SolarWorld on trade complaint: 'This was our time to step up'

Some solar executives say that anti-dumping tariffs could be a dangerous move.

DALLAS, Texas -- Several solar executives say a trade complaint filed by seven American solar manufacturers threatens to drain all momentum from a surging industry, while SolarWorld, the company heading the petition against China, contends that low-cost Chinese panels are creating an unsustainable cost structure built on artificial prices.

The debate will certainly ensue as both the Department of Commerce and the United States International Trade Commission investigate a complaint that Chinese crystalline silicon cell and panel makers are illegally dumping their products at below-market prices, and they’re doing so because they are backed by lucrative government subsidies. If a final determination is made in favor of the American companies, it could mean a doubling in the price of panels coming into the U.S. market.
On Thursday, the conversation moved away from the details of the investigation process and toward an unsettled understanding on what this may mean for the American and global solar industries.
During a roundtable discussion focused on the trade dispute and its potential impacts, three solar executives – Barry Cinnamon of Westinghouse Solar, Arno Harris of Recurrent Energy and Dan Shugar of Solaria – appeared skeptical that the move by SolarWorld and six unnamed companies would do anything but disrupt and perhaps derail the solar boom expected to happen in the United States over the next few years.


SolarWorld
SolarWorld President Kevin Kilkelly said Thursday that the decision to head up the lawsuit culminated from 10 months of internal monitoring. Kilkelly said his company began to suspect artificially low prices last spring, and by the beginning of August, he said the signs were clear. The real trigger, said Kilkelly, were July’s figures, which saw the number of crystalline silicon panels imported from China exceed the number imported during the previous fiscal year. Then when Solyndra blamed its inability to keep up with prices coming from China, the SolarWorld trade petition moved ahead at a quicker pace.
“We’ve monitored the market very closely in the Americas, and we’ve noticed too much injury happening to the industry as a whole. There’s been a whole handful of solid companies that went out of business. With the artificial pricing, it was just apparent what was going on.”
So SolarWorld began to take its case to other American manufacturers. According to SolarWorld, many of the companies he spoke with agreed that they were facing the same challenges, yet all were hesitant to move ahead publicly out of fear of retaliation from Chinese companies. What transpired was a coalition of the seven manufacturers headed by SolarWorld.
“We asked for the coalition and we vetted them out,” said Kilkelly. “We said we’d respect [their anonymity] and take the position and we’ll take care of it ourselves.
“This is a U.S. action to protect a U.S. industry,” said Kilkelly.  “We’ve been a leader in the industry in the last 35 years and this was our time to step up again.”
KilKelly also expressed concern over a different set of rules from American and Chinese manufacturers. To illustrate his point, he pointed to Jinko Solar, which faced a recent resident revolt over the dumping of chemicals. The violent protests forced the factory to close down temporarily. It has since reopened and company officials say they have addressed the environmental concerns.
“In China, you have the Jinko revolt over chemicals, and yet we’re held to EPA standards and sustainability standards,” said Kilkelly. “If there’s free trade, there has to be transparency. There’s no transparency going on with subsidies and how they are affecting the market.”
The company says it has received strong support since it became public that it was heading up the filing of the trade complaint.
“We figured there would be some reprisal,” said Kilkelly. “The overwhelming support over the last 24 hours was unexpected. It’s that much of a global impact. The injury doesn’t just go to U.S. companies; the injury goes to the entire industry. Basically, they said it was about time someone did something about this. That is the undercurrent. Ask anybody, and they say, ‘Thumbs up.’”
Yet the company is aware that there is a strong contingent of American downstream manufacturers and installers that see 100 percent tariffs as an impenetrable roadblock in their own business model.
Attorney Timothy Brightbill of Wiley Rein, the firm representing SolarWorld in the trade case, said that even though a recent report showed that the U.S. was a net exporter of solar products to China in 2010, it represents an unsustainable model for the long term.
“That study is predicated on the fact that we export raw materials and capital equipment and bring back finished goods from China. I’ve seen it over and over in basic manufacturing and in advanced manufacturing. If you export steel scraps and you get back cars and appliances, pretty soon, the whole industry is not sustainable. China will develop it’s own sources for capital equipment and raw materials and then the whole supply chain will be gone.”


