Sep 28, 2011 - Until recently the USA was the undisputed leader on the solar power market but China has caught up fast and will soon, if not already, lead the solar market.
China now makes 54% of the world's solar cells, up from just 6% in 2005, according to the U.S. Department of Energy. America's market share has plunged from 43% in 1995 to 6% this year.
by Mariyana Yaneva
China's secret to success
The secret is called the Chinese Development Bank (CDB).
Unlike most regular commercial banks, CDB raises most of its money via long-term bonds and is additionally backed by the government, so the bank can make longer-term loans to Chinese companies. CDB gives borrowers very low interest rates, and, if the borrower cannot pay back the loan, it may be back-stopped by the Chinese government.
This makes it easier, cheaper, and a lot less risky for Chinese solar companies to obtain financing.
According to a report in UK daily Guardian, in 2010 alone, the bank handed out USD 30 billion (EUR 22 bn) in low-cost loans to the top five manufacturers in the country. This has enabled China's solar producers to grow to GW scale in a very short period of time, turning the country into a leading exporter of solar and pushing down prices dramatically.
Solar-cell prices have dropped 42% this year, according to the U.S. Department of Energy.
Manufacturers trying to make product outside of China and other Asian countries just cannot match the low prices of their Chinese rivals.
And that is how despite soaring demand for solar cells in the United States, induced by 30% federal tax credits and additional state incentives, manufacturers have produced a worldwide oversupply because of huge increases in Chinese manufacturing capacity and several solar manufacturing facility closures were announced in the U.S. in recent months.
Is it really over for the "made-in-the-USA" solar ?
Remarkably, even with all the pressure from China, the U.S. is still a net exporter of solar products to the Asian country.
The US imported USD 3.7 billion (EUR 2.6bn) of photovoltaic (PV) - related goods in 2010, while it exported USD 5.6 billion, resulting in a positive trade flow of USD 1.9 billion, according to a report by GTM Research and the Solar Energy Industries Association (SEIA).
The US primarily sold capital equipment and PV polysilicon to China, while China mainly sold PV modules to the US.
Some analysts say America's solar leadership has already been ceded, at least in panel manufacturing. But with most of the solar- related revenue generated outside the manufacturing sector - particularly in the installation field - giving up manufacturing to overseas competitors might not be a disaster in the long run.
From a project development perspective, those steep price drops in PV modules are a very good thing.
US solar power installations created a direct value of USD 6 billion in 2010, 75% of which accrued to the domestic market.
The same forces that have damaged solar manufacturers in the United States have allowed other parts of the industry to flourish. Low-cost panels outside America's borders have spurred strong growth in the number of solar systems installed each year in the United States, literally doubling between 2009 and 2010. That means more jobs for installers across the country.
So is America's solar power industry doomed if most solar manufacturing moves overseas?
ABI Research, a 21-year-old market research and consulting firm vested in the wireless semiconductor industry, recently projected that the United States will become the world’s largest PV market by 2013. The prediction is based on the phenomenal rise in installed capacity, a full 900 MW during 2010 – a number expected to double in 2011.
Silicon Valley is the world's undisputed champion of high-tech innovation. And it makes most of its products abroad. This model might as well work for solar.
(USD 1 = EUR 0.735)
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