This Week in Clean Economy: Major Solar Projects Caught Up in U.S.-China Trade War

Chinese solar developer responds to U.S. trade war with new threat. Ener1 is on 'bleeding edge' of an industry shakeout and Big Wind braces for trouble.

Nov 11, 2011

Credit: WalMart Stores

China's renewable energy industry responded this week to a U.S. push to slap tariffs on cheap Chinese solar cells by conveying a simple message: Mess with us, brace for the worst.

"If there are no cheap Chinese solar panels in the market, many U.S. solar power developers will be forced to stop their plans," Cao Huabin, general manager of CECEP Solar Energy Technology, China's largest solar plant developer, told reporters.

It wasn't just talk for the cameras.

On Monday, CECEP announced that it would temporarily shelve $500 million of planned solar projects in California, New Jersey and Texas, in light of an Oct. 19 trade complaint from seven American solar firms. The companies allege that illegally subsidized Chinese firms are distorting the market with underpriced panels—and making it impossible for them to compete.

The case could lead to tariffs on soaring imports of Chinese solar goods. Last year, the U.S. imported $1.5 billion worth of solar panels from China—more than double the $640 million it brought in from China in 2009. 

Huabin said if tariffs forced CECEP to spend 30 percent more on panels his firm "would certainly drop" its U.S. solar plans because there would be "no profit to be made."

There are no signs yet the U.S. is buckling to the pressure.

The Commerce Department said Wednesday it would launch an investigation into the trade complaint. Next step is for the U.S. International Trade Commission to vote on Dec. 2 on whether the Commerce Department can proceed.

The Chinese Chamber of Commerce for Import and Export of Machinery and Electronic Products warned the ITC this week: "This ill-advised attack is threatening the whole industry in the United States," Bloomberg reported

The argument goes like this: Tariffs would make solar panels more expensive, which would make going solar costlier for American consumers. That, in turn, could slow the nation's demand for solar—just as China is catching up. (According to a report released Monday by Solarbuzz, a solar consulting group, China is on pace to match or even top the number of new solar panel installations in the U.S. this year for the first time.)

China isn't alone in its tariff opposition. On Tuesday, a group of American solar installers joined with U.S. subsidiaries of Chinese solar firms to launch the 25-member Coalition for Affordable Solar Energy, or CASE, to prevent new taxes.

The coalition argues that panel prices have dropped 30 percent since January 2010, and that cheap Chinese cells have become the lifeblood of the fastest-growing energy sector in the U.S. Tariffs would slow rapid solar expansion, they say, and could put the nation's 100,000 solar industry jobs at risk.

Ener1 on 'Bleeding Edge' of Electric Vehicle Battery Industry Shakeout

Struggling electric car battery maker Ener1 tried to fend off rumors this week that it will be the next Solyndra, the failed California solar firm that received $528 million in federal loans.

Ener1, whose subsidiary EnerDel was one of 30 advanced battery makers to win a stimulus grant, announced on Monday that it would overhaul its executive management team to "shift its business toward heavy-duty transportation and electric grid energy storage applications." It called a recent string of setbacks a "business transformation."

The announcement came two weeks after Ener1's shares were delisted from Nasdaq, and after the U.S. DOE said it was "closely monitoring" its status. Ener1's financial woes date back to June, when its biggest customer, Norwegian electric carmaker Think, went belly-up.

Even if Ener1 doesn't go bankrupt itself, analysts say it's likely to be a long road to recovery for the Indianapolis startup.

Dave Hurst, a senior analyst at Pike Research, a cleantech research firm, told InsideClimate News this week that Ener1 is on the "bleeding edge" of a quickly consolidating lithium-ion battery industry.

That's largely because today's production of batteries surpasses demand for electric cars, making it hard for less-competitive firms like Ener1 to stay afloat.

Meanwhile, bigger battery companies—mostly out of Japan and South Korea—have already snapped up prized contracts with the select pool of big-name E.V. makers like Nissan and GM. What's left for the smaller players are low-volume companies like Think, whose two-seater passenger car failed to take off in the U.S.

Scoring contracts with sound companies from the get-go was "really critical, and that's where I think Ener1 ran into trouble," Hurst said.

A123 Systems, another DOE grant winner and one of the top U.S. battery makers, took a hit this week after Fisker Automotive, which makes luxury electric sports cars, dramatically slashed demand for batteries in the fourth quarter this year. A123 said it cut its outlook for fourth quarter and end-of-year revenues by $45 million as a result.

Still, the Massachusetts firm is no Ener1. The company said its third quarter revenues rose 145 percent from the same time last year. On Wednesday, it struck a $25 million licensing deal, not with an E.V. maker but with a Japanese industrial equipment manufacturer—a move that Hurst said is key for the survival of every battery startup.

"A lot of battery companies are going to end up having to look outside of the automotive" industry, he said, pointing to grid storage, mobile electronics and power tools as potential markets.

White House Gives In to Pressure Over Solyndra Subpoena; Dems Cry Foul

After a week of wavering, the White House agreed Thursday to comply with a subpoena from House Republicans to turn over internal communications on Solyndra.

