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US tariffs on Chinese solar panels imported in to the US

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Recent decision by US government to substantially increase tariffs rates for Solar panels imported from China is causing a very mixed reaction in the US solar industry and may ultimately negatively impact consumers who will see a spike in the cost of solar panels cost and installation fees. The goal of the tariffs is to protect US solar panel manufacturers who in the recent years have found themselves increasing unable to compete against the low prices of Chinese imported solar panels. The logic behind this decision is that while in the short run, it may slow down the growth of some US Solar companies, the demand for solar panels is so high that in the long run, the industry will continue to experience steady growth.

In recent years, the US solar industry has been experiencing a real boom. Today, it is a 8.4 billion dollar industry with 2,200 US firms installing solar panels both for residential and commercial clients and about 35 major US manufacturers of solar modules. Last year alone the rate of installation of solar panels grew 109%. There have been a number of forces at play fueling this trend for increasing demand on solar panels. Some of these factors have to do with an overall increased level of awareness in the American public about the environmental benefits of solar panels vs electricity from the grid, attractive annual costs saving benefits and heavy subsidies from both federal and state governments that offered consumers as much as 30% savings in rebates on the cost of installation. Yet another significant factor that made this growth possible, is that the price of the solar panels themselves dropped, driving down the overall costs that consumers would have to pay and therefore fueling the demand. Many home and business owners who even 5 years ago felt that they could not afford the exorbitant prices of solar panels, have been able to purchase and install them last few years.

Why did the cost of solar panels drop?

The reason why the cost of solar panels went down is very simple: the US market was flooded by cheap, good quality solar panels imported from China. A Chinese-made solar panel with 220 to 240 watts of power costs on average for $165 to $196, while an American-made one with 240 to 260 watts costs $240 to $288. Considering that an average size home or facility of 1,800 sq ft requires anywhere between 12-20 solar panes, this difference translates into significant savings when purchasing solar panels made in China. As a result of being able to offer such low prices, Chinese manufacturers were able to capture a whopping 60% of the 2.8 billion US solar modules manufacturing sector, literally squeezing their US competitors out of business.

Import tariffs as a way to protect US manufacturers of solar panels

Flooding the US market with cheap Chinese solar panels that were being priced below production costs caused an uproar among US manufacturers of solar panels. As Steve Ostrenga, CEO of Helios Solar Works, a Milwaukee-based manufacturer pointed out, the Chinese were “unfairly undercutting American companies on prices.This situation was unsustainable, it was hurting us. We couldn’t compete. It had to be fixed”. One common practice to protect the home industry and keep foreign competitors in check that is frequently employed both by US and other governments is to impose high import tariffs on the competitors. This forces them to either import less products or raise their own prices, or both, thereby leveling the playing field for the home industry. This is exactly what US government decided to do in this situation, and on May 17, 2012, the US Chamber of Commerce announced that the new tariffs imposed on Chinese imported solar panels will now be as high as 250%. The US manufactures expressed strong support and approval of this decision.

The tariffs are two-tiered. The first is targeting a group of 61 current exporters, including Yingli Green Energy and Trina Solar, who will now be paying rates of roughly 31%.The second tier is comprised of all other Chinese producers who are not currently exporting to the U.S. These manufacturers would face rates of up to 250% in case they begin exporting solar panels into the US. The second tariff is being imposed to prevent potential efforts by the current Chinese exporters to circumvent the tariff by shifting production to other companies. It remains to be seen how effective these new tariffs will be, as Chinese manufacturers could also shift production to other countries such as Taiwan to avoid the punitive tariffs.

The ruling will be finalized in the fall. However, the Coalition for Affordable Solar Energy, an industry group opposed to the tariffs, made a statement that it plans to advocate to lower the rates before the decision is finalized.

Punitive tariffs can potentially backfire and hurt the US solar industry

US companies in the solar industry who are in the business of selling and installing the panels are actually worried that the tariffs will drive up costs and hurt their business. In fact, most of the jobs in the US solar sector are in the field of sales and installation, and these jobs have been on the rise precisely because the cost of the solar panels themselves went down. Many installation firms in the US have been experiencing steady growth, increases in revenue and have been able to hire more employees because they have been relying on the Chinese solar panels. Many companies that are installing solar panels are worried that they will have to raise their own prices if the Chinese manufacturers will be forces to raise theirs, which will ultimately result in business losses. This sentiment was clearly expressed by Jeff Wolfe, CEO of groSolar, a Vermont-based firm that installs commercial solar panel systems, who is worried that if he will be forced to raise prices, he could lose out on new projects, which bring in $5 million to $15 million each on average. With regard to new job openings Wolfe commented, ” We have a few job openings right now but I’m rethinking them”.

What are the consequences for consumers?

At this point it is not clear how these decisions will impact consumers. If the tariffs will take affect causing and increase in the solar panel prices, consumers will need to be prepared to pay more to purchase and install solar panels. It is possible that even if the spike in prices happens, it would be temporary. As the industry continues to grow and develop, competition from both domestic and international solar manufacturers should bring the prices back down eventually.

