The bankruptcy of three solar companies in the US last month?Solyndra, Evergreen Solar and SpectraWatt?has turned the spotlight again on China and the support it provides to its solar industry.
The more commonly used crystalline-silicon solar modules meanwhile saw a dramatic fall in price. From over $4 per watt in mid-2008, the price was at $1.4 per watt last month, and is expected to soften further, according to Bloomberg New Energy Finance. Solyndra?s business case was punctured by the sliding prices of competing modules. The California-based company filed for bankruptcy on September 6.
The country held responsible for the near-crash in the price of modules is China, which is pumping in billions into its solar manufacturing industry to make it competitive in scale and price. Declining prices may be a positive for the solar industry as a whole, but companies in the West who have had to shut shop or lay off workers as they trim operations see this as a case of ?unfair competition from China?, and are demanding action against dumping by the world?s most populous nation.
Lending to clean energy and other green sectors by the state-owned China Development Bank was a record $35 billion in 2010. Loan commitments?totalling about $47 billion since January 2010?have been extended to LDK Solar ($9.4 billion), Trina Solar ($4.7 billion), Yingli Green Energy ($5.6 billion) and Suntech Power ($7.8 billion), among others.
Getting political
The political pitch against China?s support to its clean energy industry has been rising steadily. Senator Ron Wyden asked President Barack Obama to impose dumping and countervailing duties against import of solar panels from China, cap imports or file a complaint against China at the WTO. The Oregon Democrat warned that solar panel imports from China are set to triple in the current year, compared to last year.
China frequently provides ?zero-cost financing, occasionally free land and other kinds of incentives and subsidies? to its wind and solar companies to capture a market that will be worth trillions of dollars, Jonathan Silver, executive director of the Energy Department?s loan programme told a congressional panel last month.
The specific case of Solyndra and the support extended by the Obama administration is being scrutinised by the House Energy and Commerce Committee.
On a separate note, China?s exchange rate policy is being debated in the US Congress and may invite some retaliatory action. Tossed into the debate last week was a list of undisclosed subsidy programmes?about 200 of China and 50 from India?compiled by the US Trade Representative and submitted to the WTO.
The Indian scenario
India embarked on a National Solar Mission last year aimed at adding 1,100 MW of grid-connected solar capacity by 2013. The current capacity is a little less than 50 MW.
With more than 30 companies active in the solar supply chain, it too faced the risk of cheap imports from China. The decision of the government to mandate the use of locally made modules in the projects awarded in the first round and locally made cells thereafter would limit the threat of imports from across the border.
There could also be a positive spin-off in the form of additional manufacturing capacity in India. Since sunny India has plans to increase the solar build-out to 20,000 MW by 2022, the market is large enough to support new manufacturing capacity, some of which is likely to come from Chinese companies. The playing field in that case may not be too skewed as a local unit would limit the cost advantages that Chinese companies enjoy when working in their home territory.
The author is editor, South Asia for Bloomberg New Energy Finance (www.bnef.com), a leading provider of independent analysis, data and news in the clean energy and carbon markets, headquartered in the UK