It would be more accurate to state that Germany's manufacturers of solar panels are imploding due to the large volume of lower cost panels produced in China which are flooding (allegedly being dumped in) the market.
There is a two-way battle between the installation and service companies that use panels manufactured in the EU and other installation and service companies which use Chinese panels and equipment. The former claims potential job losses of 25,000 but the latter claim that over 70,000 jobs are also at risk in Germany and many thousands more across the EU if tariffs are imposed.
The media appear to be presenting this as a clear-cut issue of dumping to destroy European jobs but the reality is far from it. The BBC seems to be one of the better sources for dis-entangling the various points of view, http://www.bbc.co.uk/news/business-22766639, but the coverage does appear to favour the anti-dumping suits.
China's companies are often state controlled. (if not outright owned, then the government controls a commanding stake) With an intense focus on keeping employment high, they are lothe to cut production in any way that would see to a lost of jobs.
So they're in a catch of their own: They know if they continue to produce, they'll flood the market and depress the price, (mind you, this lowers the profit they can obtain per-panel as well) but if they scale back to keep the demand higher, they'll need to cut factory shifts, which means letting go of workers (and dealing with the instability that follows)
The State's interest is in maintaining stability in society above all else, even in the face of sound economic sense. Unfortunately for all involved, this is not terribly sustainable. One of those shoes will drop eventually. Manufacturing in China is starting to suffer noticeably despite their best efforts to dress it up. Either the economy is allowed to liberalize and adjust normally (as it does in western countries), or it breaks down. Both scenarios would bring a critical eye to the Party.
>>So they're in a catch of their own: They know if they continue to produce, they'll flood the market and depress the price
They only need to depress the prices until they kill off the non-Chinese competition, then they have a money earning business. After that, repeat the procedure for the next industry...
(This is the standard business model of monopolies. I believe a classic example are big bakery chains which enter an area and kills off the local small bakeries with low prices, then they raise the prices above the prices of the now-gone bakeries, to finance taking over the next area.)
> "It would be very easy to blow them out of the market by offering cheaper flights than them with better customer service."
Conceptually sure, but in reality not at all. Airlines are extremely capital intensive. Everything aspect of their operation means truckloads of cash.
Airplanes cost a lot of money. Trained maintenance crews cost a lot of money. Hangars cost a lot of money. Parking at a major airport costs a lot of money. Forget flight attendants and amenities, just getting a barebones aircraft off the ground costs tens, if not hundreds of millions of dollars.
So there's a big caveat here: nobody enjoys flying Ryanair, it would be easy to blow them out of the market if you had a source for a few hundred million dollars of funding to get started.
Indeed. Businesses involved in something that falls rapidly in price tend to have these type of issues, and also tend to complain and get government support a lot. Managing a business with fast falling prices is different from one where they gradually rise.
It's really irresponsible to throw figures like that without the disclaimer that solar PV production constitutes only 1.1% of the total energy consumed in Germany for the last year.
It's really irresponsible to throw around figures like total energy consumed without clarifying that this refers to the entirety of electrical power, heating and fuel used for mobility. ;)
FWIW, PV contributed 4.7% of the electricity in 2012, wind contributed 7.7%. (Same source.)
It's helpful to consider neighboring France as to why the total energy consumption is a more meaningful indicator. It has relatively cheap electricity due to the abundant nuclear power and as a result much larger percentage of the households use electricity for heating.[1]
In Germany, they prefer burning fossil fuels and therefore need less electricity during the winter. Should those burned fossil fuels be arbitrarily excluded when considering the total energy dependence of the country, considering they could be substituted with other energy sources?
You were wrong and you got called out. Now you're moving your goalposts, and your response still stinks since (unless your point was to note that France had to import electricity to meet heating needs from Germany, thereby externalizing the costs of their electric heating).
The original poster had a much more accurate statement since transportation and industry is so weighted towards refined petroleum products and cannot/can not practically be substituted with electricity.
I think the GP makes a valid point - if you're worried about climate change, it's no good being able to say that all your electricity is produced from clean sources if all of your heating / transport energy needs are being met by carbon-intensive sources.
Also, which goal posts do you think were being moved exactly?
It's a not a valid point, it's a silly point dressed up to sound reputable.
First he tried to minimize the accomplishment of having 40% of consumption coming from PVs by saying that it was from a very small percentage of the total energy consumption.
