The Solyndra uproar and the recent International Trade Commission decision to investigate Chinese solar panel manufacturers threatens 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 has 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 a 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.
Cross-posted from The Hill