In case you haven’t noticed, the solar panel manufacturing industry has found its way into the news a lot lately. From CNN to CNBC, people have been talking about the future of solar panel manufacturing the way some talked about the future of Apple after Steve Jobs.
After all, the solar manufacturing industry is changing rapidly. Nary a day goes by when a press release isn’t distributed that announces new solar panel efficiencies, designs or related services. The intense competition between companies and researchers to improve panel production is exhilarating.
But that’s not why so many news outlets are interested in the solar panel manufacturing industry. What has brought panel manufacturing to the forefront is the ongoing trade dispute between U.S. and Chinese solar panel manufacturers. It’s a dispute that is far from settled, but two recent U.S. Department of Commerce decisions (one in March and one in May) make the battle lines abundantly clear.
So solar panel manufacturing finds itself at a crossroads. Whether the solar industry’s future is as bright as its past will depend on which path it follows — and history suggests it will have to choose quickly.
“What amazes me is the pace of the industry,” says Gary Mull, vice president of sales and marketing for Campbell, Calif.-based panel manufacturer Westinghouse Solar. He came from the high-tech software industry and has worked in solar since 2007. “It’s extraordinary how much faster change comes to this industry than any other I’ve ever worked in — and that’s saying a lot.”
How We Got Here
Discoveries related to the solar industry have often come from far-flung places around the globe, but the refinement and development of the photovoltaic (PV) panel technology that most consumers recognize today was born in 1954 in the United States.
Bell Telephone Laboratories (now a subsidiary of French firm Alcatel-Lucent) scientists named Daryl Chapin, Calvin Fuller and Gerald Pearson developed the silicon photovoltaic (PV) cell. The efficiency of that cell (which started at 4% efficiency and only reached 11% at its apex) is dwarfed by today’s cells (which are reported to reach up to 30% or 40% and seem to change almost daily), but it was a start. Today, the industry has spread globally and grown exponentially.
“What’s important to remember is that the solar manufacturing presence in the United States has been around for at least 35 years,” says Gordon Brinser, president of SolarWorld Industries America. “SolarWorld has the oldest solar manufacturing base in the Western Hemisphere.”
Until recently, however, most panel manufacturers couldn’t produce panels in the necessary volume or price to encourage widespread adoption of solar energy. In 2000, that began to change.
Mike Grunow, director of marketing for Chinese manufacturer Trina Solar Americas, says the machines producing solar cells improved dramatically starting 12 years ago. Companies developed wafering and cell-production technology that could produce highly efficient, high-throughput machines that required less human supervision. In many ways, the solar industry has mirrored the advances in the semiconductor industry.
“What you’ve seen in the past three or four years is that the companies with the lowest cost structures are the ones leading the way not only in acquiring and producing significant quantities of solar panels, but also do it at scale,” Grunow says. “They’re not doing at the 100-MW scale — they’re doing at the gigawatt scale.”
“Mass efficiencies can be achieved at that level with everything to glass to backsheets and all other components,” he continues. “But the tools themselves aren’t enough — you have to have the know-how to make sure they’re running at optimal levels.”
The automation of solar panel production has allowed companies to use thinner substrates, build higher quality products and use more consistent processes, leading to higher quality solar panels, Brinser says.
In addition, prices for silicon — the building block for traditional solar panels — have plummeted nearly 50% in the past two years, making some of the “breakthrough” non-silicon-based technologies like those proffered by the-now-infamous Solyndra obsolete.
Isabelle Christensen, marketing director for Chinese solar manufacturer Jinko Solar, says people are often distracted by “new and shiny” technologies rather than those with proven track records.
“The top-tier companies focus on producing polycrystalline and monocrystalline technologies,” Christensen says. “It’s only when you are working with proven technologies that you can focus on improving manufacturing efficiency and achieving the economies of scale that will allow the industry to bring down the price of solar for everyone.”
As solar expanded globally, numerous companies entered the market. Westinghouse’s Mull says it was inevitable that prices would drop precipitously.
“New markets opened up, and 30 … 40 … 50 new companies entered the market, all producing essentially the same kinds of panels,” Mull says. “Solar panels had hit that commodity trajectory. What happens? The law of economics takes over and prices fall.”
Where We Are
Not everyone agrees with Mull’s proposition that the fall in prices is a natural outcome of a cyclical economy, however. In fact, SolarWorld’s Brinser believes the collapse of prices the industry has experienced since 2009 is the result of what the Department of Commerce and SolarWorld see as unfair Chinese competion.
SolarWorld filed a two-tiered complaint in October 2011 with the U.S. Department of Commerce on behalf of the Coalition for Solar Manufacturing (CASM), alleging two separate but interwoven issues:
•SolarWorld argued that the Chinese government was illegally subsidizing its solar panel manufacturers in virtually all cost inputs. (This resulted in preliminary tariffs on Chinese panel manufacturers that ranged from 2.5% to 4.25% — and the Chinese companies were thrilled).
•SolarWorld also argued that the Chinese companies benefit from governmental incentive programs that are unhinged from the market forces of supply and demand. (The preliminary decision, which came down on May 17, slapped Chinese manufacturers with tariffs ranging from 31% to 250% — which didn’t thrill the Chinese companies quite as much).
(Editor’s note: Final decisions on both sets of
tariffs are expected to come no later than
If solar panel manufacturing jobs go away, it will destroy upstream jobs in the supply chain and do severe harm to the
U.S. economy, Brinser argues (though when pressed to put a percentage or number of jobs he believes could be eliminated, Brinser responded: “It’s hard to put an exact number on it. [SolarWorld Americas] has more than 1,000 jobs in the United States. What’s more important is that it’s not just solar panel manufacturing jobs — manufacturing jobs have a multiplier effect that ripples through entire communities.”)
Steve Grippi, business development director of Chinese racking-and-mounting company Clenergy America, says
U.S. manufacturers are upset because the Chinese build solar panels more efficiently and effectively than they do.
“The Chinese are exceptional at what they do,” says Grippi, who, while working for a Chinese company, is a U.S. citizen. “They’re essentially a 51st state of the United States in this global economy. We get our oranges from Florida and we get our potatoes from Idaho because those are best places to purchase those commodities from. Why wouldn’t we get our solar from China? They just produce it more efficiently than we do.”
Jinko Solar’s Christensen believes the tariffs are unfair — she says there’s no transparency in how the tariffs were calculated, leaving Chinese companies in the dark as to how and why they’ve been hit. Smaller Chinese companies will suffer the most because bigger companies like Jinko have the ability to source their cells and panels in other countries.
“The major Chinese companies will always be around as major players in the global industry,” Christensen says. “It is far more important to promote renewable energy — especially solar — on a global scale than trying to get small competitive advantages for a small handful of companies.”
“China will get through this,” Grippi says. “The tariff is a short-term. It won’t stick at its current levels. I have confidence in my government that it will figure this out. Whether we like it or not, we need China on this — that’s the bottom line.”
Despite the challenges and conflicts currently roiling the industry, the future of the solar panel industry remains bright, Westinghouse’s Mull says.
“The opportunity ahead of us is large, and we will rise above this,” Mull says. “The survival and strength of the United States depends on energy independence. What we need are smart policies that will allow the United States to become a leader on emerging solar power technologies. We’re going to have to work on it, and it’s not going to be easy — but I do believe it’s inevitable.” SPW