fbpx

Latest Posts

Home

Facebook

Twitter

Search
About

Coronavirus-Induced Shortage of Solar Panel Components Highlights China’s Major Role in Solar Supply Chain

Last week, the Star Tribune ran a story about how the Coronavirus has disrupted the global solar panel supply chain, potentially causing the delay of two large solar installations in Wisconsin. The supply-chain interruptions have occurred because of factory shutdowns and travel restrictions in China, highlighting the major role that China has plays in the solar supply chain.

According to the article:

“Asia, and particularly China, is the globe’s primary supplier of solar cells and panels, and is also a major source of inverters and racking system components. Racks hold solar panels in place; inverters convert panels’ DC current into AC.

Also, about 80% of the specialty glass used to manufacture solar panels comes from China, said Martin Pochtaruk, president of Heliene, a solar-panel maker in Mountain Iron, Minn.”

The Los Angeles Times reports:

“Of the top 10 cell makers, nine are mainly Chinese manufacturers and one is from South Korea,” adding “overseas plants could be hit as they will be unable to receive components from China given flight restrictions, according to the China Photovoltaic Industry Assn. The group has asked the government to delay tariff cuts for domestic projects — meant to encourage solar plants to compete on their own against conventional fuels such as coal and natural gas — due at the end of March.”

China’s rise in the world solar panel market was achieved because the country bought solar companies and invited others to move to China, where they found cheap, skilled labor. Also, instead of paying taxes, they received tax credits, according to an article in Scientific American.

It is estimated that between 2008 and 2016, China spent more than $47 billion subsidizing the solar industry to build up its manufacturing capacity.

This buildup of capacity has been a key reason why solar panel prices fell 80 percent from 2008 to 2013.  The most-recent declines in solar component prices appear to have come as a result of China cutting it’s generous subsidies for solar installations, causing a drop in demand for panels in China. This has led to a surplus of supply, leading to panels being sold abroad at deep discounts.

Despite falling prices, solar panels produce electricity at a cost of around $60 per megawatt hour, without federal subsidies, in the Minnesota. This is essentially double the cost of electricity from our existing coal, nuclear, and natural gas plants. This, coupled with the fact that solar panels only produce about 18 percent of their potential output on an annual basis, means that solar is simply an additional cost to running the grid, no matter how low the cost of solar panels goes.

In the end, the impact of the Coronavirus on the solar industry will likely be short-lived. However, this news represents a good time to reflect on the fact that solar panels are dependent upon subsidies on both the production and consumption end, with China subsidizing panel manufacturers to bring down prices and the U.S. subsidizing panel consumers in the from of a 30 percent tax credit.

 

Comments

Subscribe

Categories

Upcoming Events

  • Morning in Minnesota: St. Cloud

    Location: St. Cloud

    Sign up HERE! Courtyard by Marriott St. Cloud 404 West Saint Germain Street St. Cloud, MN, 56301 Please join Center of the American Experiment on Tuesday, July 21 for breakfast with Center policy fellow and education expert Catrin Wigfall as she explains K-12 education in the state and its persistent disparities despite decades of increased spending. Following her presentation, Catrin will lead a Q&A session. 7:30 AM Check In and Breakfast 8:00 AM Presentation 9:00 AM Conclude   Catrin Wigfall is a Policy Fellow at Center of the American Experiment. She is also the director of EducatedTeachersMN and EmployeeFreedomMN. Catrin’s…

    Register Now
  • Morning in Minnesota: Marshall

    Location: Marshall Golf Club

      Sign up for this event HERE! Please join Center of the American Experiment on Thursday, July 16 at Marshall Golf Club for a breakfast with Center economist, John Phelan, as he discusses Minnesota’s economic future. Following his presentation, John will lead a Q&A session. 7:30 AM Check In and Breakfast 8:00 AM Presentation 9:00 AM Conclude John Phelan is a graduate of Birkbeck College, University of London, where he earned a BSc in Economics, and of the London School of Economics where he earned an MSc. He worked in finance for ten years before becoming a professional economist. He…

    Register Now
  • 2020 Annual Dinner Featuring Sarah Huckabee Sanders- Now in September!

    Location: Minneapolis Convention Center Ballroom 1301 2nd Ave S Minneapolis, MN 55403

    NEW SEPTEMBER DATE: We have made the difficult decision to once again move the date of this event. We will now host our Annual Dinner on Saturday, September 19th. All tickets bought for the April 4th, or June 18th dates are transferrable. We are so sorry for any inconvenience this has caused, but we look forward to seeing you on September 19! Direct any questions to Kathryn Hinderaker (kathryn.hinderaker@americanexperiment.org or 612-428-7005).   American President: The Unorthodox Approach to Politics that Changed the World. Sarah Huckabee Sanders served as White House Press Secretary for President Donald J. Trump from 2017 to…

    Register Now