Are Cheap Solar Panels More Important Than The Economy?
With an average fall of 33% in the price of solar panels
, there has been no better time than now for those looking to invest in solar power and jump on the renewable energy bandwagon. Combining this with government initiatives to meet renewable energy targets, makes the investment even more appealing. However, people tend to ignore the reasons behind the relatively lower prices, and how it might affect their economy.With so much money flowing into the solar industry, manufacturers of solar panels are making considerable profits. China seems to be the country that was most prepared for this and their government has been investing heavily in the industry for several years. This has paid off with them having six of the top ten solar cell producers in the world in 2010, compared to just two producers five years ago.
It is hard to argue that those looking to invest in solar panels stand to benefit considerably from Chinas rapid expansion into the solar industry. However, this progress made by Chinese companies has left companies in the US, Germany and Spain struggling to survive. This is evident with US firms; Solyndra Solar, Evergreen and SpectraWatt all declaring bankruptcy in recent months. American companies have been unable to compete against the cheap importation of solar panels from China and it is significantly damaging the green equipment manufacturing sector in America, which means further job losses at a difficult economic time.
With a lack of protection from the government in terms of trading regulations, companies continue to import cheap Chinese solar panels to sell on. This will continue to benefit the Chinese manufacturing sector whilst making American manufacturing companies bankrupt despite initial heavy government investment.
Developed countries have always been advocates of free trade and globalisation, but it appears now that this policy is backfiring when faced with the might of the Chinese manufacturing sector. The free trade policy is negatively affecting domestic manufacturing companies who are in direct competition with China, as the case would have been with various other countries encouraged to adopt these economic measures in the past.
People have argued that protectionism is vital in helping certain domestic industries to develop and in this case it may be necessary to prevent more companies going bankrupt. However, it remains to be seen whether governments from the US or elsewhere will choose this route, which may harm trade relations with China and push up the prices of solar panels.
For the time being solar panels will continue to be at a relatively low price and people should consider taking advantage of this while it lasts. Meeting renewable energy targets seems to be one of the reasons behind allowing this to continue, so people who have the available capital stand to gain from the progress made by Chinese companies in this sector until something changes.
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