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Solar Energy Tipping Point: Will the U.S. Seize the Opportunity, or Pursue Trade War with China?

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Photo courtesy of Russ Ferriday/Flickr, Creative Commons license

The Solyndra uproar and the recent International Trade Commission
decision to investigate Chinese solar panel manufacturers threaten to
distract us from what we need most: a proactive, long-term clean and
sustainable energy strategy.

If you look beyond the partisan politics that have recently engulfed
the solar industry, two irrefutable facts stand out. First, the solar
energy industry is at a tipping point. With a diverse set of promising
technologies coming online that are affordable and scalable today, or
soon will be, the industry is becoming competitive with conventional
energy sources.

Second, ill-conceived and reactionary policies could serve to
undermine this fast-growing, innovative and job-producing sector.

The United States must chart a proactive strategy. On the first point,
the facts are clear: The solar industry worldwide is the fastest
growing source of electricity generation. What was once largely a
rooftop-by-rooftop industry is now seeing major utility-scale projects
that can rapidly meet regional energy needs. For example, a typical
medium-sized utility-scale solar power plant takes 18 to 24 months to
build, while new coal plants take years, and new nuclear facilities
can take a decade or more. And small-scale solar continues to roll out
as well. When paired with energy efficiency, solar projects can
transform local economies and increase the value of commercial and
residential properties.

The capacity of the solar industry to create jobs is similarly clear.
My laboratory at the University of California, Berkeley regularly
reviews actual job creation statistics as a measure of returns on
energy investment. Solar installation creates five times or more the
number of jobs than does investment in a natural gas plant of
comparable capacity. And these jobs span a range of sectors.

Not only has the US solar industry produced more than 100,000 jobs (a
doubling since 2009) with another 25,000 expected in the next 12
months, the vast majority of these jobs are in
finance, services, and
installation–not manufacturing.  Solar simply doesn’t provide a lot
of manufacturing jobs in any country, and the number is dwindling
further with automation.

That’s why blocking imports is beside the point in terms of saving
jobs.  But tens of thousands of Americans are employed across the
country in the solar value chain, their jobs relying on the supply of
quality solar panels from many nations, including China.

China certainly should do a better job of reporting on its subsidy
programs, in accordance with WTO requirements. The U.S. government
should demand such compliance. However, subsidy policies may have
their place, as they do in the United States, to help build a strong,
job-producing solar energy industry. Pursuit of a ‘clean-tech trade
war’ with China will only serve to thwart the innovative and
job-creating power of this burgeoning alternative energy industry.

Even Senator Jeff Merkley of Oregon, who supports the petition, which
was ironically filed by German-based SolarWorld against Chinese solar
panel manufacturers, has acknowledged that punitive tariffs against
Chinese solar panels would immediately result in job losses to
American installers in what he described as “short-term shock.”

Longer-term benefits are even less clear when increased manufacturing
and installations of solar are needed.  This begs the question of why
the U.S. government would attempt to pick technology winners by
applying punitive tariffs against Chinese companies when what is
needed is to encourage competition among all promising companies.

On the second point: As tragic as the loss of Solyndra may be, some
perspective is needed when crafting any policy in response. Some in
Congress have used the failure of Solyndra as a pretext for cutting
U.S. support for solar. That’s wrong.  It’s equally wrong to use it as
a pretext for creating trade barriers.  What would be more useful is
an assessment of a ‘whole systems’ approach to reducing costs from
materials to manufacturing to the solar system hardware, warranties,
and financial models.

The drop in solar panel prices, which in-turn shook out Solyndra and
likely others too, is part of the dynamic of the race to innovate and
to manufacture at scale. A number of the larger solar manufacturers –
whether in Germany (SolarWorld), the United States (SunPower and First
Solar), Japan (Sharp) or China (Trina, Yingli) – are now manufacturing
solar panels on such a scale that they have brought the cost of solar
down dramatically. This, in turn, has helped to launch in the United
States a new energy solution that is cost effective for ratepayers and
customers.

A number of U. S. companies today offer solar purchase or lease
arrangements that reduce ratepayer costs from the day the solar panel
are on the roof. Punitive action against companies in China – or any
other solar manufacturing country – would only serve to undermine the
competition that has begun to make solar a truly viable energy source.

Efforts to lock out the competition, with a mindset of protectionism,
will drive up solar panel prices and reduce sales, stunting domestic
job growth and stifling innovation in the field as a whole. What we
need instead is to meet energy access, job creation, and environmental
goals with a mindset of  “race to the top.”  In this race, everyone
wins.
Kammen is the Class of 1935 Distinguished Professor of Energy at the
University of California, Berkeley, in the Energy and Resources Group
and the Goldman School of Public Policy, where he directs the
Renewable and Appropriate Energy Laboratory. From 2010 – 2011 he was
the inaugural Chief Technical Specialist for Renewable Energy and
Energy Efficiency at the World Bank.

This post originally appeared in The Hill newspaper.