Chinas solar charge undercuts US industry

Written by New York Times | Updated: Sep 1 2009, 04:52am hrs
Keith Bradsher

President Barack Obama wants to make the US the worlds leading exporter of renewable energy, but in his seven months in office, it is China that has stepped on the gas in an effort to become the dominant player in green energyespecially in solar power, and even in the US.

Chinese companies have already played a leading role in pushing down the price of solar panels by almost half over the last year. Shi Zhengrong, the chief executive & founder of Chinas biggest solar panel manufacturer, Suntech Power Holdings, said that Suntech is selling solar panels on the US market for less than the cost of the materials, assembly and shipping to build market share.

Backed by lavish government support, the Chinese are preparing to construct plants to assemble products in the US to bypass protectionist legislation. As Japanese automakers did decades ago, Chinese solar companies are encouraging their US executives to join industry trade groups to tamp down anti-Chinese sentiment before it takes root.

The Obama administration is determined to help the US solar industry. The Energy and Treasury departments announced earlier this month that they would give $2.3 billion in tax credits to clean energy equipment manufacturers. But even in the solar industry, many worry that Western companies may have fragile prospects competing with Chinese companies that have cheap loans, electricity and labour, paying recent college graduates in engineering $7,000 a year.

I dont see Europe or the US becoming major producers of solar productstheyll be consumers, said Thomas M Zarrella, the CEO of GT Solar International, a company in Merrimack, New Hampshire, that sells specialised factory equipment to solar panel makers around the world.

Since March Chinese governments at the national, provincial, and even local level, have been competing with one another to offer solar companies ever more generous subsidies, including free land, and cash for research and development. State-owned banks are flooding the industry with loans at considerably lower interest rates than available in Europe or the US.

Suntech, based in Wuxi, is on track to pass Q-Cells of Germany, to become the worlds second-largest supplier of PV cells, which would put it behind only First Solar in Tempe, Arizona. Hot on Suntechs heels is a list of Chinese corporations backed by entrepreneurs, local governments and even the military, all seeking to capitalise on an industry deemed crucial by Chinas top leadership. Shi pointed out that other governments, including in the US, assist clean energy industries, including with factory construction incentives.

Chinas commitment to solar energy is unlikely to make a difference soon to global warming. Chinas energy consumption is growing faster than any other countrys. Beijings aim is to generate 20,000 mw of solar energy by 2020.

Solar energy remains far more expensive to generate than energy from coal, oil, natural gas or even wind. But in addition to heavy Chinese investment and low Chinese costs, the global economic downturn and a decline in European subsidies to buy panels has lowered prices.

The US economic stimulus plan requires any project receiving money to use steel and other construction materials, including solar panels, from countries that have signed the World Trade Organisations agreement on free trade in government procurement. China has not.