that came a loss of basic R&D, US design and manufacturing jobs.

Glen Koedding
March 9, 2013

Hey Dennis, We use a combination of Carpenters and Electricians to install integrated modules (micro-inverters and rail-less mounting systems). BUT, they are more qualified than roofers as the need to understand detailed layout/designs, wire-layouts, and be able to measure and hit rafters dead center --- which is critical for long term leak prevention and the structural integrity of the installation.

I stand corrected on the "Hundreds of Thousands" of jobs that I misquoted. The actual number is 119,000 total jobs... in accordance with the study cited below. "The solar industry has grown at significantly higher rates than most other industries," Andrea Luecke, the Solar Foundation's executive director, said in the statement.

Almost a third of survey respondents cited falling equipment prices as the primary driver of jobs growth. Solar panel prices have dropped 29 percent in the year to Oct. 15.

... See http://www.bloomberg.com/news/2012-11-02/u-s-solar-job-growth-outshines-rest-of-economy-non-profit-says.html

Dennis Heidner
March 8, 2013

GreatSunNJ,

"Solar Panel manufacturing process is automated so we are only losing thousands of jobs to China compared to the hundreds of thousands of service jobs that have been created to design, install, monitor and maintain Chinese panels..."

The loss of jobs from the crash of solar manufacturing exceeds a few thousand jobs. And I've yet to be shown "hundreds of thousands" of long term service jobs in the installation industry. In fact studies by various German ministries have shown those types of numbers to be inflated long term. Now in Germany as the FiT is degressing below the retail rate - installers are looking at other fields/markets for their skills. Solar installation/service can be also have booms and crashes.

Mounting systems (rails) are very highly automated. Not much touch labor in aluminum extrusions. Virtually all microinverters are assembled on automated lines.

An "integrated module" does not require a highly skilled work force to assemble. It also could be done with more automation or at minimum labor rates.

Germany does not use "certified electrictions/solar installers" for most of the roof tops. That work is more likely done by a roofing trades person.

American industry grew and became great because we had the raw resources in this country, we had the people to do the work, we had the know-how, and we had the money capital. Shipping raw materials overseas and buying finished products - is a good way to run the balance of trade costs up -- and drive down the value of the dollar.

While it is good that we sent solar manufacturing gear to China, you can't do that every year. Their market would saturate. China also tends to take the gear and processes - re-engineer it and then make their own machinery. So those high tech exports are not going to be a long term common business activity. Meanwhile we've destroyed the US production capacity.

Dr. A. Cannara
March 8, 2013

It's what gets sold and transported across the ocean, not the $ amounts that count.

ANONYMOUS
March 8, 2013

I tend to agree with both comments registered.However, Dennis fails to recognize any value for the cheap "solar" electricity subsidized by China. The installed costs possible now are a direct result of China's cut throat business practices. This power will be cheap and immune from fossil fuel volatility for decades to come.

Glen Koedding
March 8, 2013

In my personal opinion solar panels are a commodity. Most of the Solar Panel manufacturing process is automated so we are only losing thousands of jobs to China compared to the hundreds of thousands of service jobs that have been created to design, install, monitor and maintain Chinese panels that are getting installed on US soil... The lower price of Chinese panels has been a primary contributor to job growth in the sector.

If we are going after manufacturing jobs/products in solar lets concentrate on integrated mounting systems, micro-inverters, and building integrated modules.

I don't like "giving away" jobs to china, but in this case, lower cost Chinese panels have produced more jobs than they have taken away.

Dennis Heidner
March 8, 2013

"The U.S. sold more renewable energy and power management products to China in 2011 than it imported, contradicting wide-held views that the Asian nation is becoming the world's dominant supplier, according to the Pew Charitable Trusts."

Which part of the product value stream are we going after? Is the US to become only a supplier of raw materials, consuming(buying) higher priced finished goods? (For long term economic growth we can't be only the supplier of raw materials!)

While we exported solar manufacturing gear to China, their exports of finished goods worldwide were many times more than the import/export difference ($1.63bn)quoted above. Those large exports were in competition with US products (and other countries as well) at prices that resulted in heavy losses to the Chinese companies. In the end many companies in the US and elsewhere ceased operation. The $1.63bn surplus doesn't count the losses to the industry in the US.

If the Chinese panels had been priced to earn their manufacturers a profit - the trade surplus might have been zero or a deficit.