China look to solve solar issues with mergers

China’s solar problems stem from rapid expansion over the past decade and issues with the U.S. and Europe

In response to troubles with its solar panel manufacturing, China is trying to get producers to merge.

Beijing, in particular, is facing problems with its solar panel industry and plans to fix it by reducing government support for the industry, encouraging mergers and blocking local leaders from supporting domestic producers.

Beijing’s solar problems stem from rapid expansion over the past decade. It offered grants and low-cost loans, which led to many producers crowding the market. The end result was too many producers that flooded the market with supplies and were forced to lower prices in order to compete. The industry is now about $17.5 billion in debt.

Further complicating Beijing’s solar issues is conflict with both the U.S. and Europe. Last month, a U.S. trade panel supported tariffs as high as 250 percent on imports of sola panels from China. This occurred after it was discovered that Beijing was subsidizing imports in an inappropriate way and affecting jobs abroad.

The European Union also started investigating complaints that China was subsidizing solar panel exports improperly and hurting both European producers and jobs.

Of course, China denied doing any of the above.

China has involved itself in many solar projects over the years, such as Beijing’s plans to achieve 10 percent of its energy production from renewable resources by 2010, reaching 15 percent by 2020 through the use of wind, hydro, biomass and solar power; China Energy Conservation and Environmental Group’s (CECEP) new 6.68 megawatt solar station, and China’s solar greenhouses for cheap and efficient growing.

Solar panel companies haven’t had an easy time in the U.S., either. Back in September 2011, Silicon Valley-based solar panel company Solyndra filed for bankruptcy after receiving a $535 million government loan in 2009. Reports stated that the White House pushed the loan ahead despite warnings about the viability of Solyndra in order to meet political deadlines.

In October of this year, Satcon Technology, which is a Boston-based company that develops solar inverters, filed for Chapter 11 bankruptcy protection as a result of the poor state of the solar power industry as well as financial earnings.