Competing against China in Solar Panel Manufacturing will only Create more Solyndras and won’t help Save the Planet

Posted by PITHOCRATES - February 5th, 2012

Week in Review

The cheaper solar power equipment is the more people will buy it and hire people to install it.  Because labor is labor.  There’s nothing you can do about that.  But manufacturing can reach economies of scale that can reduce manufacturing costs.  And selling prices.  Much like everything else in the world.  The first televisions were expensive.  Now they’re cheap.  The first VCRs were expensive.  Then they got cheap.  The first personal computers were expensive.  Then they got cheap. 

So all that we need is for someone to make solar power equipment cheap by employing economies of scale and we can ‘save the planet’ by replacing fossil-fueled generated power with clean solar-generated power.   And that’s the whole point of clean solar power, isn’t it?  Saving the planet?  Well, as it turns out, no (see The Coming U.S.-China Solar War by Bryan Walsh posted 1/31/2012 on Time).

Demand for solar power rose eightfold between 2006 and 2011 — from 200 MW to 1,600 MW…

Despite those rosy numbers, many U.S. solar companies — especially those that manufacture solar panels and modules — are struggling to survive. Most notably, the solar start-up Solyndra went under in 2011, taking with it over $500 million in government loan guarantees. The Bloomberg Large Solar Energy Index of 17 top solar companies lost more than two-thirds of its value in 2011.

That’s because solar power is getting much cheaper — prices for modules have dropped 40% over the past five years. According to some U.S. solar-panel manufacturers, that drop in price is due largely to low-cost imports from Chinese panelmakers. It’s not that their manufacturing methods are necessarily better than ours. It’s that government support from Beijing and low-cost labor make it easy for China to undercut its U.S. competitors. The result is more and cheaper solar power for Americans — but perhaps less market share for U.S. manufacturers.

You’re never going to compete against Chinese manufacturing and win.  And it’s not because of government support.  (Or their currency manipulation.)  Because the U.S. is providing government support, too.  Case in point, Solyndra.  It’s the cheap labor.  In a country that builds dormitories in factories.  Where workers work, eat and sleep.  And like it.  Because these are the good jobs.  Unlike being a starving peasant farmer.  Also, China doesn’t allow unions.  Or complaining or disobedience in the workplace.  Only when U.S. workers flood factories under similar conditions will the U.S. manufacturing ever hope to compete against the Chinese.

Of course, the U.S. could make this cheap solar equipment (that can save the planet) less cheap by slapping tariffs on it.  Making people spend more to buy this solar equipment.  So much more that the expensive American manufactured equipment is no longer more costly than the once cheaper Chinese imports.  Which, of course, would greatly discourage people from buying it and hiring people to install it.  Unless they receive massive government subsidies to offset the added tax of the tariffs.

Higher solar equipment costs for installers?  Higher costs for solar power installations for people who want to ‘save the planet’?  Higher taxes for everyone to pay for ever more government subsidies and incentives to save a few manufacturing jobs?  All while discouraging people from ‘saving the planet’?  Seems like some real silly policy.  And one that no one really thought through before getting us on this silly road.

If it’s not about saving the planet then the heck with solar power I say.  Let’s just keep using fossil fuels.  From American sources.  Let’s create good coal jobs.  Good oil jobs.  And good natural gas jobs.  For if we mine it or pump it up in America, all of the jobs will be American jobs.  It doesn’t require massive government subsidies or incentives.  And there will be no more Solyndras.  And the Chinese will be left with a surplus of solar panels that they will have to discount to unload.  Which we could then add to the electrical grid to offset peak demand on those hot summer days.  When the sun is scorching the land beneath it.  Now that would be a practical use.  It would help conserve our precious fossil fuels.  And it will also help to reduce emissions during peak demand.  Which was the whole point of solar power in the first place.  Only this way it wouldn’t require massive government subsidies and incentives.  Or the massive job-killing taxes to pay for those subsidies and incentives.

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