Why are the Global Solar Panel Wars Occurring
Chinese solar panel producers have increased their market share rapidly in the last 4-5 years displacing the dominant Western and Japanese solar panel producers. The rapid decline in costs achieved by the major China companies like Trina, Jinko, Yingli, Suntech, GCL, Renesola has thrown the business models of the other solar companies in complete disarray. These companies not only managed to drastically decrease the costs, but expanded capacity so furiously that despite the rapid growth in global demand, the solar panel industry is facing a massive oversupply of solar modules. The result is that the western countries annoyed by the decimation of their solar industry and jobs have retaliated by either imposing or planning to impose duties on the deluge of Chinese solar panels imports. Many countries and regions have tried to protect their nascent solar manufacturers through domestic content rules. These have become contentious issues as well.
USA starts the War on China
Despite Europe accounting for more than $25 billion in Chinese solar panel imports, it was US who acted first against China despite facing much lower amount of imports. The US government has imposed countervailing and anti dumping duties ranging from ~30-250% . The decision which was imposed in the beginning of 2012 was confirmed recently by ITC. China has tried to retaliate against the US decision but it has few weapons to fight with. It has mostly made noises about US anti dumping duties without imposing any measures till now. The current duties have not deterred the Chinese companies as they have already devised workarounds and in fact are boomeranging against the US industry.
Europe starts its own investigation following the US, sowing panic amongst Chinese companies
Europe accounts for almost 75% of the world’s demand of solar panels and has been instrumental in the growth of the Chinese solar industry. Note China accounts for less than 10% of the demand, while it supplies almost 60-70% of the global supply of solar panels. While the US was a small market comparatively, Europe is a huge market and the loss of this market will sound the death knell of the biggest Chinese companies.
Europe has recently started an investigation into imports of Chinese solar panels following the cue from the US decision. This has made the Chinese companies desperate as they sell almost 10 times more solar modules in Europe compared to the USA. The Chinese government recognizes this and has implored German chancellor to resolve the situation through talk. However, the EU investigation has not stopped and China has gone to the WTO against preferential treatment of domestic made solar panels by EU countries like Italy and Greece. The Europe – China Solar War is the most important one currently taking place as almost 6% of China’s total exports to the EU comprise of solar modules which were valued at more than $25 billion. This is almost 5x higher than the exports to US. If Europe imposes duties on imports of Chinese solar products, then hundreds of thousands of Chinese jobs would be in peril. Many of the top Chinese solar panel companies like Suntech and LDK are bankrupt all but in name and are surviving due to the largesse of local Chinese governments and banks.
China follows with anti dumping inquiry into polysilicon imports from US, Europe and Korea
China due to its massive solar trade surplus can do little against US and European sanctions. The country imports large amounts of polysilicon since its domestic industry does not have the capacity and costs to compete with the West yet. Polysilicon Companies like Hemlock, Wacker, REC, OCI fear the worst as they are mostly dependent on Chinese customers (their domestic consumers have mostly gone bankrupt). US Solar equipment companies like Applied Materials and GT Advanced Technologies too might face the ire of the Chinese government and companies who could look at alternatives in Europe. Only 5-6 polysilicon companies in China continue to operate due to the price crash. These companies like Renesola, LDK, GCL, Daqo New Energy will benefit massively if the government imposes duties. These companies will see their selling prices go up by 30-50% and also their volumes go up by a large amount, which will allow them to utilize their full capacity.
India joins in by finding fault with China, USA, Malaysia and Taiwan Solar Cells
India has joined the solar panel wars starting it own anti dumping investigation into imports of Solar Cells imported from China, USA, Malaysia and Taiwan. The Ministry of Commerce has found evidence that these imports have led to damage of the local solar manufacturing industry. The Indian solar industry has been crying hoarse for quite some time now against the imports of cheap solar panels from USA and China. Despite the central subsidy JNNSM mandating use of local solar modules for projects, thin film modules have been exempt. This has meant that the vast majority of the winners have used thin film solar panels making First Solar the biggest solar panel supplier in India. The local state subsidy missions have no such requirements which have led solar developers to use Chinese solar panels which are much cheaper than Indian counterparts. The main winners in case AD duties are imposed will be Indian solar cell and panel makers who are currently operating at 10-20% utilization.
The Global Solar Wars don’t look like they will be resolved soon given the economic and political complexities. Solar Companies which are already dealing with a crash in revenues, margins and prices have had to factor in geopolitical calculation into their forecasting as well. These wars between the countries are not isolated to the solar industry but also extend to the steel, shipbuilding, LED and wind industries where years of Chinese over investment have led to a huge supply demand imbalance.Google+