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The Real Solar War: US Manufacturers and Installers Fight Over Cheap Chinese Panels

Raz Godelnik headshotWords by Raz Godelnik
Investment & Markets

There is a heated debate going on between people who are supposed to be on the same side of the aisle. Yet, when you hear their passionate arguments and the way they describe the damage the other is causing the US, you start wondering if they actually share anything in common. No, I’m not talking about Mitt Romney and Newt Gingrich. I’m talking about Jigar Shah and Gordon Brinser.

While Brinser and Shah might not be as well-known as the Republican candidates, the debate they’re having on the future of the solar industry might be more valuable to those concerned about the future of the US economy. Basically, the debate between the two is over a petition made to the US International Trade Commission/Department of Commerce (ITC/DOC) against Chinese solar panel import. The main question at the heart of this debate is: Does the US need to focus on manufacturing at all costs, or should it look for another way to create a healthy and sustainable economy?

Jigar Shah, the President of the Coalition for Affordable Solar Energy (CASE) and founder of SunEdison, published a letter to Gordon Brinser, President of SolarWorld Industries Americas, asking him to withdraw the petition made to the ITC/DOC against Chinese solar import. The petition claimed that Chinese companies are illegally dumping solar panels into the US solar market at artificially low prices, thanks to “massive, unprecedented” subsidies they receive from the Chinese government. These efforts, according to the petition, are burdening US solar manufacturers and are partly responsible for seven US companies going out of business or downsizing in the last year.

Shah argued in his letter to Brisner that the severe tariffs SolarWorld wants to impose on Chinese solar panels would actually hurt the US solar industry, not to mention the damage to the environment and the US economy at large. “Lowering the cost of solar cells and panels and increasing deployment has significant economic, security and financial benefits to the US. By asking the government to interfere and artificially increase the price (equivalent to instituting a high tax) will only hinder deployment, cost thousands of jobs, reduce our energy security and further negatively impact an already shaky economy,” he wrote.

Shah presents the perspective of the deployment side of the solar industry, which believes the lower price of solar panels the better, no matter where they’re coming from. In his letter he explained that “bringing down the price of solar cells and panels has been critical to expanding solar installations worldwide so we can reduce the use of polluting fossil fuels.” He heard, of course, about Solyndra but believes that the net effect of cheap Chinese solar panels is actually positive – “here in the US, the solar industry now employs more than 100,000 professionals, up from 93,000 last year.”

Brisner’s response arrived at the same day. "SolarWorld, in conjunction with the Coalition for American Solar Manufacturing (CASM), supported by over 150 associate members from 14 states employing over 11,000 US workers, view today's letter as inappropriate bluster from Jigar Shah, who speaks on behalf of the Chinese manufacturers. Mr. Shah and these Chinese manufacturers are well aware that their illegal trade practices are harming the US economy and causing thousands of good manufacturing jobs to be lost,” he replied.

Hari Chandra Polavarapu, the Managing Director of Solar/Cleantech Research at AURIGA USA, came to Brisner's aid. He accused Shah of “being willfully blind and completely ignorant of the devastation and bankruptcies that have transpired in the global solar PV industry." He also reminded Shah that the solar installation sector might not be immune to the negative Chinese impact on the US market – “China's state banks have set aside more than $43 billion in long-term solar funding via framework agreements that can be tapped by Chinese solar companies for downstream installation as well. Where will Jigar Shah go, and who will he complain to then?”

The final word (for now) came from Shah. In a piece he wrote on Co.Exist he tried a different approach. This time he explained that the solar panels are just another example of the inability of the US to compete globally on price. The solution to this problem, he said, is not to enact punitive duties as Brisner is asking from President Obama, but to understand that “America is no longer the world’s core manufacturer. But it is a technological and creative leader.” In other words, the US should start adjusting to this new reality, using its innovative advantage to recreate itself as a leading economy.

The debate between Shah and Brisner is a difference of opinion between two fundamental approaches. The first believes in what President Obama said couple of months ago, “if we want a robust growing economy, we need a robust manufacturing sector,” while the second, represented by Shah, believes that “it doesn’t matter where the panels come from, it matters that we put them up.” In a way, it is a clash between a vision and the reality. Which approach will win eventually? Only time will tell, but my guestimation is that Shah’s realistic approach has a better chance, unless Americans decide they will only buy US-made solar panels at all costs, which is not very likely to happen.

Image credit: photonenergy, Flickr Creative Commons

Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Department of Business Administration, CUNY and the New School, teaching courses in green business and new product development.

Raz Godelnik headshotRaz Godelnik

Raz Godelnik is an Assistant Professor and the Co-Director of the MS in Strategic Design & Management program at Parsons School of Design in New York. Currently, his research projects focus on the impact of the sharing economy on traditional business, the sharing economy and cities’ resilience, the future of design thinking, and the integration of sustainability into Millennials’ lifestyles. Raz is the co-founder of two green startups – Hemper Jeans and Eco-Libris and holds an MBA from Tel Aviv University.

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