China's solar making gains in West

Aug. 25, 2009 at 5:41 PM
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BEIJING, Aug. 25 (UPI) -- Chinese solar industry companies have already played a major role in lowering the cost of solar panels by almost half over the last year, The New York Times reports.

In an effort to boost market share, China's largest solar panel manufacturer, Suntech, is selling solar panels in the United States at below the cost of materials, assembly and shipping, Shi Zhengrong, the company's chief executive and founder, told the Times.

Solar companies in the West, meanwhile, are facing a tough time competing with their Chinese counterparts, which benefit from lower operating costs and government support.

Last week Germany's Q-Cells announced plans to lay off 500 of its 2,600 employees because of declining sales. Behind Tempe, Ariz.-based industry leader First Solar, Suntech is now on course to surpass Q-Cells as the world's second-largest supplier of photovoltaic cells this year.

Domestically, China's solar companies have been on the receiving end of generous subsidies from their Chinese national, provincial and local governments since March. Incentives include land for operations and funds for research and development as well as low-rate loans from state-owned banks. Electricity and labor costs are low as well, with fresh engineering graduates earning around $7,000 a year.

China's solar companies are also receiving "lavish" government support, the Times reports, to build assembly plants in the United States. In so doing, they bypass U.S. protectionist legislation. Even with the $2.3 billion tax credit program to manufacturers of clean energy equipment announced by the U.S. departments of Energy and Treasury this month, the American solar industry will also have to compete with their Chinese counterparts stateside.

Suntech plans to announce within the next two months its plans to build a $30 million solar panel assembly plant in Phoenix or somewhere in Texas. "It'll be to facilitate sales -- 'buy American' and things like that," Steven Chan, the company's president for global sales and marketing, told the Times.

About 90 percent of the plant's 75 to 150 workers will be blue-collar laborers, welding together panels from solar wafers made in China.

Last week China's Yingli Solar also announced a "preliminary plan" to assemble panels in the United States.

To avoid U.S. opposition to solar imports, Chinese solar companies are encouraging their U.S. executives to join industry trade groups, as Japanese automakers did when setting up U.S. operations decades ago.

"I don't see Europe or the United States becoming major producers of solar products -- they'll be consumers," said Thomas M. Zarrella, chief executive of Merrimack, N.H.-based GT Solar International, a company that sells specialized factory equipment to solar panel makers worldwide, the Times reports.

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