Solar Sector At War Over Cheap Chinese Panels
IRA FLATOW, HOST:
I'm Ira Flatow. This is SCIENCE FRIDAY from NPR.
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FLATOW: You're listening to SCIENCE FRIDAY. I am Ira Flatow. The U.S. solar industry is at war with itself because - get this - solar panels are getting too cheap. You would think that cheap solar panels would drive down the cost of solar energy and that's a good thing, but the story is not that simple.
The cheap panels, of course, are made in China. Seven companies have filed a trade complaint with the federal government, accusing China of illegally undercutting American prices, dumping those solar panels on our market below cost, and they're asking the government to slap tariffs on those panels to keep American factories, the ones that make them here, competitive.
One of my next guests is spearheading that effort. On the other hand, as I said, these cheap panels are driving down the cost of clean energy. Right? Helping solar to compete penny for penny with nonrenewable energy sources, like natural gas. So solar installers and lots of folks who want to see solar playing a bigger part in the energy equation - they don't mind the lower prices. They say it's good for solar in the long run, maybe at the expense of some local manufacturers, but look at the jobs, all those jobs being created installing those cheap panels and all the jobs around that.
So you can see the conflict. What is the future of the solar industry here in America? Are we going to buy all our technology from China? Does it matter? Or can we find a way to make the stuff here and save those jobs, too? Well, that's what we're going to be talking about. Our number, 1-800-989-8255. You can tweet us at SciFri at S-C-I-F-R-I.
Gordon Brinser is president of SolarWorld Industries America in Hillsboro, Oregon. SolarWorld is leading the petition against Chinese manufacturers. And he joins us by phone. Welcome to SCIENCE FRIDAY.
GORDON BRINSER: Thank you, Ira, for having me on the show today.
FLATOW: You're welcome. Dan Shugar is the CEO of Solaria Corporation. That's in Fremont, California. And he joins us by phone. Welcome to SCIENCE FRIDAY.
DAN SHUGAR: Oh, thank you very much, Ira.
FLATOW: Gordon, let's start with you. You're concerned. Did I define that correctly, that China is dumping these solar panels at an artificially lower cost here?
BRINSER: Yes. SolarWorld, in conjunction with the Coalition of American Solar Manufacturing, filed the petition with the U.S. Department of Commerce and International Trade Commission to really apply the rule of law and hold the Chinese industry accountable to U.S. international trade rules.
And what we see is China is illegally dumping solar products into the U.S. marketplace, eliminating U.S. competition, jobs and really jeopardizing the U.S. energy's security long term.
FLATOW: But, Dan Shugar, you make solar panels, do you not? Your company?
SHUGAR: Yes. We're a manufacturer of solar. We have manufacturing at Solaria in Fremont, California and we also have an overseas facility.
FLATOW: But you say you're not worried about this dumping?
SHUGAR: Well, I'm not saying we're not worried, Ira. I think there are valid concerns that SolarWorld and others have put forth and there's valid concerns on both sides of this. We didn't join the petition simply because we think some of the concerns can be addressed. That would be the measure of last resort, but some of the concerns can be addressed in a less confrontational manner.
FLATOW: And for example?
SHUGAR: Well, bilateral discussions about some of the nature of the allegations that are being made. It's important to recognize that the solar manufacturing is not in China or other places because the labor is really cheap. The great companies like SolarWorld and our company have achieved fairly high levels of automation, so the labor content in the panel is fairly low, on the order of 10 percent. So you wouldn't necessarily put manufacturing in China just because there's low cost labor.
I think some of the other concerns around currency valuations and other issues, there's a lot of valid concerns there. So I think it's definitely worth examining the trade practices and looking at it, but we elected not to sign on to the petition to slap tariffs on it.
FLATOW: Gordon Brinser, why can't you make panels as cheaply as they can in China, if what Dan is saying, that the labor cost is only, like, 10 percent of the cost?
BRINSER: You're correct. The labor cost is only 10 percent. That's why we clearly outline that there is no warranted cost advantage that the Chinese producers have. They basically are dumping products because of the illegal subsidies that exist in China.
China set out in their five year plan very specifically to dominate the solar industries worldwide. And they've done that through illegal subsidization of their companies and now we're seeing those companies, they've grown the capacity such that their capacity in China is somewhere between 16 and 20-some gigawatts. Their actual domestic demand is only half a gigawatt right now by most estimates. So they've targeted for the export markets of the U.S. and other markets in the world to basically destroy the manufacturing segments of those markets.
