The trade dispute between China and the United States over the pricing of solar panels is only delaying technological innovations into the American market and temporarily slowing a global shakeout of an industry in transition.
That’s the view of Mark Kingsley, chief commercial officer of Trina Solar Limited (NYSE:TSL), a Chinese panel manufacturer. In the first quarter of 2012, virtually equal shares of just less than 37% of its $350m in revenue came from Germany and the U.S.
That view may be self-interested, but impact of the trade case on Trina is not significant, Kingsley told GenerationHub, as the industry is now dealing with a series of “unintended consequences.”
“What it means is the best technology gets to Europe, China, Japan or Australia before it gets to the U.S.,” Kingsley said. He likened it to U.S. wireless communications stuck in a 3G world while the rest of the developed world is deploying 4G.
In May the U.S. slapped tariffs of 31% on about 60 Chinese solar panel manufacturers, alleging dumping of panels on the domestic market at below fair market value. Due to “critical circumstances,” the duties are retroactive 90 days.
The trade case – a ruling favorable to the coalition led by SolarWorld USA was expected for months – has had an impact.
Imports of Chinese solar cells and panels into the United States decreased for the second straight month in May year-over-year, according to the Coalition for American Solar Manufacturing (CASM). Chinese solar imports totaled $124.1m in May, down about 45% from $225.8m in May 2011, according to the Department of Commerce’s “U.S. Imports of Merchandise” database.
Kingsley said Trina’s business hasn’t been hurt, but the U.S. industry was disrupted as companies waited for the fallout from the trade case. And with overcapacity dogging global solar markets, losses have sunk many manufacturers and injured the survivors.
“What this means is our world-record technology goes to Germany first,” he added. The delay for the best and most efficient panels entering the U.S. market is six to 12 months, he said, as Trina’s technology has to be transferred outside of China to non-sanctioned countries for manufacture. “Once I get my manufacturing converted, then I can sell to the U.S.”
The goal of getting to grid parity, at $1.20 per installed watt, unsubsidized, is therefore delayed as less efficient technologies are deployed in the U.S.
Kingsley said the supply chain in the PV market is global, with overcapacity needed to be wrung out of the market. And panel manufacturing is one of the least value-added steps in the process.
“We buy silicon from Michigan, ship it to China and use the capital equipment that was made in New Hampshire. Again, made in the USA,” Kingsley said.
Once made into panels, then they are shipped to the U.S. for installations on homes and utility projects, often done by younger and relatively lower skilled labor, in a tough economy.