360° Coverage : Blinded By The Sun: How Much Do Solar Panels Really Cost?

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Blinded By The Sun: How Much Do Solar Panels Really Cost?

May 27 2014, 1:51am CDT | by

Nearly three years ago, a political controversy over the U.S. government’s loan guarantee supporting the once-promising but now bankrupt California solar start-up Solyndra seriously damaged support...

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9 weeks ago

Blinded By The Sun: How Much Do Solar Panels Really Cost?

May 27 2014, 1:51am CDT | by

Nearly three years ago, a political controversy over the U.S. government’s loan guarantee supporting the once-promising but now bankrupt California solar start-up Solyndra seriously damaged support for clean energy in the United States.

At the time, I speculated that financial forces similar to those that sunk Solyndra would sooner or later sink several of China’s major solar equipment manufacturers.

A series of recent defaults at Chinese solar manufacturers suggest I was at least partially right.

In 2013, Suntech Power, a solar manufacturer based in China’s eastern province of Jiangsu, defaulted on $541 million of convertible bonds. In February, Suntech filed for Chapter 15 bankruptcy in Manhattan to seek protection from U.S. creditors.

Meanwhile, LDK Solar, a solar manufacturer based in the southern province of Jiangxi, defaulted on an equally massive bond that matured in February.

Threatened with the prospect of bankruptcy, LDK Solar said it had received $321 million in loans from a consortium of lenders led by the China Development Bank, according to Bloomberg.

The same banks have already lent LDK billions of dollars. In 2011, LDK received $8.9 billion from the China Development Bank, according to Mercom Capital Group, an Austin, TX-based energy consulting firm.

The full scale of financial subsidies the Chinese government has provided domestic solar manufacturers is stunning.

In 2009, while testifying before the U.S. China Economic and Security Review Commission in 2009, Ethan Zindler, the head of Bloomberg’s New Energy Finance, suggested that these subsidies would result in a supply glut in the solar manufacturing sector.

Citing a $5.3 billion loan Yingli Solar had secured in 2010 from the China Development Bank, Zindler said: “That loan alone, and several others like it from the bank, could help double the world’s solar manufacturing supply of solar modules in just the next several years.”

Chinese manufacturers quadrupled production of solar panels between 2009 and 2011 and exported them at prices sufficiently low to expand China’s market share in the solar sector dramatically.

Between 2009 and 2011, the price of modules decreased from $2.79 to $1.59 per watt.

Chinese companies have argued that economies of scale and technical improvements are responsible for these dramatic cost reductions.

Not everyone agrees.

“The explanation for this simultaneous sharp increase in production and sharp price reduction is not entirely the happy economic event of unit cost reduction from economies of scale and improved technical performance with preservation of commercially attractive profit margins,” said the authors of an MIT report about the future of solar energy. “Rather the explanation for this price decline is overexpansion in global, primarily Chinese and Asian, production capacity of cells and modules, combined with a reduction in the demand growth of heavily subsidized PV markets in Europe caused by the financial crisis.”

After a 13-month-long investigation, the U.S. Department of Commerce similarly concluded that China has been illegally pricing solar exports below production costs to undercut foreign competitors and gain market share.

“Pervasive and all-encompassing Chinese subsidies are decimating our industry,” said Ben Santarris, the director of corporate communications at SolarWorld, a solar panel manufacturer based in Hillsboro, OR./>/>

Meanwhile, the US Energy Department’s SunShot Initiative is funding research efforts that aim to cut the all-in cost of solar power to less than $1 per watt by 2020. To do so, solar manufacturers must produce modules that cost less than 50 cents per watt by 2020, which is 75% less than what they cost to make in 2010.

In March, only three years after SunShot began, a Chinese solar company announced that it was producing modules that cost less than 50 cents per watt.

What baffles me more than anything else is how many people seem to believe that technical innovation – rather than Chinese subsidies – is responsible for these stunning cost reductions?

“I believe this is the first time in human history that a module company has recorded cost under 50 cents per watt,” said Shyam Mehta, Senior Solar Analyst at GTM Research.

Really?

 
Update
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7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected b ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Mini ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the south ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in compensa ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Ministe ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

8 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of RM20 milli ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

8 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Sc ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
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1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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