2012 Could Be a 'Lost Year' for Solar Energy

Solar companies battle over China tariffs, putting future of U.S. solar industry in doubt.

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A war is brewing between two coalitions of solar power providers—those who get materials from China and those who don't—and the outcome could have an impact on the future of American solar energy.

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A petition making its way through the U.S. Department of Commerce and the U.S. International Trade Commission alleges that the Chinese government is subsidizing solar panels, allowing American installers to buy them for "less than fair value," which harms American panel manufacturers. But a proposed tariff on Chinese imports could kill up to 60,000 American jobs by 2014, according to a new report by The Brattle Group.

The problem: The American solar energy industry is made up of more than just big manufacturers, says the Coalition for Affordable Solar Energy (CASE), whichvehemently opposes the proposed tariffs (and which commissioned the Brattle report).

About 52 percent of the U.S. solar job market is made up of installers—more mom and pop than multinational corporations, says Kevin Lapidus, senior vice president of legal and government affairs at Sun Edison, a major U.S. solar provider. "These are U.S. workers who get up in the morning, put on a tool belt and go to work. These are exactly the type of jobs we need," he says.

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Tack on 50 percent or more of workers involved in importing Chinese solar materials and those jobs are gone, he says. "If you have a tax, the price of solar goes up," says Lapidus. "That results in the project being cancelled."

SolarWorld, the German-owned panel manufacturer behind the tariff petitions, says CASE members aren't playing fair.

"CASE is in alliance with Chinese suppliers," says Gordon Brinser, president of SolarWorld Industries Americas. "Long term, we have to address the illegal subsidies and practices in China. Right now, what we see in the U.S. is an unsustainable and artificial market that's been distorted by these Chinese suppliers."

Over the past several years, the cost of solar has plummeted in the United States, and the industry has grown by about 65 percent annually over the past five years. That could stop in 2012, says Lapidus. If a preliminary tariff is levied, something that could happen in a matter of weeks, U.S. companies who bought solar panels from China would have to put money into escrow until a final decision is made later this year. That means some companies will stop taking on new customers, according to Lapidus.

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"Even the threat of the tariff kills solar energy for 2012," he says. "2012 is a lost year."

But Brinser says that, long term, writing off 2012 is better than letting Chinese manufacturers put American manufacturers out of business.

"Once the U.S. manufacturers are put out of business and China completes the strategy they set out to do, there will be nobody left to hold the Chinese industry accountable for fair competition," he says. "They'll control the pricing of the market."

Either way, the future of the American solar market seems murkier than ever. Consumers are used to falling prices, and nearly half of new solar installations in 2011 used panels that would be subject to a tariff. According to the Brattle Report, the cost of residential solar energy could rise 37 percent if the tariffs are levied. At those prices, solar energy doesn't make sense for a lot of people, says Jigar Shah, president of CASE.

"We cannot allow one company's anti-China crusade to destroy American jobs," he says.