November 28, 2014

Green Mercantilism and the truth about Chinese solar

The first concern of any individual interested in going solar is always cost. Many consumers let the cost of a certain solar panel brand determine their decision to purchase. Though this approach seems prudent, it could be a very costly mistake. The cheapest solar panels on the market are imported from China. In fact, “49% of the solar panels” purchased and installed in the US this year were designed and made by Chinese manufacturers (2). Some of the manufacturers of these solar panels try to hide the fact that they are Chinese-made by outsourcing the construction and labor to Taiwan (2).

Why would these Chinese companies try to hide their true location?—To exploit international tariff laws and loopholes, of course! In 2012, the U.S. levied tariffs on imported Chinese panels to counter the effects of illegal Chinese government subsidies that give Chinese companies an unfair trade advantage (3). They have since raised the tariffs on imported Chinese solar goods to a range of “18 to 35 percent” (2).

Some may wonder what the big deal is as cheap Chinese imports are a long-standing staple of our economy. That’s just the free market at work, right? And, all of these things are true. But, as far as Chinese solar tech is concerned, tariffs are necessary to curb their “green mercantilist policies” (2).

“Green mercantilism”, according to Atkinson and Stepp, “is the adoption of policies that give countries an unfair advantage to boost exports and limit imports of clean energy technologies—[it] is a major departure from rules-based clean technology trade. It’s represented by “beggar-thy-neighbor” policies, including lax IP enforcement, forced technology transfer, export subsidies, discriminatory standards, barriers to imports, and preferential treatment of domestic firms by their parent governments (1).”

In more digestible terms, Chinese solar companies have been offering “unfair subsidies to 'domestic firms, dumping products below market prices, stealing trade secrets from competitors [including American companies] through cyber attacks, and other forms of espionage (2).” But these new tariffs are projected to cause a 14% increase in the price of Chinese solar exports. Thus Chinese panels will cost just as much as American brands, potentially bankrupting the top six Chinese solar companies (2).

Why would a mere 14% price increase inflict such a dramatic blow to the Chinese solar industry? This is simply because the quality of their products and their business practices cannot compete with American brands like SolarWorld and SunPower. Most Chinese solar panels degrade far faster and are less durable than even SunPower’s most basic panel model. Not to mention, if or when these manufacturers go bankrupt, their warranties are worthless. If you own Chinese panels and need to get one replaced, you will have to purchase and install a panel from a different manufacturer. That means you’ll have paid full price for your panel twice!

If you are considering solar, think about the true cost of the solar panels you choose. Don’t support bad business practices or invest in subpar technology. Though a Chinese or Taiwanese panel seems cheaper, in the long-run, the choice is clear. American solar manufacturers are the smart investment in your future—Buy solar here and have no fear.




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