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It's been a banner year for solar energy. The United States is on track to install a record number of solar power systems — thanks in large part to low-cost solar panels from China. That's been challenging for American manufacturers, and federal officials have put trade tariffs on Chinese panels.
Things look busy at the SunPower solar manufacturing plant in Silicon Valley. Workers are screwing frames onto shiny, 6-foot solar panels as they come off the line.
This plant has a long list of notable visitors — governors, lawmakers, federal officials. It's because SunPower is a top supplier — and because there aren't many solar plants left to visit. "It's going to require being lonely to be one of the winners, but it's unfortunate that there aren't many American solar companies," says Tom Werner, the company's chief executive officer.
He says the growing market for solar has attracted competition. Chinese manufacturers scaled up quickly and in just four years, solar panel prices fell 75 percent. "The economics have gotten way, way more challenging," Werner says. "Difficult for some companies to make it."
SunPower is just hoping to break even this year. Several American manufacturers filed a trade complaint against China, saying companies there are getting illegal subsidies. In November, the U.S. International Trade Commission agreed and locked in trade tariffs of up to 36 percent.
Werner says while SunPower didn't directly join the complaint, it does stand to gain. "Let's just say it won't hurt our pricing, but I don't know if it will be a big advantage," he says.
Solar After Solyndra
The solar industry doesn't need more bad news, says Werner — especially after the political scandal of one particular bankrupt solar company. "It's amazing how many people know the name of that company," he says.
Solyndra is the company-that shall-not-be-named, kind of like Lord Voldemort in Harry Potter.
"Well see, if I name the company then I'm just propagating the whole deal," Werner says.
It's an entirely different story for solar installers. At Sungevity's Oakland headquarters, company President Danny Kennedy introduces me to the sales team.
Sungevity is one part power company, one part Internet startup. The team here designs rooftop solar systems virtually, by using satellite photos of each house.
"We grew gangbusters in 2010. Doubled again in '11. Have continued to grow this year," Kennedy says.
Jobs At Risk
Sungevity gets its solar panels from the U.S., South Korea and China. Even with the trade tariffs, prices haven't gone up much because Chinese solar companies have found a loophole: There's no tariff if the individual silicon solar cells are made outside China but then assembled into panels in Chinese factories. Kennedy says focusing on manufacturing jobs is a mistake.
He says there are more jobs "in the sales, finance, installation and maintenance end of the value chain than there [are] in the factory. It's probably a ratio of about 3 to 1."
Kennedy says a trade war with China puts those jobs at risk.
"We're growing faster than any industry over $100 billion in value in the global economy," he says. "And yet, there is this nabobs of negativity around us that are causing concerns in the investment community. It's crazy talk."
Dan Kammen, an energy professor at the University of California, Berkeley, says the solar industry "is totally a teenager in a lot of ways."
"The industry is growing dramatically," he says. "There's also incredible turmoil. And there are some of these teenagers who are clearly going to be young prodigies and others who are going to need to go into rehab."
Kammen says when companies fight over market share and race to the lowest price, startups with cutting-edge technology just can't compete. Losing that innovation, he says, could be the real cost of a solar trade war.