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China Tariffs - Solar Dark Cloud


  11:09:00 am, by Jim Jenal - Founder & CEO   , 462 words  
Categories: Solar Economics

China Tariffs - Solar Dark Cloud

Last week marked the first day of Spring - a time of optimism and growth, eagerly awaited by sun lovers everywhere, and certainly by those of us in the Solar Industry.  But unfortunately, last week was also marked by news that trade sanctions in the form of tariffs would be imposed upon Chinese solar panel manufacturers.  That is bad news for the Solar Industry as a whole, even if it boosts - temporarily - the prospects of a few domestic manufacturers.

Suntech logoThe tariffs that were imposed this past week were quite modest - far lower than some had predicted - and range from 2.9% to 4.73%.  Given that some had predicted tariffs of as much as 50%, these modest penalties were generally greeted with sighs of relief in the industry.

At Run on Sun, the majority of the solar panels that we specifiy are unaffected by the tariff decision since Sanyo panels (Japan and Mexico) and and LG panels (South Korea) are not manufactured in China.  Of our featured products, only Suntech panels were affected, and they at the lowest rate imposed.

The vast majority of our clients will not see any impact from this decision.  Still, anything that can potentially drive up the price of solar equipment at a time of diminishing rebates and tax incentives (such as the expiration of the section 1603 grant program) is a cause for concern.  As this decision established, prices for solar panels have been falling worldwide because of a stronger manufacturing supply chain combined with a weakening demand in some markets, particularly in Europe, and not because the Chinese government was massively subsidizing its solar manufacturers as some had claimed.

Anyone who has ever been to a solar trade show has seen hundreds of Chinese panel manufacturers sitting in small booths, waiting for potential customers.  (Indeed, the New York Times reported that there are presently more than 700 solar panel manufacturers in China!)  The vast majority of those products are third-tier, cut-rate products that are used by companies who only care about the lowest possible cost - not reliability, performance, or safety.  In solar, like everything else, you get what you pay for.  If clients demand quality, they will get it - whether from high-quality domestic producers or top-tier importers like Sanyo, or LG, or Suntech.

We are proud of all of the products that we feature - including Suntech solar panels - because we believe that they offer great quality for our clients.  But for those who only care about finding the cheapest dollar per watt solution, they will continue to put undue pressure on quality manufacturers around the globe - whether in the US or China.  Consumer demand for quality is the ultimate way to improve this situation - and that means educating consumers as to what quality means in this market - but tariffs are not the answer.



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Comment from: Ellen Klicka
Ellen Klicka
4 stars
Could you elaborate on the negative consequences of the tariffs, short- and long-term, for all stakeholders?
03/26/12 @ 10:09
Comment from: Jim Jenal - Founder & CEO
Ellen - I think we start down a bad road by imposing tariffs on the equipment needed to power a renewable energy future. Really punitive tariffs would make a great many large-scale project less economical - or they would no longer pencil out at all. That would result in fewer jobs, and less renewable energy - with the attendant environmental and health impacts from burning more fossil fuels. Even for domestic panel manufacturers, the possible repercussions of imposing tariffs - up to and including a full scale trade war (which some politicians seem all too willing to have) would make lots of products more expensive, meaning that many potential solar customers would find themselves spending otherwise disposable income on now higher-priced necessities. That would drive down demand for solar and even the companies seeking these tariffs would potentially be losers in the end. In my view, an educated consumer public would demand higher quality products (and better installation services). That would drive the third-tier panel makers out of the market and provide room for domestic manufacturers to thrive - without resorting to blunt instruments like tariffs. But how much time and money are companies willing to expend on educating the public? Have you *ever* seen an ad for a domestic solar panel manufacturer? I haven’t outside of trade publications and the consuming public doesn’t read those. We will improve the market for solar when the public is better educated about solar and can understand what makes one product superior to another. Right now no panel maker is attempting to do that - but they fail to do so at their peril. Jim
03/26/12 @ 17:42

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

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