When it was pointed out that was over all types of consumption, he claimed that electricity could be a higher percentage of consumption if it were not from solar (presumably from nuclear plants).
That is where the goalposts were moved. He went from saying "Well, it's not really that much" to "Oh, it would be even higher if it weren't solar".
Let me point out a few things:
Germany is further north, and its population weighted climate is cooler. It has larger heating needs than France. Electricity is an godawful energy source for heating. Check out payback periods of solar hot water when substituting for NG hot water heaters vs electric water heaters. If Germany wanted to substitute low/no carbon heating they'd be better off with passive solar systems or geothermal - not solar PV or nuclear electricity. The very article he linked to was about France having to buy German electricity because they couldn't heat their own country w/ their huge nuclear fleet in a cold snap. The conclusion to be drawn there is that France's energy policy is flawed, not Germany's.
Also, heating methods aside, the metric is not honest. France has a smaller demand base than Germany (quick research: approximately 650TWh vs 525TWh in the mid 2000s) and Germany's economy is more industrial and energy intensive, which frequently doesn't permit electrical substitution.
Anyway, I don't have time to write more or edit this a bunch. But I hate to see poorly organized thought spreading anti-memes about clean energy.
How exactly do you think Germany (as a whole) could profit from this? With the EEG (Energie-Einspeise-Gesetz), the German government created an artificial solar bubble which is costing electricity customers several billions of Euros each year, only to fill the pockets of (mostly Chinese) panel producers, homeowners and companies who install that stuff, and last but not least the banks (most installations are financed by credit).
The amount of electricity actually produced is almost neglible (a meager 3.1% in 2011), whereas the consumer price has almost doubled since 2005, and is now one of the highest in the world.
Even if you assume that this giant experiment in planned economy would somehow lead to technological breakthroughs, making producing electricity via solar economically feasible in the long term, Germany would still have to recover the cost of 20+ years of subventions (which already amount to over 100 billion €, and that's only a fraction of the total sum which has been guaranteed by the EEG), while other countries with much better climatic conditions would be able to reap the majority of the profits.
How about by forcing the government to admit it was a jobs program and not a program to improve the environment. How about the government officials having to acknowledge the burden their system puts upon their local manufacturers?
So was it a jobs program or environmental? Politicians love to sell programs as one while really doing the other. Jobs programs tend to be vote buying schemes for the most part.
True, and I'm fine with paying for that (I'm German). It's better than just having world summits that end in disagreement.
Let's build amazing green technology, invest and then profit some from adaption and then see the real goal come true when everyone starts to make it. It might kill some companies in the end, but there's so much more at stake here.
A man has made at least a start on discovering the meaning of human life when he plants shade trees under which he knows full well he will never sit. -- D. Elton Trueblood
> large volume of lower cost panels produced in China which are flooding (allegedly being dumped in) the market
Would it be illegal for these German companies to just buy up all the panels as they enter the market, to resell later? If the suggestion is that the panels are being sold at below-cost in order to crush competition, then it can't be sustainable.
It should be a free market. Assuming there is actual "dumping", then look at it as the Chinese are deliberately making themselves poorer in order for the Germans buying the panels to keep more of their own money. The Germans are the ones better off, and the Chinese are worse off!
The usual mumbling is then about it being a move to remove other's production capacity, and somehow in the future reap oversized profits. The technology moves fast enough to make that less likely, and reaping oversized profits means new entrants can come in to get regular profits so preventing the oversized profits.
Free markets are generally self correcting to match supply and demand. The people distorting them are usually the ones who end up worse off.
There's also an issue of quality control and environmental impact: we know that technology manufactured in the EU will, in most cases, satisfy a number of very stringent tests aimed at guaranteeing the wellbeing of workers and consumers, and at maintaining low pollution levels. Despite recent changes in policy, this cannot be said with certainty for most items produced in China. I don't see why prices shouldn't be artificially corrected to reflect that.
Because if you impose tariffs on such goods, these countries will never be able to improve their standard of living. The lower standards give them a chance to produce for lower prices and thus participate in the global market. If you look at Asia, even though things are not perfect today, their standard of living is continously improving. Sooner or later they will catch up, even if it takes some more decades.
And, who knows, maybe one day they even offer significantly better standards than the western countries. If that happens, would you think that it would be ok for them to impose tariffs on western goods or stop importing from western countries until we somehow find a way to catch up?
Yes, absolutely. In the interest of our shared planet and our fellow man, we should always strive to raise the bar.