FLATOW: And how many employees do you think are employed in the solar industry here in this country?
SHUGAR: We have - so the industry - let's take a step back and assess. The U.S. solar industry today has over 100,000 people employed. That's more folks than are working in coal mines and more folks than are working in steel mills.
Number two, our industry had a $6 billion sort of revenue last year and, of that, we exported $1.9 billion of products, including some raw materials to China and in other places around the world. Our industry grew at 69 percent last year. So while other industries were, you know, in retraction due to the economic situation, our industry's growing, basically adding jobs.
There's over 5,000 companies involved in solar here today, so solar jobs are real. This industry's growing and vibrant. I think the concerns, you know, that have been raised by SolarWorld and others, you know, definitely need to be studied to ensure that we have a fair and level playing field with all international manufacturers.
SHUGAR: And - go ahead.
FLATOW: No. I'm just saying that, you know - but we invented the light bulb here, but we don't make light bulbs anymore. We invented the solar panel here. What's so bad about having other people make them if they create so many jobs for installers? And there's where your labor force. You're saying to me already, you know, that it doesn't take a lot of people to make solar panels. They're made by robots. But it does take people to stick them on your roof.
SHUGAR: Well, there is - we're a U.S. manufacturer. We're actually expanding our capacity at Solaria and we do want to have U.S. manufacturing jobs in solar. Through innovation and R&D, we can keep evolving the technology, as we have now. SolarWorld, Solaria have outstanding products that we're offering customers to save money using clean, renewable energy instead of polluting resources.
The issue is - and solar panels - you don't put a solar panel on an airplane to ship it because they have glass in the front, so they're typically shipped by sea. It takes a while. So there is inherent logic in actually manufacturing the panels in the regions and markets in which they're served. So, as our market grows, more manufacturing should be here.
We just want to ensure that currency and other issues are on a level playing field, such that domestic manufacturing is not artificially disadvantaged. But we can definitely compete in the U.S. on the manufacturing side, complementing the additional jobs that are put in place with design and installation and service.
BRINSER: And I think, you know, we do have to point out, you know, SolarWorld has over 1,000 employees in Hillsboro, in Oregon, producing photovoltaic panels, and we've been doing it for 35 years in America, here on domestic soil. And we've been able to compete with anybody, anywhere, in any country, as long as they abide by legal and fair trade practices.
And the solar manufacturing jobs are critical because we're not talking about just the job of the factory worker on the shop floor here. Those jobs in manufacturing resonate and multiply throughout the economy, throughout these communities. We've had communities - we've had eight different manufacturing companies throughout the U.S. downsize or shut down their facilities in communities throughout the United States and those are important jobs for these communities because they basically support other jobs in the local communities; at banks, at restaurants, at - you know, malls and all throughout the community, so they are a very key, important part.
And we can have the jobs. We can manufacture here. We've shown we can compete globally, as long as there is legal practices being done. So we can have both the manufacturing jobs and the installation jobs at the same time and have a very vibrant, growing solar industry in the U.S. that is competitive.
FLATOW: Dan, you - Dan, has solar - have these solar panels arrived to the point where they can compete with - price-wise creating electricity as cheaply as it can, say, for natural gas and nuclear?
SHUGAR: I'm so glad you asked that question, Ira. Yeah, that's the real story in solar, OK? People ask me when solar is going to be economical? Well, it is today, and I'll talk about that. And when solar is going to be at scale? Well, it is at - we are at a degree of scale right now. So let's talk about that for a minute. First, on the scale side, last year, our industry - so - and I'd say photovoltaic - I say solar and photovoltaic interchangeably because photovoltaic is over 95 percent of the solar installations around the world.
Last year, our industry manufactured, shipped, installed and operating 17 gigawatts of solar power. Now, for your listeners, what a gigawatt, that's equivalent of 17 - what 17 nuclear power plants put out in the middle of the day. Now, of course, because solar is generating this power in the daytime when the demand in the grid is high and power is very expensive, that power is worth a whole lot more than power that's delivered in the middle of the night. So 17 nuclear power plants in one year manufactured, shipped and installed.
This country has not installed a single nuclear power plant in over 20 years, OK? And the cost of those, especially after the Fukushima disaster, has been projected to rise through the roof. Now, in the same period of time, as solar demand has grown, solar has followed the same cost reduction curve as cell phones, computers, DVD players and so forth. For example, in the mid-'70s, solar cost about $40 a watt for a panel, OK?
