Residential, Military Markets Offer Solar Industry Light at the end of the Tunnel

If you thought the conversation about solar energy in America was full of mixed messages, you'd be right. There are differences over the economic and commercial viability of solar power, and whether the government ought to play a role in encouraging renewable energy investment. These opinions (like so many others) are largely ideologically driven, but it’s starting to look like the divisiveness of the current political environment has begun plaguing the industry itself. Yes: things have gotten even more confusing.

On October 19 a group called the Coalition for American Solar Manufacturing (CASM) announced it was filing petitions with the U.S. International Trade Commission to investigate China's trade practices in the photovoltaic market. CASM is led by Oregon-based SolarWorld, a subsidiary of German SolarWorld AG, and has the backing of six anonymous U.S. manufacturers.

The coalition seeks protection from Chinese PV-makers, whom they accuse of dumping solar modules in the American market below the cost of production. SolarWorld believes that illegal government support — including land grants, financing breaks and supply-chain subsidies — keeps Chinese module prices artificially low, and hopes that the U.S. government will draw the same conclusions, paving the way for the implementation of tariffs of 100 percent or more on Chinese PV imports. It's easy to understand CASM's position: no one wants to be the next Solyndra.

For a brief moment, though, it did seem as if this ‘menace’ from abroad had handed the American solar industry a golden opportunity to galvanize the public — and politicians! — around the importance of American solar power. But the effect was anything but unifying. In response to CASM, the Coalition for Affordable Solar Energy (CASE), which opposes these measures, was established. Here's what lies at the heart of their dispute:

First, the measure would protect some U.S. manufacturers, while hurting others. There are American-owned companies producing PV components in China, and new tariffs will make their products more expensive at home. This would dampen demand for solar power at a time when it is one of the few markets showing real growth. Second, CASE points out that PV prices, which have fallen by around 7 percent every year since 1980, have led to greatly increased solar electricity production in America. Federal and state incentives have helped businesses and households capitalize on declining prices to install thousands of modules for grid and distributed power generation. Contractor-installers (the people who install the panels and arrays) are actually a far greater source of employment in the solar industry than PV manufacturers, so naturally any increases in the cost of solar energy will these harm these businesses — and these jobs can’t be outsourced.

This debate is a testament to the complex interconnectedness of today's global marketplace, and new tariffs may provoke retaliation from China, to whom the U.S. is still a net exporter of solar technology — by $200 million annually — according to GTM research, and a trade war is likely to hurt more than just the solar sector.

As far as I can tell, China has helped make solar energy affordable, and contributed to the success of renewable portfolio standards in states like California and New Jersey. And though a unified industry is better than a divided one, the majority of players will agree that the answer isn't protecting higher-cost manufacturers at the expense of the rest of the U.S. domestic solar power market. American companies are known for being innovators, and as long as they continue to push the frontier of photovoltaic technology, creating better inverters, better batteries for storage, and better purchasing plans to help homes and business afford solar energy, they ought not to get in the way of the market’s signals.

American companies with diversified supply-chain operations need to make a clear and public commitment to preserving and advancing the affordability of solar power. It’s an encouraging sign that Bank of America-Merill Lynch stepped in to finance the largest residential solar installation in U.S. history when the Department of Energy rescinded its loan guarantee offer in late September. The project will receive $350 million to install solar panels to power as many as 120,000 homes for military personnel over the next five years.

Companies in the solar business need to reinforce their commitment to commercial and residential end-users while state renewable portfolio standards still offer them support against high up-front costs. Perhaps even more crucially, the U.S. military is becoming a partner in solar energy like never before. Partnerships like these drive demand and help give the American market the exposure to the benefits of solar power that will continue to drive its uptake into the future. The message is clear: solar is here to stay, and we as an industry are here to make the technology affordable that will save the business and homeowner money, and make them energy independent in the long-run.

It is an exciting and uncertain time for solar in America and maintaining a public profile of commitment to solar energy as the centerpiece of the America’s energy future is more important now than ever before.