Written by lena

October 2nd, 2012 at 4:17 am

Why US Solar Manufacturers are Going out of Business – Part 2

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Read Why US Solar Manufacturers are Going out of Business –

Role of the US government in domestic solar industry:

At present the US government is taking a stance on protecting the domestic solar industry against unfair competition from the Chinese by imposing punitive import tariffs that will be as high as 240%. While this may deter some of the Chinese manufacturers from dumping massive amounts of solar panels into the US market and may force them to raise their prices, it is questionable whether this strategy will help save the domestic industry in the long run.

While taxing foreign competitors will help, it is unlikely that US manufacturers will be able to compete effectively with the Chinese even if their do raise their prices. More importantly, US manufacturers are on shaky ground in terms of current and future government funding, and it is ultimately what they need to have a shot at surviving. Importantly, in 2011, the China Development Bank offered more than $30 billion in financing to Chinese solar manufacturers, which is about 20 times more than the amount secured by US solar manufacturers from the US government (source).

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Levchik (Leo) is a renewable energy activist from Boston, MA, and has been involved with alternative energy and green construction since 2004.

In 2009, Leo and his green roofing company (CoolFlatRoof.com) sponsored Boston’s Solar Decathlon Team, providing materials and installation labor to install a cool white roof on the top of Curio home (Joint effort by Tufts University and Boston Architecture College) – more info about the project here.

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Written by Levchik B

August 13th, 2012 at 11:54 pm

Why US Solar Manufacturers are Going out of Business: Part 1

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What will be the Future of the Solar Industry in US?

In the US, solar energy has been one of the fastest growing sectors of green renewable energy, backed both by government support and funding as well as a growing interest and buy-in from the general public. Over the last five years, many solar companies have experienced incredible growth, doubling and even tripling their profits every year. This unprecedented growth has been accompanied by the downfall of a number of prominent domestic solar manufacturers, who have been filing for Chapter 11 bankruptcy one after another over the course of 2011 and 2012. The primary reason for these massive failures has been the inability of American solar manufacturers to compete with their Chinese counterparts who have flooded the US market with under-priced solar panels and essentially made it impossible for many US manufacturers to stay afloat. The current situation raises many questions and concerns about the future of the domestic solar industry.

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Levchik (Leo) is a renewable energy activist from Boston, MA, and has been involved with alternative energy and green construction since 2004.

In 2009, Leo and his green roofing company (CoolFlatRoof.com) sponsored Boston’s Solar Decathlon Team, providing materials and installation labor to install a cool white roof on the top of Curio home (Joint effort by Tufts University and Boston Architecture College) – more info about the project here.

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Written by Levchik B

August 13th, 2012 at 11:53 pm

Global Solar Power Trends – Asia (part 2)

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Over the last decade, Asia has been steadily claiming a central place in the field of renewable energy, and today many countries such as Japan, India and China have become major players that are actively pursuing the development and proliferation of renewable energy sources such as solar power. The rapidly developing economies of China and India coupled with populations in the billions, many of whom survive without such basic things as electricity, have become fertile ground for the solar industry, becoming both prime consumers and supplies of solar technologies. The active financial and policy commitments that many Asian governments have made to solar power will have a long lasting effect on the industry as a whole. Last year, we have already begun to see these affects in Europe and USA with Chinese manufacturers flooding the global markets with cheap solar panels, causing the prices to drop, making solar more affordable for average consumers and leaving many European and US manufacturers unable to compete and bankrupt. Asia’s role in the future of solar cannot be underestimated and the future of the industry will in great part depend on its development in Asia’s growing economies.

Japan

Image of Floating solar PV farm in Japan

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Levchik (Leo) is a renewable energy activist from Boston, MA, and has been involved with alternative energy and green construction since 2004.

In 2009, Leo and his green roofing company (CoolFlatRoof.com) sponsored Boston’s Solar Decathlon Team, providing materials and installation labor to install a cool white roof on the top of Curio home (Joint effort by Tufts University and Boston Architecture College) – more info about the project here.

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Written by Levchik B

June 27th, 2012 at 4:30 pm

Global Trends in Solar Power – Part 1: A close look at Europe

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For anyone interested in the future of the solar industry around the globe, Europe is a key region to be watched closely, as it is the leader in solar energy, containing nine of the largest fifteen solar markets in the world. Despite the prolonged economic downturn affecting solar industry, the debt crisis and a slow decline of government support for solar programs in a number of countries such as Germany, France, Spain, Greece and UK, overall Europe is demonstrating an unwavering commitment to solar energy and many countries have already surpassed their targets for renewable electricity for 2020.

In 2011, new European PV installations accounted for 26.7 % of capacity additions, which is roughly equal to 20.9 GW (over 75% of the global total (27.7 GW)). Moreover, according to Bloomberg New Energy Finance report, 2011 was also a strong year for investment into solar energy, with an sizable increase to $136.6 billion, which is a 5 percent increase over 2010 levels and an impressive five fold increase over 2004 totals.

The current trends in the solar industry of a number of leading European countries is profiled in detail.

