Politics behind solar panel prices divides makers and installers

Those of you following renewable energy may have noticed that solar photovoltaic panel prices have dropped dramatically in the last two years.

In fact, they are now half the price or less.

That doesn’t mean that most readers will have seen roof after roof of solar installations. This is because most Canadians live in jurisdictions where conventional electricity is still fairly inexpensive, ranging from five to 15 cents per kilowatt hour. As well, there are few incentives, except in Ontario.

Certainly, Ontario residents have seen large increases in PV installations, which are less attributable to solar PV prices and more to the fact that there has been a strong and popular program to encourage residents and businesses to create energy to compensate for decommissioning of the province’s coal-fired power generators.

Many Ontario residents are using the feed-it-tariff (FIT) and microFIT programs to set up their own power generating systems to feed back into the grid.

However, PV growth has been enormous in the United States.

The Solar Energy Industries Association indicates that solar installations doubled in 2011 over the previous year, with more than 1.8 gigawatts installed, enough to power 370,000 homes.

There is a wide variety of incentives to help people who want to install a solar PV system in the U.S. Many are state policies rather than national policies, including grants and rebates, loans, tax credits, property tax incentives and higher power rates.

The most significant factor in the huge growth of solar PV installations in the U.S. has been the decreased cost of solar panels.

Cheaper prices for solar panels sounds like a great thing, and it has been for the installation sector.

However, a significant number of American solar PV manufacturers have declared bankruptcy as prices dropped. It seems like a contradiction to have problems when the market is at its best.

To understand this, think about the possible source and pricing of solar panels. As in so many other industries, an increasing amount of solar PV manufacturing is being done in China, which forces the price down. Cheap Chinese solar panels showing up in the American marketplace should not come as a surprise.

However, American PV manufacturers claim that China is dumping cheap solar panels into the U.S. market.

The term dumping implies that a company or country puts their product into someone else’s marketplace at a price below the cost of production. U.S. manufacturers are claiming that the Chinese government was providing subsidies for the solar industry.

However, unlike the U.S., which aims its subsidies at the purchaser, the Chinese were providing money directly to the manufacturers.

This implies that besides the cheap labour and lower working standards inherent in Chinese goods, the competition was implicitly unfair.

U.S. manufacturers convinced the U.S. government to do an investigation. When the smoke cleared, the American government agreed that the Chinese were guilty of dumping and assessed a significant tariff on Chinese companies selling PV cells or panels made from them.

The duty will be 31 percent for 60 companies and 250 percent for the bulk of the Chinese companies. Some U.S. firms who have direct interest in Chinese manufacturing companies have complained, but they will have to live with it as well.

For some, the tariff is seen as a calculated political move in a year of a presidential election, while others say it is a long-overdue response to China and its attempt to dominate the solar industry by false means.

The effect this tariff has on the stabilization of the U.S. solar manufacturing and installation sectors will be seen over time, but at the moment there is a division in the U.S. solar industry.

The Coalition for American Solar Manufacturing was formed to lobby the government to institute such a tariff, believing that the cheap, dumped panels were crushing the U.S. domestic solar industry.

However, companies that supply polysilicon, which is the fundamental component of current solar panels, suggest that such a tariff will be devastating for the growth of solar technology in the U.S.

The distribution and installation components of the U.S. solar industry formed the Coalition for Affordable Solar Energy, which suggests the tariff will slash solar installations in the country. It argues that this will have more dramatic results for the U.S. economy.

Because the tariff is a U.S. national policy, there are no direct effects on other countries. However, Europe is also considering imposing tariffs.

Canada’s PV manufacturing is entirely situated in Ontario and is a direct offshoot of that province’s solar PV policies.

As part of the Ontario FIT and Micro-FIT programs, a minimum of 60 percent of an installed system must be manufactured in Ontario.

Labour is included in installation costs, but labour is less of a component in solar PV systems than in many other installations, so much of the rest of the materials, including racking systems and panels, wiring and electrical components, must be made in Ontario for a project to qualify.

In a way, this has blocked the cheapest panels out of the Ontario market.

Cheap Chinese silicon cells are likely being used, but the panels themselves are made in Ontario.

Because there are no PV manufacturers in other parts of the country, our government is not likely to follow the U.S. lead, so cheap panels will continue to be available.

It still doesn’t make installed systems inexpensive at this point, but with increasing electrical rates and decreasing solar prices, it is just a matter of time before installations start to climb throughout Canada.

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