Earlier this year, the US government opened a new front in its war with China over solar panel manufacturing - tariffs designed to close the gap between U.S. and Chinese labor costs.
Tariffs don't work, we have known that since the Depression of the 1930s was prolonged due to economic tinkering and boosting tariffs. Creating higher costs for a non-essential product, especially a non-essential product for a market that is only in existence due to government subsidies, drives down demand.
The day after the American presidential election, the U.S. International Trade Commission voted to saddle Suntech Power Holdings Co., Ltd. with a tariff of 35.97% on their silicon module imports from China, which are made by the parent company.
A week later, Suntech cut two thirds of its production and announced it is laying off people at its Goodyear, Arizona, manufacturing facility. Annual production will drop to 15MW from 45MW and about 50 jobs are lost. Solar cells are just one of the tariffs manufacturers face if they are not the 'right' company, i.e. producing expensive products under the government's $72 billion taxpayer-funded alternative energy drive. In 2011 new tariffs were also imposed on imported aluminum frames.
Ironically, their 300-watt commercial and utility-scale solar panels have been purchased under subsidized American Recovery and Reinvestment Act (ARRA) and Buy American Act projects. They're American enough for purchase under the government stimulus plan but not American enough to avoid government tariffs.
"We will continue to produce solar panels in Arizona to meet the needs of our customers, particularly those who are willing to pay a premium for U.S.-manufactured products," E.L. "Mick" McDaniel, Managing Director of Suntech America, said in their statement. "Our employees in Goodyear have done a tremendous job, however all PV manufacturers globally are facing challenging market and political conditions, and rationalizing production is necessary to maintain a competitive cost structure. Subsequent to our decision to invest in Arizona, unnecessary upstream trade barriers have made it difficult and more costly to manufacture solar panels in the U.S. In addition, these new tariffs limit our ability to utilize Suntech's advanced solar cell technology imported from China."
The US is not the only place where solar is no longer the green energy darling. Siemens in Germany has basically given up on that sector now that the German government has cut subsidies and China has to be worried, since their manufacturing capacity had scaled up to meet a $100 billion Western-government-fed demand. Suntech in China is sitting on over $2 billion in debt they acquired to increase manufacturing capacity. As irrational Western government demand for solar panels has dropped, the Chinese panel industry has become more desperate.
Why doesn't China buy its own solar panels, instead of worrying about exporting them? China is arguably the most scientific government in the world and they know solar is a terrible investment given the current technology, even with the giant drops in price per kilowatt-hour due to oversupply. Only we've been crazy enough to spend tens of billions of dollars on products even the people who make them think is a bad deal.
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