With about 2,000 megawatts being installed this year and a total of 4,000 megawatts constructed in the USA, major events in solar affect not only the 100,000 Americans working in the solar industry but also the entire energy industry.
Consequently last friday's unanimous vote by the International Trade Commission preliminarily finding that Chinese solar panel imports actually were harming US solar manufacturers matters a lot. It is a big first step toward what could be substantial tariffs on Chinese imports.
Indeed the possibility of tariffs from 50% to 250% exists. Tariffs would probably convert to approximately an additional 50 cents to $1.50 per watt. That would be a big deal, making the lowest cost US manufacturers of solar panels competitive with Chinese product and delaying in more parts of the USA the arrival of grid parity--solar power prices being equal or lower than the price of grid power.
With the price of solar power declining about 1% per month and most solar projects costing $3.50 to $5.50 per watt installed, the tariffs could delay the start of grid parity in some parts of the country by about 1 to 3 years. Therein lies the explanation of why this case matters a lot to the entire energy industry.
The complaint by US manufacturers has split the solar industry in the USA, with companies in the solar installation sector and the production of solar materials and equipment that are exported to China and around the world opposed to the case. China is threatening retaliation against solar product that it imports from the USA that China uses in its solar manufacturing. In fact, the USA actually had a positive solar trade balance with China in 2010.
The finding of actual harm to US manufacturers that was made on friday by the ITC is not the same as a finding that the Chinese were dumping or selling solar panels below cost. Tackling the dumping issue is the next step in the case that may be reached in January.
The solar manufacturers complaint against Chinese solar panels is just one example of US industry competing against China, Inc. China is organized to combine both the Chinese private sector and government to bear to win market share in targeted industries. It pursues a policy of public-private partnerships on steroids, and China, Inc. has targeted solar, as an industry where domination will be handsomely rewarded. China correctly understands that the solar industry is already substantial and could provide as much as 33% of the world's energy by 2060, according to the IEA.
No doubt exists that China is massively supporting with free land and large, zero-cost capital infusions its solar panel manufacturers, and the facts likely support a finding of dumping product--or the sale below costs of manufacturing--for the purpose of capturing market share and destroying competitors. Coming to grips with China Inc. and how to respond remains an enormous, unresolved challenge. This solar panel case is about the domination of solar manufacturing and much more.