China is facing an enormous oversupply of solar panels and wind turbines, and the problem makes the woes of Solyndra and the rest of the U.S. solar industry look tiny by comparison. The NYT reports:
Though worldwide demand for solar panels and wind turbines has grown rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a ferocious price war.The result is a looming financial disaster, not only for manufacturers but for state-owned banks that financed factories with approximately $18 billion in low-rate loans and for municipal and provincial governments that provided loan guarantees and sold manufacturers valuable land at deeply discounted prices.China’s biggest solar panel makers are suffering losses of up to $1 for every $3 of sales this year, as panel prices have fallen by three-fourths since 2008. Even though the cost of solar power has fallen, it still remains triple the price of coal-generated power in China, requiring substantial subsidies through a tax imposed on industrial users of electricity to cover the higher cost of renewable energy.
This just emphasizes the point that solar and wind energy are not ready for a bigger role in the global energy market—at least not without massive government subsidies and cheap bank loans. And even then, as this story shows, they’re still very difficult to make profitable.All those people who say the U.S. should look to China’s green energy policies should heed their own advice and take a hard look themselves. The view ain’t pretty.