The House Energy and Commerce Committee probing the loan guarantee sought the documents to try to show that White House officials had contact with Obama campaign donor George Kaiser, an Oklahoma oil executive who was also a Solyndra investor.

Whether the White House will hand over all Solyndra-related documents, as the subpoena requested, is still unknown. Initially it refused to consent, saying the request was "driven more by partisan politics than a legitimate effort to conduct a responsible investigation," CNN reported.

Update: On Friday the White House rejected the subpoena for all communications related to Solyndra. Instead it provided 135 pages of documents that officials say meet the "legitimate oversight interests" of investigators.

On Wednesday, GOP lawmakers tried to ramp up the pressure by releasing selected emails between Kaiser and two of his top business associates. The Republicans say the emails show that Obama officials talked about Solyndra with Kaiser. The correspondence, the committee says, suggests the White House engaged in cronyism and strengthens the case for the subpoena.

The White House and House Democrats railed against the Republicans for releasing the so-called "cherry-picked" emails in a "misleading and inaccurate" manner, according to news reports.

So far the House committee's probe of more than 85,000 pages of documents hasn't turned up any proof that political influence played a role in the decision to approve Solyndra's loan and later to restructure its financing.

But the scrutiny around the loan program isn't expected to let up any time soon.

On Wednesday, Republican members of the House Natural Resources Committee pressed Energy Secretary Steven Chu to scrap a program for financing power line projects.

They pointed to a DOE inspector general report from earlier this week that cited problems with an electric transmission project that received $152 million in stimulus financing. In a letter to Chu, they called the program a "risky, Solyndra-like loan authority."

Wind Turbine Makers Already Bracing for U.S. Tax Credit's End

Global wind turbine makers said this week they are already bracing for what could be a major dip in turbine demand if a key U.S. tax credit for wind development is left to expire at the end of 2012.

Wind energy markets "tend to fall off a cliff" when such tax credits run out, Ditlev Engel, chief executive of Denmark's Vestas Wind Systems, the world's largest turbine manufacturer, told Bloomberg on Wednesday.

At issue is a production tax credit that allows wind farm operators to shave 2.2 cents off of each kilowatt-hour of wind power their turbines generate. The tax credit has been left to lapse three times since it was introduced in 1999, causing U.S. wind installations to fall each year after it ended, in one case by as much as 93 percent, Greentech Media reported last week.

Such declines hit turbine makers like Vestas hard. The U.S. is the No. 2 market for wind energy, behind China, so any drop in demand affects turbine sales.

A bipartisan bill in the House is seeking to extend the tax credit through 2016. But Vestas said it isn't banking on it. On top of that, the company said it expects sluggish demand in the Spanish wind energy industry, plus a weak wind market in debt-saddled southern Europe.

"Even the Chinese market ... has in 2011 turned out to be quite challenging," Engel said.

Due to these mix of factors, the Danish manufacturer said it was scrapping its financial goal to reach $21 billion in revenues in 2015, Reuters reported. The firm said it would cut costs, including jobs, by $207 million over the next year.

First in Flight: Algae-Fueled American Airplanes Take to the Skies

America's advanced biofuels sector made big strides this week after two U.S. airlines swapped petroleum-only fuel for lower-carbon alternatives.

A United Airlines flight soared from Houston to Chicago on Monday using a 60-40 mix of jet fuel and biofuel made from algae. Two days later, Alaska Airlines said it would fly 75 planes out of Seattle to Portland, Ore., and Washington, D.C., using an 80-20 blend of conventional fuels and used cooking oil.

Aeromexico, Mexico's largest carrier, said Thursday that it would use a 15 percent blend of Honeywell Green Jet Fuel—the same kind deployed by United—on daily outbound Mexico City flights to San Jose, Costa Rica.

The biofuels industry is hoping that these milestones can prod the rest of the aviation industry toward cleaner fuels, the Guardian reports. The test flights come just as the EU is proposing to cap the amount of CO2 that Europe-bound planes can emit starting next year.

Bill Glover of Boeing said the Chicago-based aviation giant wants 1 percent of all jet fuels industry-wide to have "some bio-content by 2015," according to NPR.

It's a tiny fraction, but it's no small feat for cash-strapped airlines. Alaska Airlines CEO Bill Ayer told the Wall Street Journal that the airline spent "about six times" more per gallon on the grease-based biofuel than it normally pays for jet fuel.

On our radar for next week:

In the UK, expect more action around a proposed 50 percent cut to residential solar subsidies after a coalition of solar firms took legal action against the government on Thursday. The group claims the Dec. 12 expiration of existing subsidies is "unreasonable" and could do in the fledgling industry.

The hot seat just got hotter for Energy Secretary Steven Chu, who will testify on November 17 to the House panel investigating Solyndra. The Washington Post released a report Friday arguing that Chu and his DOE colleagues failed to intervene as the struggling solar maker veered toward its eventual collapse.

Facebook Twitter Google Plus Email LinkedIn RSS RSS Instagram YouTube