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It looks likely that a U.S. government investigation into the pricing of solar panels by companies in China will find that they are selling below cost, perhaps aided by government support.

A source involved in the investigation, which is part of a trade dispute initiated by a complaint from seven U.S. solar panel makers, says that analysis of available data suggests that the costs of making the solar panels are higher than the prices companies in China are selling them for. They’re able to survive, he says, because they have better balance sheets than their competitors, and can afford to sell at a loss, at least temporarily.

The results of the study are being prepared for publication, and could be out next month. The U.S. solar panel makers who asked for the investigation have asked the U.S. government to impose tariffs that would double the price of solar panels imported from China, saying that unfair pricing has hurt their ability to be profitable. The U.S. Department of Commerce is expected to announce its initial findings, and its decision about imposing a tariff, as early as this month. The top solar panel manufacturers in China have denied any wrong-doing, and the Chinese government is threatening to apply tariffs of its own on solar panel related materials and equipment imported from the U.S..

Whatever the facts of the case prove to be, if large tariffs are applied to solar panels from China, what will this mean for innovation in solar power, and the ultimate goal of achieving affordable solar power?

Some, including the prominent solar researcher Martin Green, have argued that trade barriers will stymie innovation. He says that remarkable reductions in the cost of solar panels have been the result of innovations coming from countries around the world. Cheap solar, he says, depends on taking advantage of what each country has done best, whether that be making solar cell materials, the equipment for manufacturing solar panels, or actually manufacturing the solar panels themselves.

Other experts have argued that unfair pricing is hurting some of the most innovative solar panel manufacturers, forcing them out of business.

While tariffs could help keep solar panel makers afloat in the United States, they could hurt other U.S. companies. China currently imports large amounts of solar cell materials and manufacturing equipment from the U.S.. If China imposes retaliatory tariffs, it could hurt the companies that sell to China. These include innovative companies such as GT Advanced Technologies, which is lowering the cost of solar power by inventing better ways to make the crystalline silicon used in most solar panels.

The impact on innovation could also depend upon the extent to which companies in China are themselves innovating. Most of their success so far has had to do with their ability to finance, and quickly build, solar cells that use the latest available equipment. But some have started to make significant improvements to solar cell manufacturing and solar cell design. Many Chinese solar companies are themselves going out of business due to the difficult market for solar panels, and the tariffs could hurt those that depend on the U.S. market. 

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Tagged: Energy, energy, solar power, China, silicon, innovation, tariff

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