Chinese industry must be gently pushed away from make-it-cheap-make-it-quick practices that are unsustainable in the long period, both from an industrial perspective (sooner or later there will be someone cheaper than you) and from an environmental one.
You provide the reason in your second paragraph. The reason for dumping is to gain market share. Once a suitable amount of market share has been reached then prices will rise to profitability.
I don't believe the technology moves fast enough in this regard to resist the effects of dumping. Any new innovation that the Germans could introduce that would lower their costs enough that would allow them lower prices than the Chinese dumping would almost certainly be available to the Chinese. Who would then lower their prices yet again.
You do have the right idea about free markets correcting itself, in most cases. But a truly free market would result in all the German companies going out of business with the result being almost all panels coming from China. That would be bad for Germany but good for China. The reason to get in there to regulate that is because, under a truly free market, it would be possible for one region to totally decimate another region's economy due to numerous social and economic differences between the regions.
Think of locusts. They fly to a crop, eat everything, and fly away. Good for the locusts but bad for the farmer.
-- The people distorting them are usually the ones who end up worse off.
No, not really, ever successful business tries to shift away from a ideological free market. That's the nature of the beast, after all in an ideological free market prices free fall to the lowest possible level.
And surely you should be aware from a empirical historical standpoint the statement is completely and utterly false.
I doubt you could find a true free market on a large scale as it is in the economic interests of most governments to be involved in their own markets. A truly free market on a large scale would ultimately be like a true democracy, bad for people in the long run.
I suppose you could find examples of it in places that use a barter system that doesn't involve much, if any, government.
There is a wikipedia page with lots of content. Some useful characteristics are:
- free entry and exit: people can enter as suppliers or exit. Many markets are like this. Some aren't such as hospitals in most states in the US where you have to get a certificate of need, and it will only be granted if yours won't affect existing ones.
- mostly homogenous fungible products: you can do this for shoes, eggs and solar panels since they are substantially the same. This is significantly less true for nuclear submarines for the military because they are custom designs, and limited to builders with appropriate blessing and security clearances
- available information: the demand side can get information about the supplies on offer. You can do this for shoes and pretty much most things that have lots of reviews on Amazon. You can't for US healthcare since even pricing info isn't available in advance, nor is exactly what you are going to get.
I think I heard the government was also cutting their subsidies? Is that true?
I don't think most subsidies are good, but sometimes they could be needed if you want the future to look a certain way, and I don't think it's right to cut the subsidies of the solar industry after just a few short years, when the oil industry has been getting subsidies for almost a century, and keeps getting them (this goes for most countries).
The problem is that the German subsidies to solar power are extremely high, have the form of price guarantees (i.e. their total amount is unlimited!) and are paid for by private consumers via their electricity bill - and have reached already reached the level where they're a noticeable drain on the funds of poorer households.
I see it more as a failure of subsidies. Those companies were built for the sole purpose of grabbing government money. Not only is the installation of solar panels highly subsidized in Germany, these companies were often also founded in economically poor regions in eastern Germany which would grant further support. A few years ago there was a real alternative energy goldrush, companies expanded quickly, IPOs happened etc. . The money was plenty and the companies lived well of it. Then the Chinese catched up, and afaik there was/is no real reason to not buy the Chinese product since the German companies had no real advance in quality or technology (maybe they did not innovate, since they thought they were in a comfortable position?). Now the subsidies for installations would go to China. So basically the tax money supposed to prop up German industries supports a Chinese price-dumping scheme. And if that was not worse enough our energy prices are rising and rising (I think I pay about 0,25€ / kWh) (about a third of it is going to alternative energy subsidies). And don't get me started on the problems with keeping the grid at 50Hz....
Reversal of German subsidies and subsidies on Chinese side (that's what you mean by price dumping, right?) causing the German side to implode => failure of subsidies. Right.
Also, I would replace "the sole purpose of grabbing government money" with "wouldn't happen if not for the subsidies". But then the spin would be different, eh?
We have a similar thing going on here in the UK with the feed in tariff. Companies have been trying to sell solar to people in a country that gets an average of 1340 hours of sunshine a year (which is obviously far less up north than it is down south).
Acceptable? What on earth are you talking about? Do you think because some people use a news board they all of a sudden have to have the same world view?
