Falling prices have been punishing the industry, and other low-cost Chinese providers like Trina Solar Ltd. (NYSE: TSL), JA Solar Holdings Co. Ltd. (NASDAQ: JASO), Suntech Powsr Holdings Co. Ltd. (NYSE: STP), and LDK Solar Co. Ltd. (NYSE: LDK) have taken a beating. Higher priced makers like SunPower Corp. (NASDAQ: SPWRA) are getting even more punishment. Solyndra is in bankruptcy now because it could not get its cost structure in line with the collapse in panel pricing.
The lower prices have had the expected effect though. Even as countries have lowered solar subsidies, falling panel prices have kept demand reasonably high because the cost of installing solar is reaching a point where it is price-competitive. Firms like First Solar, SunPower, MEMC Electronic Materials Inc. (NYSE: WFR) that have acquired project development companies are able to cope better with the decline in panel prices because they have both a captive and growing market.
There’s little argument that the falling price of modules have extended the market for solar PV, which is why the trade case filed by SolarWorld and the unnamed US solar panel makers is getting no support from firms like First Solar, SunPower, or MEMC. In fact, a rival group, called CASE, the Coalition for Affordable Solar Energy, has been quickly put together to fight against the SolarWorld-led trade case.
Their argument is that falling prices for solar modules have brought solar generation prices down to near grid parity with coal and natural gas generation. Slapping a tariff on solar panels will essentially kill the gains made by the industry. In fact, a Chinese solar project developer has said that a 30% tariff on imported solar panels will make uneconomic $500 million in new solar developments the company has planned in the US.
US energy company Sempra Energy (NYSE: SRE) is building a 700-megawatt solar farm project near Phoenix that will use 200 megawatts of panels from Suntech. If the trade case is decided in favor of SolarWorld, panels from US makers like First Solar could be substituted, but the entire cost of the project would rise, changing the power purchase agreement that is the basis for the project and, ultimately perhaps, making the project uneconomic. The loss of the installation jobs would cost the US economy more than it would gain from having a US maker supply the panels. US makers build most of their panels overseas anyway.
SolarWorld is the largest maker of solar panels in the US, and employs about 1,300 workers at its plant near Portland, Oregon. A grand total of all US workers involved in making solar panels for distribution and sale could not exceed 3,000, while more than 52,000 US jobs are supported by solar installers. In terms of US job creation, the numbers support low-cost modules and high installation counts.
That JinkoSolar or some of the other solar makers may go bust is a near certainty. There are too many makers with too much capacity all angling for too few projects. But as module prices continue their decline, it becomes unnecessary for governments to subsidize more solar installations and more solar projects are very likely to make it off the drawing board.
One solar industry official (from a project installer) has likened the fight over dumping to a circular firing squad, where everyone is going to take some hits. The survivors will be those who bleed the least.
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