Conversations with analysts and advocates on both sides of SolarWorld’s anti-dumping suit against China lead me believe the U.S. cannot beat its communist counterparts on cost. What it CAN do is set policies that convince U.S. financiers that solar energy is worth investing in. This way, fresh capital can flow to U.S. companies so they can better compete on their own.
The most effective way to do that is to establish a national renewable energy standard on top of the hodgepodge of national, state and local incentives, many of which expired at year-end 2011.
Such a mandate can help financiers see the money they can make with solar electric systems. If U.S. policymakers want to buttress such a policy with domestic content requirements, so be it, as long as Chinese and other foreign companies can find a way to play ball by teaming with U.S. partners and vice versa. That keeps costs declining, jobs growing and pollution declining while leveling the playing field with more transparency.
After conversations with Jigar Shah, on behalf of the international Coalition for Affordable Solar Energy, and Hari Chandra Polavarapu, a solar power / clean tech analyst at Auriga USA, who sides with the opposing Coalition for American Solar Manufacturing, it’s clear to me that a healthy end- (aka “downstream”) market is vital to U.S. interests. And it’s something the U.S. can control. A U.S. commitment to solar can achieve what’s doable and avoid the fallout of a nasty trade war with China.
If Chinese companies don’t play ball in a relatively even-handed fashion, they WILL find the means to do otherwise, beginning with outright acquisitions of U.S. companies. And I’m not talking about just equipment suppliers. They could take aim at designers and installers too. We can already see one dimension of this happening in the burgeoning oil shale industry. Devon Energy this week sold a one-third stake of selected oil shale properties to the China Petrochemical Corp. also known as “Sinopec.”
What the U.S. solar industry needs is capital. To access capital, bankers and investors need to see solar as an industry with a steadily growing future supported by consistent policies that boost domestic demand. And those policies can best be provided by a national, permanent commitment to renewable energy.
While we’re at it, we can extend an olive branch of sorts to China and challenge the Politburo Standing Committee of the Communist Party to open up its domestic downstream market. This way, companies in each country can win. How China and the U.S. agree on that is anybody’s guess. But with the money, reputations and jobs at stake, not to mention the brainpower that can be brought to bear, it’s certainly worth a try.
If anybody, the newly-installed Secretary of Commerce, John Bryson (pictured), should know the benefits of controlling one’s own fate. He once headed Edison International, parent company of Southern California Edison, perhaps THE most enlightened and innovative energy utility in the U.S. heavily dependent on importing electricity from outside the state.
Access to the U.S. market is the only major leverage U.S. negotiators have. With China financing a large portion of U.S. debt, they hold the ultimate trump card.
If China’s unfair trade practices that led to below-market solar panel prices continue unhindered, Chandra Polavarapu asks “how long will it be before (the) downstream solar PV (photovoltaic) value chain is also fully emasculated?”
On this point, Shah and Chandra Polavarapu virtually agree.
Shah: “If you’re one of the 5,000 installers in the United States and probably 15,000 installers globally who represent the bulk of solar industry installation capacity in the world and you’re buying from a distributor, or via a third-party or buying one pallet (of panels) at a time, your options become significantly limited and your prices for panels goes through the roof,” he told The Energy Fix.
“It is not in the best interests of the solar industry,” Shah continued, “to have the large players win (led by China’s manufacturers) and the small players (in the U.S.) die. We need to figure out a way to create a level playing field. We need to make sure the small innovative companies (e.g. SunEdison, the company Shah co-founded in 2003) to come in, disrupt the large companies and keep the solar industry on a path of innovation.”
Chandra Polavarapu: “We believe a better solution would be to drive domestic demand both in China and the U.S.” Instead of a full-scale trade war, he sees a more efficient result rising out of more “sensible” U.S. energy policies and “positive steps that China can take in creating large scale domestic demand.”
We’ll see soon if Secretary Bryson and other key players in the Obama administration have what it takes to negotiate a realistic path forward.
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