Further the Germans who have had democracy have voted for (a kind of) socialism and (a kind of) planned economy for the last 60 years, and they are in the top 5 healthiest economies of the world (although not largest), and their long term prospects with regards to manufacturing and exportation are much better than the US.
I don't think you're using "socialism"[1] or "planned economy"[2] correctly. There's a large difference between a "mixed economy"[3] and "planned"/"socialism".
Socialism and planned economy seem to be working pretty damn well and leading to countries with much higher standards of living and social metrics than those which do not.
Perhaps we should ask since when is living in a bubble and declaring communitarian measures as failures acceptable in HN.
Starting with the obvious, the USSR and China were/are two of the largest experiments in socialism/planned economies. The USSR failed pretty spectacularly, while China's communistic policies are continually losing out to the spread of capitalism within it's own borders.
Meanwhile, in Europe, some of the more socialistic countries (Greece, for example) are failing economically while a strongly capitalistic (comparatively) Germany is continually having to bail them out.
I really don't see any argument that supports your claims, though I'd like to point out the answer is not pure socialism or pure capitalism. It's a happy medium, the million dollar question is exactly where that medium resides.
(Please don't respond with outliers like the resource rich Scandinavian countries that have small, extremely heterogenous populations)
Okay, take Germany: fully subsidized education, high taxation rate, socialized health care, important subsidies to public infrastructure.
England: public, socialized health care and social services.
Latin American countries: despite my personal opposition to many of the so-called populist governments, the trend in the last 10 years has been a reversion of neoliberal policies towards more social services and public investment, and it has been succesful in, at the very least, reversing 15 years of damage by American-imposed neoliberal policies.
The best the US has done in the past times is to reduce the amount of spending in social services and public infrastructure, creating the highest level of income inequality in the last few decades. Countries following the same policies are going the same way: a small cadre of extremely wealthy elites and a massive level of poverty elsewhere, with a minuscule middle class.
I wonder whether the Chinese manufacturer are really dumping them, or whether the German companies only had high prices from the beginning. Companies like Siemens and Bosch aren't exactly known for low prices or efficiency. Massive government subsidies certainly did not help making them more efficient. It rather seems like this made the companies focus on maximizing subsidies instead of producing something of market value, simply because the subsidies were more profitable. And now, with fewer subsidies and more market pressure, their business model ceases to exist. Can you blame the Chinese companies for that?
"Companies like Siemens and Bosch aren't exactly known for low prices or efficiency."
Which products, exactly, are you referring to? Siemens is a huge company that spans transportation, energy, healthcare, etc. I know their sub-critical, superheated steam turbines are pretty cost-effective. What's your experience with Siemens?
I will give you mine: at least the industry sector in my region is plagged by inefficient factories, subpar products at premium prices and a severe lack of innovation. Siemens is extremely beurocratic, in part thanks to regulations imposed because of corruption cases. At least in the Industry sector, innovation seems to come due to aquisitions rather than true R&D.
Regarding turbines, I've only heard excellent things about the ones manufactured in the US, stay away from the brazilian ones though.
Mine is that they were convinced of bribing in several countries and whenever they won a deal (they only went into government or municipality-financed things), they were more expensive than competition. I wonder how they won those.
Maybe some people go with the notion you get what you pay for? Not to say that it's always the case that expensive means quality, but you shouldn't necessarily always go with the lowest bid.
If Chinese products are being dumped, then the cheaper products become available to more people, resulting in reduced consumption of fossil fuels, which equals less pollution, which ends up being a net win for the planet...
On Saturday night, a hippie at a campfire told me solar panels are using 10% of the world's silver. I politely told him I was interested and I'd look it up...
It turned out to be true! It's easily verifiable, but just to start you off, here's one link. [1]
It isn't actually un-green to use lots of silver IMO, b/c solar cells will be around for a long time, but I think more people need to realize this fact b/c it means that certain solar dreams may not be financially possible.
For example, I once believed in covering the square meterage necessary to produce all electricity needs in the U.S. (and everywhere else for that matter) with PV panels. I couldn't understand why everyone was taking their sweet time. I figured it was a matter of waiting for the tech to stabilize... but now I realize we're limited by the cost of silver! (which has recently had a huge burst [2] )
p.s. Multiple companies are working on ways to reduce the silver in PV panels, including nanosilver and replacing it with copper, but the real issue is efficiency.
Are you sure about that? It's something I always wondered. The efficiency of today's solar panels is 15%-20%. According to a short google search, researchers have already shown panels with 44%. It seems certain that over time the efficiency of commercial panels is going up and prices are going down.