Today, panels are between a dollar and a dollar fifty a watt for the panels, and systems - system prices are very - depending if it's residential or utility scale. But what - on the utility scale systems, what's amazing is solar today is less expensive than a new nuclear power plant. We're more affordable for daytime peaking power than a peaking gas plant, for example, from an aeroderivative gas turbine, those - the cost of power on utilities and all the utilities around the country is the same thing.
They're all - when do they need that power? They need it on a hot summer afternoon. And that power from the turbines cost 25 to 30 cents a kilowatt hour. Solar is half that cost. So solar is economic today for peak power in America.
BRINSER: And I think what we need to really understand is what Dan mentioned previously, is we've been able to reduce the cost of solar sustainably and legally over the last, you know, 20 to 30 years. And we've seen that improvement, and we've reached that point because of that sustainable cost reductions. And what we see today in the market is really a very distorted market due to really the dump prices in the market and the artificially low prices.
FLATOW: This is SCIENCE FRIDAY from NPR. I'm Ira Flatow. But aren't you afraid that - I know that that, Dan, you agree in principle with Gordon. But you're saying don't do it in this method of retaliation against the solar power people in China. There's a different way you believe in doing it.
SHUGAR: Well, the, you know...
FLATOW: Because are you going to create a trade war?
SHUGAR: Yeah. I mean, that's basically our concern. I - it's certainly a measure of last resort. Yeah. I would just encourage the parties to, you know, sit down and see if a more - a less confrontational solution can be arrived at. I think there's, you know, a number of issues with - that are on the table that are valid. There are valid issues on both sides of this. The - but currency is also a factor. I've brought it up several times. And the solar industry is not the only industry concerned about the valuation of the yuan. And so I think we really need to look at a broad set of issues and have an informed discussion before going to the last step first.
FLATOW: One of the arguments against solar power, you laid out your case very well, I thought. But people say what happens about storage, better batteries? We don't have batteries to store all that solar energy.
SHUGAR: Well, I'm glad you asked that question, too. Thank you. As I mentioned a few moments ago, the utilities are strained in the middle of the day on the summer, so one of the myths of solar is that we need some, you know, new battery solution in order for solar to get to scale. That's actually untrue. I was formally a - I'm an electrical engineer and formally a transmission planning engineer and operations guy for a large utility, so I know how the grid works. What happens is if you look at why all these utilities around the country are overloaded in the middle of the day, and we saw that with the record heat due to the global warming that's happened in Texas and back east, it - the electric power need is actually driven by sunlight because, number one, people are up in the day in that office.
But number two, that's when the air-conditioning load kicks on, and that makes a huge strain on the grid. And the third factor is there's a lot of evaporation in agricultural conditions, so you have a lot of water pumping, and those pumps will draw a lot of power. So what happens is there's a perfect correlation between sunlight and energy demand. And so the demand almost doubles every day. In the middle of the night, it's very low, and then, it goes - it almost doubles in the day, and then same thing happens, it goes back down.
So when you put solar into the grid, solar uniquely matches load. Solar also has the nice attribute of being modular. So it can go on customer rooftops throughout the grid. You don't have these giant systems. You can have giant systems, but they're, you know, part of the solution. And then a third is rooftop and a third is small distributed systems. So it actually helps support the grid. It provides a benefit. Solar can get to, you know, 20, 30 percent of the grid without any storage.
In fact today in Germany, Germany, with half the sun of Las Vegas, is the largest solar market today. And in southern Germany, in Bavaria, there are - in the summer, there are days when 40 percent of the grid is operating on solar - 40 percent, and the same thing is true in places - areas of Spain. They have no battery storage. They're able to operate the grid. The grid is absolutely fine and able - because of this condition where - when as the demand picks up, the distributor of resources are there to support it.
It makes the grid more efficient by reducing losses, supporting voltage and extending the lives - so you don't have to build new transmission lines and substations.
FLATOW: All right, gentlemen, we've ran out of time, but I want to thank you both for taking time to talk solar with us.
SHUGAR: A real pleasure. Thanks, Ira.
FLATOW: You're welcome.
BRINSER: Thank you.
FLATOW: And we'll be watching to see what happens in Washington. Gordon Brinser is president of SolarWorld Industries America in Hillsboro, Oregon. Dan Shugar is CEO of Solaria. Solaria Corporation is in Fremont, California. Transcript provided by NPR, Copyright NPR.