China Watch

All Solar PV Roads Lead To China

With the Chinese nation suffering unprecedented pollution and choking on epic air pollution, "China's government plans to boost its goal for solar power installations by 2015 from 21 GW to 35 GW."  (Source).  "Shi Dinghuan, the counselor of China's State Council and the president of the Chinese Renewable Energy Society, told Bloomberg that China now faces increased pressure to reduce carbon dioxide emissions."  Id.  See also this source.  And yes, to 50 GW by 2020.  China needs a game-changer renewable technology, frankly. It's so besieged by air pollution that in February, 2013, it imposed a carbon tax.

In July, 2013, China announced plans to install 30 GW of solar power over the next 3 years. (Source).  As of November, 2013, it is projected to lead the world in renewables by 2035.  (Source).

But as of May, 2014, China's great shakeout was in full swing, thus validating the maxim that government subsidies are ultimately a fool's errand.  (Source).

Some more background:

In January, 2013, China bought A123's remnants. That's the battery maker into which Obama sank $133 million of our money before it crashed.  The Chinese have no choice but to go green, as they are now choking on record air pollution.  In one city, residents can cop a $19,000 subsidy to buy an electric car there. 

So, just as the Chinese are now leading the world in low-cost solar power, they'll hopefully do the same with cost-feasible, 100+ mile range batteries.  That'll be win for America, which does things like invent VHS tech and then lets others (Japan, in that case) develop it, because the USA will do nothing but squander resources and retard battery/solar development, while the Chinese will accelerate it.

We nevertheless will win because we'll get to "Energy Nirvana" (free fuel source, the sun) that much sooner, and free fuel = free money, wealth, plus reduced pollution and land-disturbance.  We may enrich the Chinese in the process (they already steal from us), but hey, no pain no gain.

Here's an April, 2014 article on China's new "Sun King" -- a guy who's buying up "fire sale" solar panel factories and (I surmise) will be able to integrate them into even lower-cost solar production.

The 2013 Bust of China's Bubble?

This may be the start of the China's solar bubble.

The 2012-2013 Trade War

Now that we're in a trade war with China (see also thisthisthisthisthis, thisthisthis and this) over its Solar PV products (I have 10KW of German branded, Chinese-made Solar panels on my roof), and now that the resulting increased prices from taxing Chinese panels (what tariffs do) has led to the predictable uptick in U.S.-produced panels (source), 
I'm going to go out on a limb: I'm against unfair trade practices based on fraud and counterfeit products.  

The beef with the Chinese is that, through China's misuse of its taxpayers' money (subsidizing its solar panel makers) and cheap labor, Chinese solar panel makers are killing off American panel makers.  In that regard, note the U.S. government's 31%- 250% anti-dumping tariff (see this earlier piece, too) against China, though it seems like all solar players are subsidized -- perhaps to a house-of-cards level.  See also this March, 2013 story on a Chinese municipal government's take-over of Suntech, a big player in the solar panel manufacturing market (pay particular attention to the very elucidating comments to that piece, too).

I conclude this: If a nation otherwise wants to give away its labor, wealth and clean environment to bring down Solar PV's cost (stop and read this paper, including a list of Chinese panel makers), then there's a good argument for welcoming that if the result is a tidal wave of Solar PV-based prosperity and clean energy for "Joe Six Pack," hence, 330 million Americans.  The economic and ecologic upside of that will far outweigh the downside.  At sub-$1/watt system pricing, everyone will have Solar PV on unused solar-radiated free spaces.  It will do for the next two decades what PCs did for the last.  And at the 100-million unit level substantial ecologic benefits will result.
 
And yet, the U.S. government's marching forward with this, now joined by Germany's Solarworld, triggering predictable retaliation.  Note: There are very good arguments against my opinion on this. Click here.  The most compelling is that Chinese subsidies ultimately enable Chinese government officials to pick market winners and losers while wiping out competition and thus enabling monopolist-pricing once competitors are extinguished.  That's definitely worth pondering, and here's a piece on the state of the Chinese solar industry as of August, 2012.  Here's a rebuttal to that article, by the way, and note this piece arguing that tariffs against Chinese panels cost us jobs.

Meanwhile, consider these numbers:

China, whose government has been a big promoter of green-energy companies, already accounts for three-fifths of the world’s solar panel production, giving it enormous economies of scale.

And it exports 95 percent of its production, much of it to the United States, rather than using it within China. That has helped push wholesale solar panel prices down sharply — from $3.30 a watt of capacity in 2008, to $1.80 by last January, to $1 to $1.20 today. A typical solar panel might have a capacity of 230 watts.

