Can the solar industry survive without subsidies?

a reprint from the economist, 2018-06-25

A LITTLE over a decade ago, when JinkoSolar, a Shanghai-based company, entered the solar business, it was such a novice that when it visited international trade fairs, all it had was a bare table and a board with its name scribbled on it. But it also had luck, a technological edge and lots of public money on its side.

The industry globally was riding high on subsidies. Generous feed-in-tariffs (FITs), financial incentives for installing solar, made Germany the world’s largest solar market by around 2010. Germans turned to China for cheap sources of crystalline silicon solar panels, not least because subsidised land and loans enabled China’s fledgling manufacturers to undercut European and American competitors.

When European solar subsidies slumped during the euro crisis, the Chinese government once again stepped in to support its renewable-energy champions. It offered FITs to slather the remote west of China with solar farms. By 2013 China had eclipsed Germany as the world’s largest solar-panel market; last year it installed 53 gigawatts (GW), almost five times as much as in America, now the next-biggest market. Jinko became the world’s largest provider of solar panels in 2016, shipping almost 10GW globally last year. Six of the top ten producers are Chinese.
These ups and downs are known globally as the “solarcoaster”: just as subsidies can quickly build the market up, their withdrawal can tear it down. On June 1st this happened with a particularly heart-stopping lurch when Chinese authorities, with almost no notice, strictly limited new solar installations that qualified for FITs, blitzing the shares of Jinko and some of its peers in China, as well as of First Solar, one of America’s biggest solar suppliers.
Analysts reckon that at least 20GW of solar projects expected to be built in China this year will now be scrapped (see chart). As demand wilts, they predict, Chinese panel prices will fall by at least a third. Benjamin Attia of Wood Mackenzie, an energy consultancy, says that, depending on how quickly the price falls encourage an uptake of solar in new markets, this could be the first year since 2000 that the global solar industry stalls. “In the short term, the policy change will rack the China market with angst,” says an industry insider there. continue reading...