Imports from China fuel boom in solar energy

British homeowners are increasingly able to build greener homes by using cheap solar panels from China, but western workers are paying the price with a wave of corporate collapses and layoffs among green energy firms.

The price of PV (photovoltaic) solar panels has dropped by as much as a third this year alone, hastening the introduction of a low-carbon economy and reducing the time period when renewable energy needs public subsidy.

And there is a boom at present as consumers try to install the low-cost equipment before the level of handouts via the government feed-in tariff (FIT) is reassessed in April next year.

"Prices (of solar panels) are falling so fast that some buyers are holding off making purchases on the expectation they will come down even more. We have seen an average fall of around 33% so far this year and I would expect to see a further 15% decline in the last quarter," says Gabriel Wondrausch, founder of Exeter-based PV installer, Solar Gift Solar.

Wondrausch has traditionally bought in solar equipment from places such as Germany but says he is now poised to introduce a whole new range of low-cost panels with the help of Chinese manufacturers.

Solar Century, a larger London-based supplier that also assembles PV equipment, says a large amount of its equipment is imported from China too.

Britain has come late to the solar party with government ministers preferring in the past to concentrate on wind power and only fairly recently trying to stimulate demand by offering subsidies to solar users.

This has meant PV manufacture has been concentrated in countries such as Germany and Spain where harnessing the power of the sun has been encouraged for many years.

The US, and more recently China, have gradually latched on to the growing global market for solar and have been setting up factories in double-quick time.

But the very low labour costs – and allegedly the very cheap finance available from state-owned institutions – has rapidly propelled China into pole position in the production of solar equipment.

The rapid build-up in capacity in the Far East is playing a major role in driving down the cost of panels, but it is also being blamed for a crisis at many German and particularly American rivals.

In recent months leading green equipment makers in the US such as Solyndra Solar, Evergreen and SpectraWatt have all been declared bankrupt, while SolarWorld has shut a factory in California and Hamburg-based Conergy, is to axe 100 jobs.

The 1,100 job losses at Solyndra have caused a political storm in America over alleged predatory practices by Beijing. The situation has been made worse for Barack Obama by the fact the Californian company received more than half a billion dollars worth of loan guarantees from Washington.

Republican critics of the US president and his climate change policies have been having a field day reminding Obama of a speech he made at the main Solyndra plant last year.

"The promise of clean energy isn’t just an article of faith," Obama said, "It’s not just some abstract possibility for science fiction movies or a distant future or 10 years down the road or 20 years, it’s happening right now. The future is here," he said.

Senators in the US have recently written to Obama with a call for action to be taken against low-cost competition. "Unless the US takes aggressive action to combat the import surge of Chinese solar panels and the unfair trade practices that China employs, our efforts to facilitate the creation of the new jobs our economy needs will be substantially undermined," wrote Democratic senator for Oregon, Ron Wyden.

Parts of the US and German industry have voiced similar concerns and the air was thick with recrimination at the recent annual meet-up of the industry, the PV solar energy conference in Hamburg, earlier this month.

But top Chinese companies have started to fight back, saying that their country is being used as a scapegoat for bad management, old technology or other individual company problems. They point out that even some smaller Chinese companies have been going to the wall as competition intensifies.

Huang Ming, founder of Himin Solar Corporation, which claims to be the biggest solar thermal business in the world and is hoping soon to break into the British market, told the Observer: "It’s nonsense that Chinese companies are thriving on the back of low credit from state-owned banks. You can get lower interest rates from local banks in the west – and governments from Germany to the US have been offering financial support to solar developments."

Whatever the reason for solar manufacturers losing out, it should be easy to see a winner: the British homeowner. But as Wondrausch points out, it is also tough for consumers deciding which panels they should buy knowing any producer could out of business and shred any 25-year guarantee along with it.

Terry Macalister,