The drop in the price of solar panels has grown Matthew Dunay’s Boise business installing solar systems.
The 50 percent decrease also has allowed more customers of his company, Altenergy, to afford to buy American, Dunay said.
Yet his experience shows how a ruling this month by the International Trade Commission — that U.S. solar companies were being harmed by Chinese solar imports — is not necessarily good news for everybody in the U.S. solar industry.
Seven U.S. solar panel manufacturers had told the ITC that Chinese makers were dumping panels on the U.S. market to drive down prices and injure competitors.
But the U.S. solar industry is divided on the complaint. Idaho’s main player in the market, Hoku Corp., worries it will get caught in the middle of a trade war just as it prepares to begin producing silicon for export. Hoku, which has a plant in Pocatello, is the U.S. subsidiary of Tianwei New Energy, a Chinese company, but could end up a victim of retaliatory Chinese tariffs.
SOLAR AFFORDABILITY
No matter what the outcome for the manufacturers, consumers and installation companies like Altenergy are benefiting from the low prices that many buyers can now afford.
The cost per watt of solar power produced by photovoltaic panels was more than $2.20 a watt for Dunay in 2009. Today, he can get a watt of power for about a dollar.
“We’re a small company,” he said, “so we might not be getting the best prices.”
He and his partner employ 10 people in Idaho and Virginia, and they hope to grow. The low prices are helping.
“It’s really cutthroat right now, because people are selling inventory just to get rid of it,” he said. “We’re really busy, even though there’s a recession on.”
Subsidies here and abroad have attracted many entrepreneurs to the solar panel business, said David Solon, director of the Energy Policy Institute at Boise State University. This has brought innovation, but it also has caused overproduction for the existing marketplace.
“There’s going to be a lot of consolidation,” Solon said. “That’s just the way it works.”
SolarWorld Industries America Inc., an Oregon company, is leading the group that brought the trade complaint. It is the largest U.S. solar manufacturer, but it’s owned by a German company.
The company says China’s export drive has cost Americans about 2,000 direct jobs throughout the United States, and many more at the subcontractor level.
“Nothing about China’s export campaign has proven to be sustainable, including its subsidized and dumped pricing,” said Gordon Brinser, president of SolarWorld.
The International Trade Commission could take months or even years to decide what actions to take. One option could be putting a tariff on Chinese solar panels.
Following this month’s ruling, the Chinese government has threatened to place a similar tariff on U.S. polysilicon, the raw material for solar panels. That would directly hurt Hoku, which is nearly ready to begin production at its $700 million plant in Pocatello.
The trade issue comes as polysilicon prices have dropped dramatically. They are so low that Hoku can buy polysilicon on the open market more cheaply than it can produce it.
CONFUSING MARKETS
Which leaves Hoku CEO Scott Paul considering whether to buy from competitors to meet its contracts and delay opening the plant.
“We need to make sure we’re spending our money the right way today,” he said.
He expects market conditions to turn around by the middle of 2012. But the trade fight has brought uncertainty to the marketplace.
Hoku not only produces polysilicon, it also installs solar power systems in Hawaii. And last month it announced a reseller agreement to establish Tianwei Solar USA Inc., a wholly owned subsidiary of Hoku. It will distribute solar equipment made by Hoku’s parent company in China.
“All of our businesses are potentially impacted by this tariff case,” Paul said.
Idaho’s other solar player is Transform Solar, a partnership between Australian energy company Origin and Micron Technology. Transform is planning to make solar cells and panel sub-assemblies in Boise and Nampa, but it’s not talking yet.
So, you have the U.S. subsidiary of a German company filing a trade complaint about Chinese solar companies that will hurt a Pocatello company with Chinese ties and might affect a company with factories in the Treasure Valley started by Micron and its Australian partner.
This global nature of the business, said BSU’s Solon, makes trade cases complex.
“In any industry where there’s a global supply chain, there are unintended effects,” Solon said.
BUYING AMERICAN
That gets us back to Dunay’s Altenergy. His customers prefer American-made products, Dunay said.
The dramatic drop in prices has brought prices for American gear down to where consumers are willing to install solar panels instead of just paying the power company for electricity. That’s helping American companies, he said.
Even larger solar developers have been able to come closer to successfully competing with natural gas when the subsidies are added in. Low prices will help all the businesses that can survive.
“It’s going to bring the cream of the crop to the top in the solar industry,” Dunay said. “Some realignment is good for the industry and the consumer.”
Rocky Barker: 377-6484
