Competition Over Solar Panel Costs Sparks Escalating Energy War

Photo by Bert van Dijk. Some rights reserved.

The Obama Administration has always been vocal about its support for renewable energy and, even in the wake of the Solyndra debacle earlier this year, are moving forward with new solar and wind projects on both coasts that would help push the U.S. to the forefront of the green energy movement. Or so it would like to think…

New research shows that, while solar energy only currently accounts for a little over 1 percent of total U.S. electricity consumed, that we may be at a tipping point for the green movement where the reality of cheap solar energy is finally realized across the globe. Joshua Pearce, associate professor of electrical engineering and materials science at Michigan Technological University, explains that consumers and researchers have been vastly overestimating the rate at which solar panels would drop in productivity: instead of dropping at a rate of 1 percent per year, “if you buy a top of the line solar panel, it’s much less, between 0.1 and 0.2 percent.” Beyond this misconception, and perhaps more importantly, Pearce comments that “since 2009, the cost [of solar panels] has dropped 70 percent… the costs have been pushed down enough that [solar energy] can compete.” Who can we thank for such a drastic reduction in manufacturing costs? The answer shouldn’t surprise you.

Earlier this year, the United States International Trade Commission (USITC) determined that American solar panel manufacturers were correct in their complaint that the American market was being flooded with cheaper models imported from China being sold at aggressively low prices that the American manufacturers could not compete with (we posted about U.S. solar energy company SolarWorld’s original complaint to the ITC in October). While no clear decision was reached, this initial vote clears a path for the Commerce Department to open an investigation and, in theory, impose tariffs on exported panels to level the playing field for American manufacturers. Of course, the availability of Chinese panels has everything to do with the aforementioned costs of solar energy being drastically reduced. It also has a lot to do with why American solar companies like Solyndra have been forced to declare bankruptcy. Understandably, this complex issue has already created a rift between American manufacturers (who have taken to labeling themselves the Coalition for American Solar Manufacturing) and a group of American installers and distributors (as well as anti-tariff manufacturers) who are calling themselves the Coalition for Affordable Solar Energy.

Both sides make extremely fair points (CASM: “Domestic production creates high-paying manufacturing jobs and builds national economic health while advancing energy independence” vs. CASE: “Protectionism drives up the price of solar electricity and negatively impacts more than 5,000 American solar companies, mostly small businesses, and more than 100,000 American jobs”), and its worth investigating both sides of the argument for yourself. Meanwhile, the Chinese Ministry of Commerce has responded to the December 2nd ruling of the U.S. Commerce Department, arguing that their decision was made “without sufficient evidence showing the U.S. soalr panel industry has been harmed,” and has announced its own investigation into whether American subsidies of renewable energy sources have compromised China’s development of the same areas. It was also reported yesterday that India may itself look into joining the growing “energy war,” and impose its own taxes on imported panels.

3 responses to this post.

  1. […] overseas business while European governments cut such subsidies as cost saving measures. Just as we reported on the solar panel business earlier this year, this foreign competition in new energy markets will […]


  2. Good article. I absolutely love this site. Continue the good work!


  3. Well said, but everyone needs to understand that adding Solar on their home is an purchase that could increase the actual worth of their residence if / when they choose to sell. With the environment the way it is going we are unable to overlook any item that supplies no cost electricity at no cost to both the customer and more notably the world!


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