As a portend of things to come for the solar industry, solar power is now cheaper to acquire and use than diesel fuel in India. As a result, Indian manufacturers are exchanging diesel fuel for solar panels to power their operations. That’s a big deal for the environment, as well as the solar industry at large. However, this presents a serious problem – and opportunity – for the United States.
“But wait, you just said solar is cheaper than diesel! That’s great!”
I urge you to hold your enthusiasm and ask an important question: Why is solar power now cheaper than diesel in India?
“That’s easy, solar panel prices have dropped over 50% since last year”
Good, now tell me why solar panel prices have dropped that much.
“Uhh, because… I don’t know. They’re just less expensive.”
Panel prices have come down so much because of Hu Jintao’s decision to massively subsidize the cost of producing solar panels in China.
Those subsidies allow Chinese manufacturers to produce panels at a net cost much lower than American companies can. There is now a huge amount of solar panels produced in China, as those solar subsidies were the equivalent to throwing gasoline on an already stoked flame:
China now has an extreme global advantage in an industry where panels on roofs are sure to become as ubiquitous as handles on doors.
Their low cost of labor and subsidized production have already tightened the vice on several American manufacturers. Last year, Evergreen Solar had to shutter one of its plants because it could not continue to compete with Chinese imports.
A solar panel manufacturing plant in Wuxi, China
On the other hand, solar installers love the decreased panel prices from China, as they are able to present much more financially compelling reasons why homeowners should go solar with a lower net cost of installation.
Meanwhile, American solar installers and manufacturers are at odds with one another as talks of tariffs on Chinese panel imports bubble up in congressional hearings.
American manufacturers are seeking protection from panel prices they cannot compete with, and installers want to protect their rosy sales and installation forecasts by being able to offer the most affordable solar solutions to their clients.
In the end, not much is happening to help domestic manufacturers and we’re starting to see a prosperous window of American opportunity start to close.
There’s plenty to find issue with regarding the philosophy of the Chinese government on many accounts over the course of human history. Though, I simply can’t help but admire China for their ability to take action instead of quibble and be locked in stalemate as is commonplace in Washington.
Opportunity to lead in a new industry was clear. China’s political system is uniquely set up to seize global economic opportunities (as well as political prisoners). They have the money and the leadership to act quickly and they’re now set to dominate the global solar marketplace.
The China Brilliance “JinJue” resembles a BMW
China has taken up similar manufacturing challenges supported by subsidies in the past – namely to produce automobiles. Cars are not easy to manufacture, require a lot of technical expertise, testing, and dogged commitment to process improvement. Even so, there are signs that the Chinese automobile industry is picking up and turning some heads after years of development.
While Chinese cars still have a long way to go to achieve the levels of prestige, reliability, and performance of international competitors, the solar panel market is nascent, and the technology is very simple. Nobody in any country has had enough experience with solar panels to have brand associations or expectations yet and Chinese panels work just as well to harvest electricity from the sun as domestic panels do.
Your neighbor has no perception that an Oregon manufactured SolarWorld panel is as nice as an Audi, or that a Chinese manufactured SunTech panel is as reliable as a Pinto. There’s also strong reason to believe they never will, as you don’t spend a significant amount of time hanging out with your solar panels once they get installed: They don’t get you to work, you don’t take vacations in them, you don’t make memories with them. They just make electricity.
There aren’t any moving parts either: just silicon, some wiring, good housing, maybe a microinverter popped on the back and that’s it.
Due to their technical simplicity, Chinese solar panels have quickly overcome their growing pains and are now performing as admirably as German engineered cars.
For those reasons, there’s strong reason to believe solar panels will soon become as much a commodity as say lumber, corn, or pork bellies.
Instead of a tariff, which arguably helps nobody (even with cost protections, manufacturers will have a difficult time selling panels into an artificially pricey market), we should be subsidizing the manufacture of solar panels just like we subsidize other farm commodities.
I urge the United States government and all of congress to stop subsidizing corn so damn much and shift billions, yes I said it, billions of dollars to subsidize the American solar panel industry.
Create a manufacturing war just as hot and inspired as the space war. This IS the new space war. We’re not doing ourselves a favor by being so influenced by the giant oil, coal, and corn lobby. We need to lead like China has led.
There’s still time. Jump in the damn pool.
