India joins the Solar Wars

Global Solar Wars have been going on for some time now with the major world players like US, EU and China all taking part. While USA has already imposed CVD and AD duties on imports of Chinese solar panels, EU too has started its own investigation into Chinese imports. China which exports more than $30 billion of solar products to US and Europe has retaliated by filing a complaint against Europe and started its own anti dumping duty against imports of polysilicon from South Korea, US and Europe.

Now 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 like

WINNERS in case AD duty is imposed

a) IndoSolar

b) Tata Solar

c) Moser Baer

d) Lanco Solar

e) Jupiter Solar and other small solar panel makers

LOSERS in case AD duty is imposed

i) Solar Developers who will see their margins go down due to usage of higher price local modules

ii) Indian power consumers who will have to pay higher tariffs.

Indian Solar Panel Makers have been trying for duties for quite some time

Indian Solar Panel Companies are asking for protection from cheap imports from China and other countries. Note the prices of solar panels have fallen by 60% in 2011 due to a number of reasons such as cheap raw material polysilicon prices, high competition between major module manufacturers, dropping processing costs. The biggest reason for the solar panel price crash has been the support of the Chinese and other Asian government to their respective domestic solar industries. It is a fact that many of the major solar module companies would be bankrupt right now without government support. LDK is the prime example of a zombie company flourishing on the back of Chinese government support. Indian solar panel makers have got some protection with the federal subsidy policy JNNSM mandating that cell and modules be made in India. However thin film solar panel technology is exempt which means that they are not fully protected. Besides state government solar polices do not protect them at all. The consequence has been that most of the solar panel companies are running at 0 to 20% utilization as orders dry up.

Note there is precedence of protecting the solar panel makers by

1) Ontario, Canada

2) Japan (which follows an implicit policy)

3) USA which is set to introduce dumping duties on Chinese solar panels

4) China itself which for a number of years had domestic content requirements on Wind Energy

Solar Cell Dumping Case

The Directorate General of Anti-Dumping and Allied Duties of the Ministry of Commerce has initiated anti-dumping investigations into the import of solar cells from China, Malaysia, Chinese Taipei and the US. The Authority has found sufficient prima facie evidence of dumping of the subject goods, originating in or exported from the subject countries, and injury to the domestic industry, and causal link between the dumping and injury. Hence, it has initiated an investigation into the alleged dumping, the Directorate’s notification says. The action is against solar cells imported from these countries “whether or not assembled partially or fully in modules or panels’’

Global Solar Wars – The Story so Far

The Global Green War had started with the US imposing duties on imports of Chinese made solar panels and cells. Subsequently dumping charges were also imposed on wind energy equipment made in China as well. China has not been able to do much against these duties as it exports almost 80-90% of its solar products. Though the Government is investigating the charges of cheap polysilicon imports from the USA , the Government has refrained from taking any action till now. The Chinese Government perhaps realizes that it does not want to get into a full scale war with the US considering the massive trade surplus it runs. However the Chinese Government does not want to get run down and has started making bigger noises. Today the Government of China criticized US for unfairly subsidizing six green energy projects against WTO rules. Though no action has yet been taken, China is trying to up the ante with the USA as Chinese solar panel exports to the US have declined sharply.

China USA Cleantech War

The Global Solar World War is truly on now, with the Chinese Government starting investigation on the imports of solar polysilicon from Korean and US solar companies. Note, we had already predicted this some time back and listed the solar winners and losers in case the Chinese imposed duties.

The US imposition of duties on Solar panel imports from China has raised the hackles of the Chinese Government which considers the solar industry to be strategic to its future growth. While it will not affect the Chinese exports in a big way considering the easy workarounds, it has the potential of making the Chinese Government react negatively. The biggest losers could be the Polysilicon companies and Solar equipment suppliers based in the USA. Note China imports huge volumes of the polysilicon raw material used in solar panels from USA and South Korea. The reason being the the quality made in these countries is better and the costs are lower. With the polysilicon spot prices crashing to below cost, around as low as $20/kg levels, US and Korean companies are being forced to change their LT contracts which were stuck at higher levels.

European investigation of dumping on solar panels made in China

The biggest Chinese solar panel producers like Sunech, Trina ,Yingli and Canadian Solar have come out strongly against the recent filing of a complaint of dumping of Chinese solar panels in Europe. Solarworld which is the biggest German solar panel company has led a group of 25 European solar companies in filing a complaint against the dumping of solar modules made in China. Note Solarworld had earlier successfully managed to champion an anti dumping duty on China made solar panels, in the USA. In recent days, the Chinese Government has initiated the process of paying back the USA in the same coin by starting an investigation of US polysilicon imports. While that had led to feeble protests from the Chinese biggies, they had already prepared workarounds for the anti dumping duty.

Europe to decide in 45 days the fate of the Chinese Solar Panel Industry

If Europe finds the Chinese solar module manufacturers guilty and imposes special duties to protect the European solar industry, then the struggling Chinese solar panel makers like Suntech, LDK which have huge debt burdens and losses might shut down completely. Already there are rumors that LDK has been taken over unofficially by 3 state owned corporations as it continues to bleed money with no hope for revival anytime soon.

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.