Executive Roundtable
For Shugar, Cinnamon and Harris, the move represented a dangerous new element to an industry that is still in its infancy. Below is a series of quotes from the discussion. The full video will appear on RenewableEnergyWorld.com on Friday.
Barry Cinnamon, CEO, Westinghouse Solar

The market’s growing up. And especially what that means for our industry, is there’s a lot more installation jobs out there.  I cringe when I think about the number of installation jobs and projects that would get canceled around the country if the price of panels were to double overnight.

The best story that we as an industry have is that costs have come down.  You know, that solar is now cost-effective….that it has become less than grid-parity in so many places and we as an industry have got to be out of our cotton pickin’ minds to say, ‘Oh, we want to double the price of solar panels.’  The paranoid part of me thinks that it’s some solar companies plus the fossil energy companies that are behind this anti-dumping charge because the answer will be very clearly if that goes into effect and prices have doubled [because] there’s a 100 percent tariff put in place, that our industry will crater, slow down, [and] there will be 100,000 jobs lost and we would be set back five years.

Cell phones are made in China for, you know, free and it’s wonderful. You think about how big the IT, the computer, the software, the cell phone industry, the telecommunications industry has gotten because the enabling components are very inexpensive, if we could make those solar panels inexpensive regardless of where they are manufactured, we create such a big vibrant industry.

Dan Shugar, CEO, Solaria

At Solaria corporation we manufacture panels both in the U.S. and overseas. I think a lot of the hysteria about these issues is really overblown. And it’s important to look at other industries. The semi-conductor industry did not go to Asia because labor rates were lower. That’s a fallacy.  Because whether its semiconductor or solar, a lot of these processes are very automated. They really went to the other countries due to access to capital. 

It’s important to really keep in mind that U.S. industries still had net exports of 1.9 billion dollars last year. If we have the right industrial policy, you know essentially incentivizing proven manufacturing technologies here in the U.S., we could also create additional jobs but we are still a net exporter.  So, we don’t think this particular development is constructive for anyone.

I think it’s a little premature to try to asses what a potential tariff  on imported panels would do to the pricing. I think the main thing is looking at the global market and understanding that the competitiveness of these products has really driven the cost-effectiveness of solar.

Arno Harris, Recurrent Energy

It’s a disappointing development, and it is one that has the potential to distract from important issues and really distract from the successes we are seeing in the solar industry, and potentially even to be counterproductive and harm some of the growth we’ve seen. If we now get into a dispute over who sells panels in the United States for what price, we ultimately run the risk of hurting that engine of demand and growth that is creating jobs, and instead of protecting and saving jobs we may end up destroying them.

The exiting development we’ve seen is the rapid accelerating reduction of costs. This is accelerating the horizon of grid parity. The tremendous demand that we have seen coming from both the residential and commercial segment, and even more importantly now from the utility segment...is potentially at risk now if we start to do things like put barriers in place that prevent the best-cost, most competitive technology from reaching the market.

The cost trajectory is going to create challenges for this industry in the same way as when hard drives became less expensive [or] when memory chips became less expensive. It massively increased demand, but it also created a lot of stress on companies that had invented exciting technologies or been a part of the birth of an industry. And in many ways, I think going through this kind of cost reduction and suffering the stresses it places on the industry is part of growing up. I can sympathize with the companies that are wrestling with that dynamic. We can choose to either look backward in our response or look forward. This trade dispute falls into the “looking backward” category and it’s attempting to preserve market prices in a way it has historically been served. At the end of the day, the key is to reduce costs, make solar more competitive and allow it to contribute to our conventional energy mix.

http://www.renewableenergyworld.com/rea/news/article/2011/10/solarworld-on-trade-complaint-this-was-our-time-to-stand-up