Dumping? Or competition?

President Obama meets China’s Vice President Xi Jinping today. A hot topic will be the alleged solar panel dumping by Chinese manufacturers, which has been hurting U.S. manufacturers. Is it dumping? Or competition?

Viewed from learning curve economics, two megatrends have changed the solar module landscape. First, five years of massive national subsidies in Europe and Japan have been slashed or eliminated. Second, the solar industry has matured to the level where it now has its own dedicated silicon cell supply, rather than taking the excess capacity of the semiconductor industry. These impacts mean the industry has reverted to its long term cost curve as the basis for pricing, rather than artificially high prices.

Viewed from the political lens, solar is a lightning rod for near term posturing. Obama’s administration needs recovery from the Solyndra debacle and show that it wants to create jobs. The U.S. industry has suffered, as unexpectedly quick price cuts have damaged bottom lines.

Expect strong language from both sides. But dont expect real sanctions anytime soon. For the plain truth is that its a new, tougher competitive environment for solar modules. Get used to it.