China was mentioned 59 times when Energy Secretary Steven Chu testified last month before a House subcommittee on the U.S. loan guarantee program for renewable-energy projects.
“Countries like China are playing to win in the solar industry,” Chu said.
China’s share of the solar market and production has increased rapidly.
“My big thing is that I worry about China,” said Rep. Brian P. Bilbray (R-Calif.).
“The Chinese are eating our lunch,” said Rep. John D. Dingell (D-Mich.).
Yet if Chinese solar companies are eating our lunch, they’re also choking on it. Growth in global solar manufacturing capacity is outpacing global demand, and prices of solar energy products are plunging. And while U.S. politicians portray Chinese firms as heavily subsidized rivals gobbling up global market share, Chinese solar companies are suffering from some of the same ills afflicting their U.S. competitors.
Some of China’s biggest companies are losing money, shelving capital expenditure plans and looking to conserve dwindling reserves of cash. To avoid going deeper into debt, they have borrowed only a tiny fraction of $34 billion in loans available to them from the China Development Bank.
For consumers, the cutthroat competition is a good thing. Wholesale solar panel prices have dropped as much as 50 percent this year, and retail prices are less than half what they were five years ago. Industry experts say that the day is near when solar can compete against other energy sources without subsidies. In certain places and at certain times of day, it’s already viable. Meanwhile, analysts say, if China wants to subsidize solar products, Americans can buy more of them.
For some U.S. companies, China’s expanding industry has meant more jobs. Cheap panels fuel greater sales — and installation accounts for more than half of U.S. solar industry jobs.
Moreover, the United States has a trade surplus with China in solar goods, led by exports of polysilicon, the raw material needed to make photovoltaic cells, which in turn are the building blocks for solar panels.
The United States also exports the solar manufacturing machinery. Applied Materials, which made its name in the semiconductor business, beat analysts’ expectations earlier this year thanks to sales of equipment for making solar cells. To promote sales, the Santa Clara, Calif., company has set up a research center in the Chinese city of Xian and moved its chief technology officer there. “Now we are doing for the green economy what we did for the Information Age,” the company says on its Web site.
GT Advanced Technologies, which sells furnaces and other equipment for making the polysilicon and ingots used in making solar cells, does 98 percent of its business in Asia, much of it in China. “We compete very effectively as a U.S.-based corporation in spite of the fact that my Chinese competitors sell at half my price,” said Tom Gutierrez, chief executive of the New Hampshire-based firm. “We beat them through technology and innovation.”
But U.S. solar panel manufacturers and people who believe that solar manufacturing can become part of a new “clean technology” economy are unhappy. They believe that the flood of Chinese solar cells is a textbook case of dumping — an economic term to describe when foreign companies overwhelm a market with cheap goods to drive competitors out of business. Later, after gaining control of that market, the foreign companies can jack up prices.
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