The European Union plans to join the US in investigating Chinese solar makers' alleged dumping of solar panels on the world markets at prices that undercut the industry. The US is considering imposing import fees on Chinese solar panels and the EU may follow suit.
That would be a blow to China's solar manufacturers who sell an estimated 80% of their products in Europe. Their profits are already being squeezed from cuts in subsidies there.
This could be the first year in a decade that solar installations go down because of subsidy cuts in the EU, increasing the worldwide glut in solar panels.
Bloomberg New Energy Finance estimates 24.8 gigawatts (GW) of new solar capacity will get installed this year, down 10% from 2011, when 27.7 Still, that's equal to the output of 20 nuclear reactors. Since 1999, solar installations have grown an average of 61% a year.
In contrast, factories have the capacity to make 38 GW of solar PV this year, 53% more than the median demand forecast, says New Energy Finance.
Three years ago, typical margins for industry leaders were 30% - now they're down to 7-10%.
China may absorb some of the over-capacity as it's expected to help domestic solar manufacturers by doubling installations this year, from 2.2 GW in 2011.
A group of US wind manufacturers also filed a complaint against China's wind industry, along similar lines.
Interestingly, a recent article pointed out that because China's solar manufacturers run mostly on coal, their output adds much more carbon to the atmosphere than those produced in Germany, which has lots of renewable energy.
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