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Maybe you thought that those in the solar industry would have, well, a sunny disposition–that the various manufacturers would gather at conferences to sing cheery songs about the coming green energy future. If so, you’ve clearly never been in business.

A fierce battle has been heating up in the solar industry. At the heart of the issue is a complaint leveled by the German group SolarWorld, which alleges that Chinese companies are aggressively undercutting competitors’ prices through the use of cash grants and subsidies, according to Reuters. On Wednesday of last week, SolarWorld’s U.S. division filed a trade case against China. Six other companies co-filed the case, but anonymously, potentially out of fear from being shut out of China’s market down the line. The seven companies have requested that the Commerce Deparment compare solar prices in a third country, India, in order to ascertain whether China is engaging in anticompetitive behavior.

After the action from its U.S. Division, SolarWorld’s Chief Executive expressed his desire to expand the battle on the European front as well: “We are currently reviewing several options for how to throw this forward over here,” he told Reuters. “The EU has to wake up now to make sure we are having fair competition over here, too.”

China, naturally, doesn’t plan to take this lying down. It delivered an official response via the website of its Ministry of Commerce, saying, “If the U.S. government files a case, adopts duties and sends an inappropriate protectionist signal, it would cast a shadow over world economic recovery.” It denied having broken any trade rules, and called the prospect of a trade war “lose-lose,” adding, “The Chinese government hopes the United States will scrupulously abide by its promise to oppose trade protectionism, avoid adopting protectionist measures on Chinese solar cell products, jointly protect a free, open and fair international trade environment, and adopt more rational means of handling trade frictions.”

In fact, the issues here are somewhat thorny, as this report from Bloomberg illustrates. Even within the U.S. solar industry, there are differing views of the merit of the U.S. solar suit. One of them, Arno Harris, CEO of Recurrent Energy, called the dispute “fundamentally a mistake.”

What’s going on here? There are two very different components to the solar industry: first, there are the manufacturers, who have made large bets that the particular type of technology they’ve invested in (not all solar panel tech is identical), will be the one that wins out. Second, there are the project developers–those whose job is to take solar technology and figure out the systems under which panels will be rolled out, financed, and operated. I recently interviewed solar entrepreneur Lynn Jurich, who counts herself in the second camp. She told me of her company, SunRun: “We’re technology-agnostic. A lot of people are investing in panels and hardware, and we don’t want to take a bet on that: We want to be the beneficiaries as those costs come down. The high-profile companies you’ve seen go bankrupt have almost been victims of the solar industry’s success–they’re hardware companies, and because cost has come down so dramatically over the last two years, they’re not able to compete.”

Harris, quoted in Bloomberg, echoed Jurich: “You have a group of manufacturers whose product is not competitive and they’re turning to trade mechanisms.” And Carlos Domenech, president of SunEdison, added that he thought China was playing a “positive role” in lowering panel costs in the U.S.

Are SolarWorld’s complaints frivolous, the last-ditch efforts of a manufacturer who just can’t compete? Or is China genuinely dealing in underhanded ways? Time, and the investigations of the various regulatory bodies, will tell. In the meantime, clouds are gathering over the solar industry.

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