China, Solar Power & the Supply Chain

I have been giving some consideration to China's impact on the US solar industry supply chain. After a bit of investigation, it looks like the average investment for a 5KW system that is on the grid and has battery backup is about $40,000. I thought about the cost erosion as China has taken down its pricing per watt, effectively blowing away non-Chinese manufacturers.

I understand that companies like Solyndra could not compete with the Chinese pricing, so we have started adding tariffs to solar products imported from China. If we spent $1 billion to equip 25,000 homes with solar power, it would seem like we have not accomplished that much energy conservation. However, the US government spent $700 billion bailing out big banks and insurance companies, which are richer than ever. If we had used that money to equip homes with solar energy, we would have 17.5 million homes powered with some kind of solar energy assistance today. Since most homes require closer to 2KW of power, we could have easily doubled that total.

From another perspective, if we set the cost of a 968MW solar power plant in Blythe, Calif., at $6 billion and the average power supply per home at 3KW, the same $700 billion could have powered 37 million homes. As of 2011, there were 13.7 million housing units in California. That $700 billion that went to banks and insurers could have provided solar energy to more than twice the population of California. Consider Nevada (1.18 million households) or Wyoming (265,000), and you can easily understand how that $700 billion could have been better utilized setting up entire states with solar power.

The top-selling car in California is the Prius. An all-electric plugin car (not powered by fossil fuels) could be deployed even faster if we had an efficient solar grid network. The sun is not going to stop providing energy anytime soon.

Let's get back to supply chain relevance. Let China's government subsidize solar cells and panels. Don't charge a tariff. Buy as many cheaper solar panels as possible as quickly as possible. Do everything we can to reduce the carbon footprint, stave off global warming, and reduce the dependency on foreign energy. The sun is not a political power. It will not threaten us with labor shutdowns, filibusters, partisan holdouts, or increased costs.

Sustainability starts and ends with energy issues. Yes, our solar industry OEMs will feel the pinch and may go out of business. But in the long run, when we have become less dependent on the manipulations of foreign market strategies and fossil fuel interests, the same genius developing the solar businesses here will be incorporated into harvesting, distribution, and storage technologies that will augment the lower cost of imported solar cells and panels.

Transportation costs are common to all supply chains. When we see electrically powered common carriers in the form of trains, trucks, and perhaps even ocean-going freighters, we can begin to hope for the greatest and longest growth in our history. Mass deployment of solar-derived electricity will set us free from restrictive and even punitive practices now thrust upon the consumer via big money interests from both corporate and political power players.