Although plunging prices could speed up the adoption of solar power, the American industry contends the Chinese are simply not playing fair. Besides Solyndra, two other American solar companies that together represented one-sixth of American manufacturing capacity in the sector went bankrupt in August, while four other American solar companies have laid off workers and cut output since spring of last year.

(Source).  Even among Americans, this is open to intense debate, as noted here.

7/13:  Anti-dumping tariffs raised Chinese solar panel prices.  (Source).

11/12:  "Solar has expanded dramatically in China this year, with 2.71 gigawatts (GW) commissioned, a 415% increase from the first nine months of 2011. That puts it on track to be the world’s second largest PV market this year. China also raised its solar target to prop up the industry. It’s new target, announced in July, is 21 GW of solar by 2015 (up from 15 GW)."  (Source).

9/17/12:  300 MW of Solar PV to be erected on Chinese agricultural lands.

8/31/12: High domestic growth in the Chinese Solar PV market.

8/7/12:  "China is well on the way to install 15GW of solar capacity by 2015, with 50GW planned by 2020, and the solar industry has received another vote of confidence with news that the former target has now been raised to 21 gigawatts. This is the third such increase of the goal over the last 18 months, which some analysts consider a conservative estimate. Some estimates predict that China could hit as much as 30GW within the timeframe. To put that in perspective, that would be the equivalent of installing 30 large nuclear power plants or coal-fired plants."  (Source).

7/18/12: Massive Chinese investment in domestic solar: "Solar photovoltaic installations in China are set to surpass 4 GW in the second half of the year, as the National Development and Reform Commission - the country's regulatory and planning body - has raised its solar energy target from 15 GW to 21 GW by 2015."  Here's a 7/30/12 follow-up on that: "Currently China has around 1-2 GW of Solar Energy Capacity. The new target would imply a roughly 5 GW of Solar Energy Capacity to be installed each year which would easily  rival that of top solar countries like Germany. Currently the Chinese Solar Market has little competition with the giant state owned utilities winning most of the solar project auctions at absurdly cheap rates."  Note that source's description of China's wind and Solar PV investment:

China, which had a target of only  20 GW of solar by 2020, has decided to raise the target by 150% ie. to 50 GW according to the country’s leading energy planning authority NDRC. Note China installed more than 15 GW of Wind Energy in 2010 alone becoming the world’s largest Wind Energy Market by far. Solar Energy strongly lags Wind in China, despite China having the biggest solar panel manufacturing industry in the world. Its Golden Sun and other Solar Subsidy programs have been small in absolute terms compared to its huge electricity capacity. Note Wind Power in China has reached a saturation level with almost 18 GW installed in 2010, with such a high level further growth looks quite difficult.


6/14/12:  US and Chinese solar players are still cutting deals with each other.

4/20/12:  The distortive effects of Chinese government subsidies on the world solar panel manufacturing market.


12/19/11:  "China’s National Energy Administration (NEA) last week announced it is aiming for the country’s installed solar power generating capacity to reach 15 GW by 2015. This is a 50 percent increase from its previous plan"  (Source).

12/21/11:  "China is poised to spend US$473.1 billion on clean energy investments in the next five years, and wants to add 370 GW of renewable energy generation capacity by 2020."  (Source).

2/3/12:  "The US Department of Commerce has found a large surge in Chinese solar imports, which could trigger 90-day retroactivity if it finds duties are warranted."  (Source).

Here's the American "evidence" against China: 

[SolarWorld President Gordon] Brinser presented evidence that Chinese exports of solar cells and solar panels to the U.S. rose more than 350% from 2008 to 2010 and continue to rise. In fact, exports from China in July exceeded those from all of 2010, according to Brinser and the CASM. "Market prices simply do not seem to apply to the Chinese producers," Kilkelly said. "Rather than allowing increased efficiencies to steadily decrease costs and prices, the Chinese government continues to pump billions of dollars of subsidies into their solar industry to build massive amounts of excess capacity. Nearly 95 percent of their production capacity is targeted toward export markets, including the United States. 

"Chinese producers' only goal is to push huge volumes of cells and modules into the U.S. and other markets through extremely low prices," he continued.

The CASM contends that the surge in Chinese solar manufacturing and exporting has been the primary cause for a 40% decline in world market prices over the past year. Moreover, the coalition says, the proliferation of these products has caused seven U.S. manufacturers to either close or downsize operations.

In its petitions, SolarWorld has asked the federal government to impose duties to defend the domestic makers of crystalline silicon cells.

(Source).   Here's where the market's been going:

American solar panel makers, though, have had trouble competing with the Chinese, whose export industry has helped push wholesale solar panel prices down sharply — to $1 to $1.20 a watt of capacity today, from $1.80 in January and $3.30 in 2008.

