Skip to comments.The Sun Sets on China's Solar Industry
Posted on 10/08/2012 4:56:30 AM PDT by SeekAndFind
On Friday, shares of Trina Solar closed at $4.62, down $0.18 for the day. The stock has been falling for a long time, declining more than 85% in the last three years. Thats not bad, however, considering Trina is a Chinese solar company. Rival Suntech Power has seen its shares, also listed on the Big Board, drop. They are at about 2% of their 2007 values. And Yingli Green Energy plunged 7.3% on Friday in New York, and it is now trading close to its five-year low.
In last two years, shares of Chinese solar cell producers have fallen by about half, and more price declines are on the way. The prospects for these manufacturers are poor.
More important, the seemingly intractable problems of the sector highlight the limitsand impending failureof the countrys industrial policy. Its not that Chinese technocrats did not accomplish their ambitious goals. They set out to create an industry that would dominate the world, and they succeeded. They aided solar cell manufacturers with easy credit from state banksperhaps as much as $18 billion of cheap loansand, some say, subsidies. As a result of central and local government support, Chinese manufacturers began to expand rapidly. Chinese competitors now own 70% of the worlds wafer-producing capacity.
Make that overcapacity. Massive subsidies and state intervention have stimulated overcapacity more than 20 times total Chinese consumption and close to double total global demand, said Milan Nitzschke, president of EU ProSun, in a statement released late last month. The company alleges that 90% of Chinese production had to be exported and that Beijing used subsidies to keep its manufacturers in business.
EU ProSun, a subsidiary of SolarWorld of Germany, has filed a complaint with the European Commission alleging Chinas subsidies were illegal.
(Excerpt) Read more at forbes.com ...
Doesn't sound like such a big mistake compared to the $90 billion we flushed.
The price of solar panels imported into the U.S. from China has been falling for some time. A few years back this was a $3 to $5 per watt business for the Chinese and American manufacturers. Recently I've seen that price fall to less than $0.80 per watt for large deliveries to San Pedro California.
Solar panel manufacturing is a business best left to the Chinese. Let them pour there wealth into subsidies for firms that will shortly go bankrupt. We need to get out of the business of doing the same. It's time for Obama to stop picking "losers" for us. Solar panel manufacturing is not a high tech money making business. It just isn't.
Yes it is and I'll give you a simple example that explains why Obama is so foolish in his pursuit of an American solar panel industry:
The cost of installing a solar system on your house is of the order of $5/watt. The cost of the panels is about $1/watt. This business requires additional components for the installation that are not trivial in cost and are typically manufactured in the U.S. And, most importantly, it is 100% American labor that does the installation and the system design.
The panels themselves are just another component. Not the big deal that Obama wants us to believe they are.
During this same period what has our inflation rate been? $3 to $5 won't buy today what it would 10 or 15 years ago.
Probably 15% at least and not what the CPI would tell us. Evermore reason to buy cheap from China rather than invest in a low tech, low profit business here in the U.S. Let the Chinese subsidize their solar industry. We should be "subsidizing" our whole country by cutting Corporate tax rates.
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