Solar Tariffs on China

SOLAR energy is at a delicate, maybe historic, moment. The cost of the glassy photovoltaic panels that generate most solar electricity—by freeing electrons from a semiconducting material such as silicon—is plummeting. In the past four years their average cost has fallen by more than 75%. At less than $1 per watt of generating capacity, solar is now the cheapest power source in some sunny places, especially those, like India, that lack fossil-fuelled alternatives. This is starting to look like a revolution. Everyone who wants a reliable and nonpolluting energy supply, you would think, would welcome that.

But on May 17th America’s Commerce Department slapped a provisional tariff of 31% on 61 Chinese makers of solar panels, including some of the cheapest in the business. Another group of unnamed Chinese solar companies, which failed to respond satisfactorily to the department’s inquiries, were hit with a 250% tariff. These duties, which are expected to be confirmed in October, were in response to an anti-dumping complaint from seven solar firms including SolarWorld, a German company with operations in America.

China’s panelmaking industry has seen explosive growth, fuelled by strong demand, mainly from Europe, but also by soft loans from state-owned lenders. Chinese panelmakers are reckoned by Bloomberg New Energy Finance (BNEF), a research firm, to be able to make panels for around 10% less than the industry’s average cost. They have undercut European and American producers: between 2009 and 2011 the value of American imports of cheap Chinese panels soared from $640m to $3.1 billion.

Read the rest in The Economist