Solar Panels: Should We Be Paying More For Products People Don't Want?
    By Hank Campbell | November 16th 2012 10:19 AM | 8 comments | Print | E-mail | Track Comments
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    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.


    Your perspective seems to be that, since this is not cost-effective by your lights as an "investment," it lacks value so badly it should be abandoned. I disagree, because there are *so* many more things to gain from this as a genuine investment in our sustainable future. Adopting entirely solar (including the passive solar technologies, i.e., wind and passive water) 1) remedies the CO2/Global Warming problem, as well as 2) decentralising the power grids, giving people much better power stability than they have now. Finally, add into that that 3) we pay for power, so eventually we would all be getting something practically for free for which we now pay, and it *certainly* seems to have value for the average person, to say nothing of 4) the countless tribes of Native Americans and Africans who would benefit from the boon of their own electrification, no strings attached. So, did these things simply go without saying, or do you disagree that they have value?

    They don't have $40-70 billion of value, no.  What should be invested in rather than corporate subsidies is basic research to make this clean energy future more realistic.  What our wasted tax dollars have yielded, those tens of billions of dollars in taxpayer debt, is 1/18,000th the actual energy we need.  There is no proof of concept in a corporate subsidy, the technology does not advance by magic because more money is thrown at it. The $1,300,000,000,000,000 it would take today - just for the US - is actually too much when 20 years from now, with research, we might be able to do it for a fraction of that.
    I perform costs analyses for my clients as a professional engineer. PV systems have roughly a 15 year payback period at commercial electricity rates provided there is a 40% government subsidy. When they are not subsidized, the payback period is roughly 30 years. This is beyond the useful life of the DC-to-AC inverters. It is beyond any proven useful life of PV panels.

    Residential systems are sold with a 7 year payback period based on an electricity rate that is twice commercial rates. Utility companies are granted this increased rate by the government in order to "motivate" homeowners to buy PV systems. This functions as a tax that is paid to utilities for their support of politicians.

    According to the American Society of Engineers Energy Handbook, all solar energy production must be reproduced in fossil or nuclear fuel based energy production because solar and wind are dependent on an unpredictable an inconsistent energy supply. No known technology exists for storing electricity during production times for use during non-productions times such as between 4 PM and 8 AM, cloudy days, et cetera.

    While solar energy is something that makes folks feel good at the moment, it is an immature technology that uses more energy than it produces. From a societal perspective, Solar energy is a misallocation of resources. While we as a society can do this for select industries for brief periods of time in order to develop such industries, we cannot do it indefinitely.

    The tariffs are absolutely mad, that I agree with and the effect on Suntech is no doubt the opposite to what was intended. It flies in the face of the US government's commitment to a more sustainable energy future. On the flip side, reducing demand for Chinese panels in the US might have the unintended bonus of lowering the price even further for those of us living in the rest of the world.                                                                                                                                                                                                                                                                                             >Why doesn't China buy its own solar panels, instead of worrying about exporting them? They are buying them themselves! They're enthusiastically putting up large scale solar installations such as these  all over the country.                                                                                                                                      As for the value of solar, the comments by W.Charles Perry are blatantly wrong. The myth that solar panels take more energy to produce than they ever produce themselves is a myth, nothing more. Consider this, 1 watt of solar panel will produce on average 5 watt hours per day, or 45 kwh over a 25 year life (assuming that they turn up their toes immediately as the warranty runs out) I can buy solar panels for US$0.60 per watt so even if 100% of that cost went into paying for energy used in the manufacture, they would have to be paying only $0.013 per kwh to be using as much as the panel will produce. It's more likely that they pay about ten times that and that the panels will produce well over ten times the energy embodied in their production. Also solar panels spread across a country are unlikely to be all in overcast at the same time and the problem of only producing electricity during the day is naturally solved by the fact that peak demand is during the day. Thermal power stations generally waste energy running well below optimum output at night. You won't see many countries powered by solar alone (though some small Pacific countries are heading that way) but solar power can certainly play a part in sustainable energy production throughout the world. 

    The prices are low because so many companies ramped up demand assuming western subsidies would be unlimited.  I truly cannot fathom why anyone has continued to think subsidies will lead to lower cost. Yes China buys some of their own product but if they 'paid for themselves' as fast as the sales pitch always claims, China would use all of them.  Instead, they can claim to be the largest green energy producer just like they are the largest energy producer overall.  But their panel companies are going insolvent because the Chinese think they are too expensive and inefficient and the west has seen no return on investment.
    1 watt of solar panel will produce on average 5 watt hours per day
    I can't even figure out what that means.  I guess you mean where you live you get 5 hours of sunlight per day and it would be great if you think we can dump 20,000 miles of solar panels somewhere where the sun shines every day but the public has been sold this same myth for 50 years and it never works out.  That is why those companies in solar power are lobbying for more guaranteed subsidies - the actual math doesn't work.
    I absolutely agree that subsidies don't lead to better pricing, at least in the long term. Here in New Zealand there are no subsidies for installing PVs, but we do have subsidies for selected approved solar hot water heaters, trouble is that the ones which get the subsidies just get to charge more and remain competitive. The solar hot water heaters which I bought for our home were locally made by a small producer and not subsidised, but still competitive.

    When I say 1 watt produces about 5 watt hours per day, I mean that you get on average (depending on location) the equivalent of 5 hours of full power sun per day (assuming a fixed panel, not a mechanical tracker which will produce more, but the complexity is not worth the effort). Some days you get more, some days you get less, depending on the weather. 5 hours is an average based on my own experience.  My own PV system will produce over 7 hours equivalent on a good day, and on a rubbish day, raining all day, it might produce only 1 hour equivalent.

    Im sure that plenty of places in the US would have higher output than here. Our home generates 100% of it's electricity from solar PVs which were purchased three years ago when prices were five times what they are now (and no subsidies). Even then it made sense from an economic point of view because the whole installation cost only about 3k more than the cost of running a cable 200m from the road to our site, and now we don't have a power bill, which was previously about $80-$100 per month.

    With prices so low now it seems like a "no brainer". Now that panels are as cheap as they are I'm planning to shift my business to a home workshop and increase the size of our solar array to power the home, workshop, and an electric car. Replacing petrol with solar electric power has a much faster payback time than replacing grid electricity. 
    Seems like I heard Milton Friedman once arguing that we should take full advantage of countries subsidizing their products and essentially selling them to us at a loss. Sure, they get the business, but ultimately china is getting pennies on the dollar if you look at the government/industrial relationship as a single entity. So it's not sustainable and they'll ultimately realize it, but until they do, let's buy the underpriced good. There is certainly an economic boost just in installations on items like this.

    Not to say that I am a solar believer. I think it's a pipe dream to think it's the single solution. I don't think think we should be subsidizing ideas that don't pay themselves off. But if china wants to, let's take 'em up on it.

    I don't get too worked up on the "they took our jobs!" front either.

    So it's not sustainable and they'll ultimately realize it, but until they do, let's buy the underpriced good.
    The issue with this underpriced good is it's barely worth even that price. IMO this generation of solar cell will never be made cheap enough to be worth it. But it might lead to the generation after this one, or the one after that one, and they might.
    This is why all of the companies that make them are either getting gov money (directly or indirectly) or going out of business.

    The side issue, is not every one lives in texas like the guy if texas does. 10 years ago the roi on my house was over 30 years. And having a little background in the reliability of electronics, sitting in the sun exposed to large temp swings is very hard on electronics, it's not likely to last 30+ years without some stuff having to be replaced.
    Never is a long time.