China's Plan to Rescue the Global Solar Industry

By Brian Fung

The People's Republic is taking emergency action to bolster the crashing price of photovoltaic panels. 

RTR30CX7-615.jpgReuters

This is the price of solar panels as it's fallen since the 1990s:

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If that chart looks dramatic, that's nothing compared to what's happened in the last couple years. According to Bloomberg data, solar energy's price-per-watt now stands at 83.87 cents -- 43 percent less than where that chart ends.

The crashing price of solar is partly what sunk Solyndra in the United States, and it's also what prompted the Commerce Department to levy steep tariffs on imported Chinese solar panels. China's produced too many, and now the world faces an overabundance of photovoltaic screens. It's a bad situation for solar companies around the world.

But here's a reason for optimism: the Chinese government -- because it can do these things -- plans to buy up over $11 billion of that excess and use it to build out its domestic solar energy capacity. In a mandate issued last month by China's National Energy Administration, every province will be required to construct a series of small photovoltaic plants that altogether will generate more than 15 gigawatts of electricity, which in the United States would be enough to power up to 5 million homes. By taking the extra solar panels off the market, China hopes its emergency stimulus project will take its solar industry off of life support and restore balance in the marketplace.

It's hard to argue against anybody's investment in solar energy. But for a country that, together with India, is expected to account for nearly a third of global energy consumption by 2035, this news comes as an unqualified win. Beijing has been aggressive about pursuing clean energy -- its latest five-year plan calls for expanding solar capacity to 21 gigawatts by 2015 and to 50 gigawatts by 2020. This attempt at resolving an immediate problem should get the People's Republic significantly closer to its target.

This article available online at:

http://www.theatlantic.com/international/archive/2012/10/chinas-plan-to-rescue-the-global-solar-industry/264054/