It's Time to Pick Sides in the US-China Solar Trade Wars

Should we worry about Chinese government subsidies to its solar industry? Or send the Chinese a thank-you note?

A group of seven U.S.-based manufacturers of solar panels is alarmed. These manufacturers, led by Solar World, a German firm with a plant in Oregon, filed a complaint with the United States International Trade Commission, which reached a preliminary conclusion in December that U.S. companies were, in fact, being harmed by subsidized imports.

If the Commerce Department goes on to find that Chinese firms have been dumping solar panels on the U.S. market at prices below their costs, it could impose steep tariffs of 50 to 250 percent on Chinese panels, according to this report in The Times by Matt Wald. The Chinese government provides billions of dollars of low-cost financing and free or cheap land to Chinese solar firms.

But much of the solar industry -- led by Jigar Shah, the founder of Solar Edison, entrepreneur and environmental advocate -- thinks this complaint is a terrible idea. Tariffs would raise the costs of solar power to U.S. business and consumers, at a time when those are coming down; they could also set off a solar trade war that would harm other U.S. solar companies.

As it happens, the U.S. had a trade surplus of nearly $1.9 billion in the solar sector with China in 2010, as exports of raw material and factory equipment more than offset imports of finished solar panels, according to the Solar Electric Industries Association,. What's more, Jigar says, most of the 100,000 or so jobs in the U.S. solar industry -- he says as much as 97-98 percent -- are downstream of the manufacturing business in project development, logistics, construction and installation.

"SolarWorld's petition will do far more damage than good to the U.S. solar industry as a whole," Jigar wrote in this letter to Gordon Brinser of Solar World. "Every morning, thousands of hard-working Americans put on their tool belts and go build solar power plants. Our country needs more of those jobs, not fewer."

What got me thinking about this brouhaha was an email the other day from a California company called Solar Power Inc., or SPI, that underscored for me just how committed the Chinese are to getting their solar panels onto rooftops in the U.S.. SPI said it had secured construction financing worth $44 million from the state-owned China Development Bank to fund construction of solar projects in New Jersey.

Why would a Chinese bank finance solar panels in the U.S.? Well, it turns out that SPI is 70 percent-owned by LDK Solar, a Chinese company founded in 2005 that now says it "the world's largest producer of solar wafers in terms of capacity and a leading high-purity polysilicon and solar module manufacturer."

LDK bought its controlling interest in SPI Solar last year in an effort to gain direct access to the U.S. commercial market. With revenues expected to top $90 million last year, SPI is small to mid-sized developer of rooftop PV -- it installed panels atop the Staples Center and the Fox Studios in Los Angeles and a Costco in New Jersey. "We're a downstream market for LDK," said Mike Anderson, vice president of communications for SPI Solar.