Why China's Solar Building Boom Is Good for the United States

China will install a third of the world's photovoltaic capacity next year—and that means cheaper solar panels for the U.S.


China is on track to install a record 12,000 megawatts of solar panels in 2014, according a report released today. At peak output, that’s the equivalent of a dozen huge nuclear power plants. The panels won't just give energy to China, though; they will also fuel a photovoltaic power shift in the United States.

The solar boom of recent years has largely been the result of a flood of cheap solar panels from China, home to about 80 percent of the world’s photovoltaic manufacturing capacity. But that came with a price: Chinese solar manufacturers vastly expanded production, saddling themselves with billions of dollars in debt just as revenues collapsed along with solar panel prices.

Suntech, once the world’s largest photovoltaic manufacturer, filed for bankruptcy earlier this year. The company’s rivals, meanwhile, have struggled to survive, cutting corners to save money and prompting worries about a spike in the number of defective solar panels that have begun to appear in the U.S. and elsewhere.

Historically, nearly all of China’s solar panels had been exported. Over the past two years, however, a solar shift has been underway as the country’s policymakers, under pressure to do something about the country’s pollution, took a green leap forward by ordering the installation of 49,000 megawatts of renewable energy in 2013 alone.

The report from the market research firm NPD Solarbuzz predicts that China will be the world’s largest solar market in 2014—and it will be that for the second year in a row. China will account for half the 24,000 megawatts of solar panels expected to be put on roofs in the Asia Pacific region in 2014, according to NPD Solarbuzz, and for a third of worldwide installations. In contrast, the U.S. is expected to install 4,400 megawatts of photovoltaic power this year.

The Chinese solar boom is helping to revive the fortunes of Chinese solar manufacturers, putting idle factories back to work. Yingli, now the world’s largest solar panel maker, said last week that China accounted for 38 percent of its sales in the third quarter of this year, up from 28 percent in the previous quarter. That contributed to a 63-percent jump in sales in the third quarter, compared to the same quarter last year.

And why should you care? A resurgent Chinese solar industry will help spur innovation and keep the supply of ever-cheaper panels flowing into the U.S. You’ll likely soon find Yingli solar panels—and those from other Chinese firms—on the roof of your house or supplying your electricity from photovoltaic power plants, where the panels are deployed by the tens of thousands.

You’ll want those panels to be built to last. And backed by a company with a healthy balance sheet.