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UnThink Solar
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Will SolarWorld's Brand be Helped or Harmed by the China Trade Dispute?

When one thinks of the solar trade dispute that has led to a 31 percent-plus tariff on Chinese solar manufacturers, the first brand that comes to mind is SolarWorld, who publicly led the CASM Coalition and filed the complaint. Now that the decision is in, will SolarWorld’s leadership benefit its brand relationship with installers or hurt it?

Clearly, the company’s actions have upset many installers and developers, most notably Jigar Shah, founder of SunEdison and the leader of CASE, the Coalition for Affordable Solar Energy. Although many companies on the CASE list of 177 public members are rival solar manufacturers, there are many large and small installers listed as well.

From the comments I’ve seen on Renewable Energy World and other solar news sites, the solar industry has taken sides. Some are applauding SolarWorld for its made-in-USA efforts, while others are condemning the company for bringing uncertainty and an inevitable rise in solar PV prices.

Will the two camps offset each other in terms of SolarWorld sales? Will installations slow down, stay the same, or somehow increase? My solar Magic 8 Ball says, “ask again later.” However, in terms of brand relationship currency, SolarWorld has certainly been hurt. Given how price sensitive PPA deals are today, I asked Jigar Shah if he would still consider buying SolarWorld panels if they were the most competitively priced. Perhaps not surprisingly, his answer was a very strong “no.”

He called SolarWorld’s suit “unconscionable” and said, “I know that solar is facing this stuff now because we are a $93 billion industry, but it would be one thing if our enemies were behind this. They are not; it is one of our own. I would never buy SolarWorld products as long as Frank Asbeck owns the company.“ (Asbeck is the head of SolarWorld AG, SolarWorld USA’s German parent company.)

Strong words, but Shah is not alone. The CASE list also includes solar developer and distributor groSolar. In a phone conversation with Jeff Wolfe, groSolar’s co-founder, he said, “SolarWorld has initiated an acrimonious situation in the industry. … If solar PV prices go higher, people are going to start losing jobs. So, if there’s blood being spilled, it’s going to be on SolarWorld’s hands.”

Wolfe also added that while he thinks SolarWorld manufactures quality solar PV panels, given a choice between SolarWorld and another Tier 1 competitively priced solar PV brand, he would personally choose the other brand.

Similarly, Adam Gerza, a commercial project developer in Southern California, said, ”I think the SolarWorld's image/brand is now just more polarized. Whatever side of the debate someone was on before [the tariff decision], they're probably still there. Purchase decisions will always be driven by price, quality, and bankability. But whatever chain of events this sets off next will get referenced back to SolarWorld, for good or for worse.”

Robert Lahey, vice president of investment banking at Ardour Capital Investments saw the glass somewhat half full for SolarWorld. He wrote, “I tend to hear favoritism for “made-in-the-USA” panels more from the smaller installers. I expect the big players will continue to go for bankability and price above country reputation. The tariff adds uncertainty to those metrics though, which is always bad for the market. Ultimately, I think the Asian players will find arrangements to remain highly competitive in the U.S. market.”

If Lahey is correct and Chinese panel makers remain competitive, then SolarWorld will once again be faced with the same competitors, but be left with the brand resentment that did not exist before the trade dispute.

From my knowledge, SolarWorld had a solid brand reputation with the entire U.S. solar industry before filing the trade complaint. Based on the above, it seems that now they will have a smaller slice of the U.S. pie. So, how does SolarWorld repair its brand relationship with resentful CASE-minded installers?

Depends. If solar PV prices rise, as expected, then SolarWorld will have to convince these installers that the tariffs somehow benefited installer businesses through higher PV panel prices and a market slowdown. That will be difficult. They will have to continue their focus on "American-made" solidarity and "fair trade," but those concepts may not assuage bottom-line-minded large developers and environmentalists wanting faster U.S. grid parity. On the other hand, if PV prices somehow remain at their current historic lows, then a robust U.S. solar market may not only enhance SolarWorld's brand, but also endorse its fair-trade cause. However, most analysts think panel prices will rise for all brands, not just Chinese companies.

The irony in all of this is that SolarWorld USA is a division of SolarWorld AG, a German company. American solar PV pioneer SunPower is now 60 percent owned by Total, a French energy company. Sharp Solar USA, one of the oldest U.S.-based manufacturers, has a Japanese parent company. I could go on with other familiar international solar PV brands, but the point is that we’re a global industry in manufacturing.

So, while I understand SolarWorld’s goal of preserving U.S. solar panel manufacturing jobs and fair trade, I just wish they could have worked toward a win-win solution instead of this divisive one. For example, SolarWorld could have used the same PR, lobbying, and lawsuit resources to lead the industry to get Congress to transfer fossil fuel subsidies to the solar sector, incentivizing demand for themselves and installers, furthering their brand relationships and consumer brand recognition. Another strategy would have been to lead their solar coalition to lobby Congress for manufacturing subsidies similar to China’s, thereby leveling the playing field and maintaining low PV prices.

With that in mind, the 31+ percent tariff decision is still not final. Until then, it's my hope that the parties can find a better last-minute resolution than implementing these tariffs and inciting a potential trade war that spreads to other U.S. industries.

I genuinely wish SolarWorld success. …But the truth is that I wish all solar companies success, for the sake of our environment, our economy, and for our world. UnThink Solar.


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