Taking on China
- Posted on February 7, 2012
- 4 views
The trade dispute between China and America over solar power is heating up. Leading the battle on this side of the Pacific is SolarWorld, one of a handful of companies that asked the U.S. Department of Commerce to investigate whether Chinese manufacturers have dumped solar panels in America at prices below their costs.
SolarWorld Industries America, a subsidiary of SolarWorld of Germany, employs 3,300 and has claimed to be the largest solar manufacturer in the United States for 35 years. The German subsidiary's Oregon campus can make 500 megawatts of photovoltaics a year.
To better understand the future of solar power in America and around the world, EnergyBiz recently interviewed Gordon Brinser, president of SolarWorld Industries America. The comments of the 45-year-old executive, edited for style and length, follow.
ENERGYBIZ Why have you reached the breaking point as far as China's solar sector subsidies?
BRINSER We can compete on a global basis with anybody, anywhere, anytime, and we can do it so long as they compete using legal business practices. What really brought us to this point was looking at the U.S. industry as a whole and saying, "Hey, we've had seven bankruptcies or downsizings in the last 18 months." It's clear that China intends to gut it and own it and really wipe out the industry here in the United States.
ENERGYBIZ Subsidies have been an integral part of getting solar power launched. What is unique about China's approach?
BRINSER China's approach is to use subsidies directed at the manufacturer and the subsidies are highly illegal because they are very focused on exporting those products into other markets. When you talk about the subsidies being used in Europe and the United States, the focus is on the consumer getting the subsidy or the tax credit. It's legal under Trade Organization laws whereas the one the Chinese are using is not legal. The Chinese industry is using its domestic manufacturing, then they ship products over here and then they are getting the benefit of the consumer-based incentive also.
ENERGYBIZ The Chinese manufacturers have contributed to a steep decline in solar costs for installers. Is that bad?
BRINSER I'd say the low prices are really very artificial out there in the market. It's not a sustainable model for them to continue to dump product below their cost.
ENERGYBIZ So your argument would be that doing this drives competitors out of business, which will lead to higher prices?
BRINSER The prices will increase when the market returns to normal because they are currently manipulated to artificially low prices. If you want to talk about solar power being a renewable, sustainable source of energy, look at the environmental safety and labor standards that we adhere to in order to manufacture in the United States. The Chinese industry is not held accountable for those same environmental standards. So ask yourself - low cost at what cost? Is the entire carbon footprint then changed by shipping panels on large ships overseas? What's the total cost?
ENERGYBIZ What is at stake for utilities in America?
BRINSER It is critical for the utilities to have a domestic supply chain that they can rely on and work with over time to make sure that the solar products and supply are secure. What is also critical for them are local jobs and local businesses. If the U.S. industry is wiped out, they may be dependent upon a foreign source of the renewable energy. Where are they going to buy their solar panels and what if the export practices from the Chinese industry change and those prices do start going up because there is no competition in the United States to hold them accountable?
ENERGYBIZ Have any U.S. utilities expressed interest in your battle?
BRINSER We have not heard from them either in opposition or support.
ENERGYBIZ When might there be a ruling on this and how long is this issue going to take to play out?
BRINSER The next ruling on this should occur sometime in late March. It's what they call the preliminary determination as to whether there will be any type of actions taken by the Department of Commerce. Then several months after that there would be the final determination of the final placement of any type of tariffs. There is a provision within the law that allows the tariff also to be retroactive
ENERGYBIZ Why is it that none of your allies in this battle choose to be publically identified? Does that handicap your fight in any way?
BRINSER It doesn't handicap our fight. Many of these companies have a broad spectrum of businesses that they may be involved with. They are concerned about retaliation from the Chinese industry. We were trying to move as quickly as possible to get the petitions filed so we were focusing most on the legal and the business issues. But I expect they will come out with their identities. They hadn't by the time we filed the petition.
ENERGYBIZ What is the relative importance of solar panel price and quality to the solar market?
BRINSER We have a high-quality and reliable product. What we are facing here is really an illegal business practice in the Chinese industry. So if they were competing legally, then that is not a big issue. But when it is illegal and they are dumping product, it's not a sustainable model.
ENERGYBIZ For those who support steady expansion of solar power generation, what is at stake in this trade dispute?
BRINSER Having a strong domestic industry in the United States will drive innovation and that innovation will be able to continue to drive cost down over time. We have been able to show incremental cost reductions over the last several years and improvements in our efficiency, quality and reliability over the years. If the solar manufacturers go away, then the industry goes away, whether that's glass manufacturers or paste manufacturers. All the suppliers that we rely on to help us continue to go down this path of innovation for better, faster, more cost-effective products will be affected.
ENERGYBIZ Competition from the Chinese in recent years has driven the cost of solar modules down by half. If you prevail in this case that you are mounting, would solar costs rise dramatically?
BRINSER We are confusing cost and price. The cost of the solar manufacturing has been driven down through various innovations. The equipment improved and the technology has improved and that has driven down a lot of the cost. The pricing has been driven down by the illegal subsidies and dumping from the Chinese solar products. If this is really an open market, it will correct itself and find the right price.
ENERGYBIZ What is your best estimate of solar prices the United States two years from now?
BRINSER I don't know where to start to guess.
ENERGYBIZ Let me put it a different way. If prices have fallen by half, what share of that decline was caused by China's unfair trade practices?
BRINSER A very significant share.
ENERGYBIZ So there will be a major price impact if you prevail?
BRINSER Once you have a legal open market, then the prices will find that natural balance. Whether it is through a traditional consolidation or whatever else occurs in the market, pricing is going to find its natural level. You will see upward pricing pressure only because it is a false price at this point because of the dumping.
ENERGYBIZ Why launch this effort now?
BRINSER If you look at the number of bankruptcies and downsizing that has occurred in the last 18 months, it becomes apparent that we had to do something fairly quickly. We started this process in the springtime.
Published In: EnergyBiz Magazine January/February 2012
The editorial staff at RenewablesBiz.com is passionate about exchanging ideas and dedicated to promoting ongoing conversation about renewable and sustainable energy issues. We invite you to join and contribute to our online community. If you have an idea for an article or editorial contribution, please contact me via email, firstname.lastname@example.org, or phone, 860.633.0090.
No discussions yet. Start a discussion below.