Three American solar companies that together represented one-sixth of American manufacturing capacity in the sector went bankrupt in August — including Solyndra, whose failure despite receiving more than $500 million in federal loan guarantees has fueled Republican criticism of the Obama administration’s green-energy policy. Four other American solar companies have laid off workers and cut output since spring of last year.

(Source).  See also this article on the subject, along with this end-of-2011 recap.

My response: Let the Chinese give us their wealth (their subsidies and cheap labor, including $1.7 trillion in direct renewables investment) and enable Americans to buy Solar cheap.  That will spur tens of billions of spin-off benefits (solar installation labor can't be outsourced, and of course there are Solar accessories like rack systems, wiring, etc. that U.S. manufacturers can supply) and tremendous ecologic benefits (California's claiming 30% "renewable" electricity by 2020, imagine if the USA achieved that).  America sold off its VCR technology to Japan in the 1980s and we all benefited from constantly lowering VCR costs (my first cost $400; my last cost $29) that Americans just didn't want to manufacture (yet, retailers had billions more in products to sell). 

Cede this solar panel market to the Chinese, and we can, just as they've done, "borrow back" their resulting higher-efficiency production technologies when they get tired of giving us their wealth via hyper-subsidies.  [Side note: Yes, "borrow back" means cop it from them -- as it is they who long ago established that course of dealing:  "Nearly 25,000 shipments of infringing goods from abroad were seized in the U.S. during fiscal year 2011. The No. 1 source country for knockoffs continues to be mainland China, which accounted for 62 percent, or $124.7 million, of the total domestic value of seizures."  -- The National Law Journal online, 1/12/12.  The Chinese have always stolen intellectual property, copyrighted material and patented wealth from the rest of the world, and especially from us.  Too wrongs never make a right, but it is not wrong if "A" abandons a rule and then hypocritically expects his victim, "B," to uphold it to A's advantage.]

Meanwhile, the Chinese are not dopes.  Currently "China exports more than 90 percent of its solar panels, and many of those panels go into the U.S. market. To make up for the potential of a severed market, Chinese businesses are being encouraged to expand their domestic market."  (Source). And, of course, their government is now digging up "unfair" trade practices on the American side to throw back at us -- all part of a pointless, counterproductive trade protectionist riff by the Obamacrons.

But the Chinese are also substantially investing in clean tech -- because they must, and some Chinese Solar PV manufacturers are not cutting environmental corners.  They do not have enough coal, oil, nukes or clean air to cover their projected energy needs, and much of Mongolia is a very high insolation zone. The obvious benefit: "
China leads the world in investment in clean-energy infrastructure, and few nations embrace potential breakthrough inventions with such zeal. That combination allows commercial development of innovations that otherwise might never make it out of labs in the West."  Id. And, as that article notes, American companies can sell to it and grab a piece of that economic action.  That works for me.

So does this: "As part of new solar capacity target plan, the NEA will seek international help in building new a transmission infrastructure. It acknowledged that much of the problem with getting the utility-level renewable energy projects connected to the grid has been a lack of engineering expertise."   (Source).  Catch that?  The Chinese are going to foot the bill for building a renewable-energy based grid.  The West will be able to study that and learn from China's mistakes along the way -- mistakes at China's expense, not ours.

Meanwhile, here's an American "study" advocating flat-out trade protectionism in backing the "petition" against China, which is kicking our asses because it's got a humongous, $17/day labor force that can produce almost any technological product almost overnight:

it is safe to say that if meaningful import duties were indeed imposed on China-based cell and module suppliers, this would have the effect of making domestic suppliers more price-competitive, at least in the near-term, and could result in a material increase in domestic market share for U.S.-manufactured modules in 2012 and beyond. The trade petition thus remains a potential wild card in terms of influencing competitive dynamics in the U.S., and it is critical to monitor the development of this issue going forward.


I note, by the way, that the only capitalists out there to contact me through this site have been Chinese -- and I have rewarded them by mentioning here.  These folks were smart enough to figure out that for just a few moments of their time they could establish a business connection.  That is what American companies need to keep in mind -- The Business of America is Business.  Not "donating money" to our politicians to get trade-protectionist measures promulgated on your behalf.  The Chinese are willing to hustle and work for their market share.  That's what Americans must also do.


August 2012: Jaw-dropping story of  a massive (Solyndra-class) Chinese solar PV boondoggle.

August, 2012:   China is spending $372 Billion over the next 3 years on energy conservation and pollution abatement.

Related stuff:  Korea's jumping in.

Subpages (1): Rebuttal Argument
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James Christopher Desmond,
Jan 10, 2014, 3:34 PM
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James Christopher Desmond,
Jan 10, 2014, 3:37 PM