March 14, 2013

U.S. Solar Market Sees Record Growth; Trade Tariff Impacts Hurt Chinese Manufacturers

In 2012, the United States International Trade Commission (ITC) approved of the high tariffs (24-36%) that the United States placed on Chinese solar panel manufacturers.  The ITC found that the cheap Chinese panels hurt U.S. solar panel manufacturers’ ability to sell their product. Gordon Brinser, president of SolarWorld America and leader of the Coalition of American Solar Manufacturing (CASM) supported this decision based on the idea that “with the [] support of the Chinese government, [Chinese manufacturers] have attempted to game the international trading system in order to gain a virtual monopoly on solar cells and modules sales in the U.S. market.” 

Industry analysts surmise that these low-cost Chinese panels majorly contributed to the increase of solar installations in the United States. A recent solar trade group report demonstrated a large increase in the solar market. A headline for the Solar Energy Industries Association (SEIA) website reads “U.S. Solar Market Grows 76% in 2012.” President and CEO of SEIA, Rhone Resch, stated that solar panel costs dropped by 60% since the beginning of 2011. This reduction in price has resulted from a number of factors, but obviously relates to the recent glut of solar panels that Chinese producers dumped on the United States over the recent years.

While it is not completely clear what the long-term repercussions of the tariffs will be, the impacts begin to come to light. On March 14, 2013, the New York Times covered the above-mentioned solar trade group report alongside a story about Suntech, one of the world’s largest manufacturer’s of solar panels.  Due to the tariffs, among other things, Suntech faces serious cash flow problems.  The company’s financial straits are so dire, that it is rumored that the local municipal government (Wuxi, China) is positioned to take over Suntech.

The trade report and financial issues plaguing Suntech demonstrate that winners and losers will result as the United States turns to the modern solar age.  Analysts consider the Chinese tariffs to have little impact on the overall cost of solar installations in the US, and any increase in price will be tempered by cost reductions due to improved technology.  Also, regardless of price fluctuations in solar panel costs, the United State’s government continues to bolster the burgeoning solar industry through the extension of the investment tax credit through 2016.  

Written for SIEL by:
Scott Hilgenberg, 3L