China subsidized solar panels, US finds. Are tariffs the right response?
A Commerce Department investigation found that Chinese government-subsidized solar panels were dumped in the US market, harming US manufacturers.
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In a January finding in the runup to Tuesday’s announcement, the Commerce Department's International Trade Administration determined that Chinese manufacturers had apparently dumped "massive" quantities of solar panels into the US market that were sold far more cheaply than US-made panels. According to the finding, the lower price was mainly because the panels were heavily subsidized by dozens of low-cost Chinese government loan programs and other subsidies.Skip to next paragraph
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The Commerce finding parallel's a separate Stanford University analysis for the National Renewable Energy Laboratory based in Golden, Colo. released last month. It found that Chinese solar panel manufacturers had only about a one percent cost advantage – if subsidies were excluded – and would actually have exceeded the cost of US-made panels by 5 percent when ocean transportation costs were included.
The preliminary Commerce finding – which comes without fanfare as a "fact sheet" rather than a press announcement and included no formal comment from a commerce official – comes at a politically delicate moment for the Obama administration, which would like to avoid a trade war with China during an election year.
As a result of the finding, tariffs on Chinese solar panel imports will be levied retroactively back to December and US Customs and border protection officers will be instructed to slap tariffs on any new Chinese solar panels entering the US. But whether that will be sufficient to keep US manufacturers afloat remains to be seen.
"Definitely everybody knows that what the Chinese charge for modules is very close to their production costs," says Fatima Toor, a solar industry analyst with Lux Research, a Boston-based renewable energy market research firm. "That's because they have government backing and government support to help them survive. They can get away selling near cost, while it's hard if you are a US manufacturer to do that."
Solar industry analysts have predicted for years that a "solar industry shakeout" was coming. Those companies left standing after the predicted savage price competition would be the big winners in the global market in the long run.
But will US manufacturers be there when the dust settles?
US solar panel installations more than doubled in number last year over 2010 figures to reach 1,855 megawatts, the Solar Energy Industries Association reported this month. Overall, US solar panel capacity now stands at about 4 gigawatts – about the same as four nuclear power reactors.
That should have been great news for US-based makers of solar panel wafers and cell manufacturers with close proximity to one of the hottest solar markets on the planet. Instead, the US market was swamped in the second half of 2011 with Chinese solar panels far cheaper that those made by US manufacturers, the coalition argues.