China bans solar panel factories; global solar industry rejoices
More and more solar is not necessarily a good thing for a solar industry trying to find its footing.
Fri, Sep 27 2013 at 1:40 PM
Cheaper solar power is something that most environmentalists dream about. Indeed prices have been coming down dramatically in recent years. And though it may sound counterintuitive, getting too cheap, too soon can be a major problem.
Manufacturers need reliable projections of future costs. Installers have to remain profitable despite diminishing returns on the hardware they sell. And quality can become compromised if all we care about is the price of panels.
That's why many in the solar industry are rejoicing about news that the Chinese government is placing a moratorium on new solar factories. Here's how Renewable Energy World described the move:
Beijing took an important step towards rejuvenating the global solar panel sector last week when it announced new steps that will strictly limit new plant construction. This kind of government-led approach is a good short-term solution, as it will halt the introduction of new supply, which in turn will allow prices to stabilize after more than two years of steep declines caused by massive overcapacity.But over the longer term, China needs to address the problem at its root by changing the mindset of state-owned enterprises that own many smaller plants which contributed to the current crisis. It can do that by teaching them to make their decisions based on commercial factors and not simply in blind response to government objectives.
The controversy over Chinese government support for solar has been rumbling for some time now, and even Chinese manufacturers have suffered from these market distortions. This move alone is unlikely to defuse the tensions. After all, competition across differing economic systems and cultures is one of the inherent challenges of a globalized economy.
Businesses in Germany, where renewables receive extremely generous incentives and where energy prices are higher, compete with other parts of Europe where these rules don't apply. Similarly, manufacturers in America, which has a phobia of big government, must compete with China, where a major government role in economic management is seen as inevitable — and positive.
As is often the case, I suspect the answer doesn't lie in forcing cultural, economic or political homogeneity — but rather enhancing our understanding of each other's cultures and political systems — and seeking a middle ground where nations and economies can coexist and compete without driving each other into the ground.
How and if that can be done remains to be seen. But the damping down of the solar manufacturing boom may be a good place to start.
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