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Levchik (Leo) is a renewable energy activist from Boston, MA, and has been involved with alternative energy and green construction since 2004.

In 2009, Leo and his green roofing company (CoolFlatRoof.com) sponsored Boston’s Solar Decathlon Team, providing materials and installation labor to install a cool white roof on the top of Curio home (Joint effort by Tufts University and Boston Architecture College) – more info about the project here.

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Written by Levchik B

June 12th, 2012 at 2:27 pm

Top 3 Game Changing Innovations in Solar Technology: 2012 Edition

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While currently the US solar industry may be experiencing some tumultuous times as a result of decreasing government support, lowered demand, and intense competition from Asian solar manufacturers, one thing is clear – the industry still has a shot at surviving and flourishing because solar technological innovations keep rolling in. According to Lux Research, new solar technologies that are being developed today will replace what is currently in use within 3-6 years. Innovations in materials and cell design will provide more efficient and less expensive alternative to the solar panels sold on the market today. Not only will these innovations be beneficial to consumers by bringing costs down to less than a $ 1 per watt, they will enable solar companies and manufacturers to improve their profit margins, which is the key to staying in business and growing. Ultimately, for the industry to mature, it needs to reduce their capital and materials costs and increase profits, and there are a number of innovations that have the market potential to make this shift happen.

These inventions are highly likely to propel the industry forward because they offer efficiency improvements and cost reductions of already existing systems and do not require major shifts in infrastructure that is currently in place. Check out our list of top 5 technological innovations that will be game changers for the solar industry.

1. Direct Solidification

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Levchik (Leo) is a renewable energy activist from Boston, MA, and has been involved with alternative energy and green construction since 2004.

In 2009, Leo and his green roofing company (CoolFlatRoof.com) sponsored Boston’s Solar Decathlon Team, providing materials and installation labor to install a cool white roof on the top of Curio home (Joint effort by Tufts University and Boston Architecture College) – more info about the project here.

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Written by Levchik B

June 11th, 2012 at 8:07 pm

Current Trends in Government and Private Investor Funding for the US Solar Industry

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Over the last couple of years there have been clear signs that the solar industry is heading toward a tough period in its development because of a steady decline in both government and private funding for large scale solar projects and companies. This trend was first evident in Europe, where countries struggling to deal with the financial crisis, started scaling down on investments into alternative sources of clean energy such as solar power. While the Obama administration was an avid supporter of the budding domestic solar industry during the president’s first term, tough economic times have also lead the government to cut back on its funding. Private venture capital firms in the US are in a similar position, many have chosen to withdraw their initial support and funding and pursue safer investment opportunities. As the solar industry in the US struggles to get back on its feet, facing stiff competition from heavily subsidized Chinese solar panels, it remains to be seen whether the tides will turn once again and the industry will get both public and private assistance that it currently seeks to survive.

Downturn in private investment: Uni-Solar’s bankruptcy auction canceled

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Levchik (Leo) is a renewable energy activist from Boston, MA, and has been involved with alternative energy and green construction since 2004.

In 2009, Leo and his green roofing company (CoolFlatRoof.com) sponsored Boston’s Solar Decathlon Team, providing materials and installation labor to install a cool white roof on the top of Curio home (Joint effort by Tufts University and Boston Architecture College) – more info about the project here.

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Written by Levchik B

June 4th, 2012 at 7:22 pm

Uni-Solar’s Bankruptcy and what it reveals about the state of the Solar Industry in US

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The solar industry in the US has been experiencing a noticable downturn after a few years of booming growth, forcing a number of major manufacturers to file for Chapter 11 bankruptcy. The demand for solar panels has been on the decline while the supply has drastically risen fueled by massive imports from China, causing a drop in panel prices that most US manufacturers cannot compete with, even with government support. Uni-Solar is yet another prominent domestic manufacturer of solar panels that had to file for bankruptcy. The company’s financial situation, subsequent worker layoffs and a recent cancellation of the bankruptcy auction offer a telling commentary on the general state of the solar industry in the US today. While there can be no doubt that the domestic solar industry is only in its infancy and it is normal for a new industry to experience growing pains, the reality is that the industry’s future depends as much on the natural adjustments of supply and demand as on its ability to effectively restructure its operations, and secure government and private funds.

Uni-Solar files for bankruptcy

Uni-Solar, manufacturer of makes thin-film solar products for commercial rooftops and metal roof integrated solar systems, filed for Chapter 11 bankruptcy protection on February 14, 2012. As the reason for bankruptcy the company sited that it has $263 million in debt notes due next year that it is unable to repay.

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Levchik (Leo) is a renewable energy activist from Boston, MA, and has been involved with alternative energy and green construction since 2004.

In 2009, Leo and his green roofing company (CoolFlatRoof.com) sponsored Boston’s Solar Decathlon Team, providing materials and installation labor to install a cool white roof on the top of Curio home (Joint effort by Tufts University and Boston Architecture College) – more info about the project here.

Follow Levchik B:

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Written by Levchik B

June 4th, 2012 at 7:09 pm