If you have only limited space (e.g. your roof), doesn't it make economic sense to replace your old panels with more efficient and possibly also cheaper panels at some point?
Bloomberg News' Alex Webb reports that Siemens AG is getting out of the solar power industry, announcing plans to close its solar power unit after struggling to find a buyer following losses of at least $1 billion since 2011.
I think pointing the finger at cheap panels from China is only half of the issue. The real issue is that even the cheaper PVs from China aren't cheap enough to make it viable.
Everything I've read about solar panels is that they aren't nearly efficient enough just yet to offset the long term costs. Although there is hope that they are getting better.
But the biggest factor is that for a large number of people they will likely never be viable simply because they do not receive enough sunlight on a daily basis. The solutions for them is either importing the energy from the closest region that has ample sunlight or put the panels above the weather.
The trouble is they're not actually doing it cheaper. They're doing it expensively, but using Chinese government subsidies to over-expand production.
The problem is that Chinese companies like Suntech (1) get massive government grants to expand production, but when their massive overproduction swamps the market and prices crash, they still ended up losing money and had to default on their bonds. It's a debacle at both ends, Germany and China.
This is one theoretical explanation. Another one, quite plausible, is that Chinese companies spent less on salaries, especially of management and company image, given very different "standards of life" between China and Germany, and just producing the damn things.)
The WaPo article does not present the defaulting on the debt and bankruptcy as a theory. Are you suggesting that lower salaries somehow led to default and bankruptcy?
Conveniently, the article also states that Suntech is the largest global seller of PV modules, undermining arguments that it is some sort of special case (if it's the largest on the planet, it must be the largest in China...).
Default is, probably, just part of a money stealing scheme, nothing special, it is same everywhere - get loads of government money and then bust - US, especially Russia, China - all the same.
The difference in so called "standard of living", however, is very simple thing. For example, uneducated people who making roads in Sweden receiving around 3k euro salary, while exactly the same job in, say, China is just to get food and rent. Similarly, German working class enjoys very high wages, which makes any "fair" competition with Asian cheap labor impossible. Then big companies employs tricks, such as assigning taxes for Chinese solar panels in EU, just to protect inflated wages of its working class. Actually all this is the very basics of micro-economy, so nothing to discuss here.
There's nothing theoretical about it. The Chinese government is completely blatant about it's interventions in it's economy. Subtle they are not. I say this as the spouse of a former Chinese citizen, with extended family over there in business and government.
Dutchman here (Germany's neighbor). 'Green' forces in my country set new rules so the government actually pays a part of the costs if you buy and install solar panels on your roof. The very same government who puts up an import-fine for those very same panels thus making them more expensive. Now that a lot of people have bought and installed solar panels and have become net suppliers of power (giving it back to the grid) they're working on new rules to administrate those net-suppliers. They now run the risk of having to document everything like regular power-providing companies do. (Lots of red tape). Thanks government...
Administering a power grid is no amateur job. I don't see why the government wouldn't want to put safeguards in place, in order to guarantee that lights will stay on. Obviously there's a balance to be found, but you can't just give everyone full access to the grid and expect things never to break.
Everybody has a meter in their house, only with these solar panels it will run backwards. At the end of the year everybody receives a bill of what they used... There is no need for extra red tape.
That system us actually a (usually) government mandated subsidy.
Think about it: when you pay for power you pay not just for generation but for distribution as well. When you feed it back and your meter runs backwards the power company should be paying you only for generation (at a wholesale rate, so they can turn a profit).
In some countries they measure your power in both directions and give you a credit based how much you put back into the grid. This would be much lower than what you pay to buy power.
> In some countries they measure your power in both directions and give you a credit based how much you put back into the grid
That would be perfect. No need for extra administration and extra taxation.
Oh, I come today and I see my tiny comment got so much hate. Why is that? If you want more details, you can ask for it.
Why would be good to have tax money go where no private investor would? How sustainable is this in the long term? I thought this was obvious enough, apparently not.
I think that those firms failing is an example of the intent of the comment.
Just to be clear, I'm not agreeing as I feel that the State investing in the private economy can lead to good things if done responsibly. The problem is often that the people doing the investing have no idea of what they are investing in, which can lead to economic damages. Thankfully in these cases it just appears that we lost taxpayer dollars in those failings.
Personally I feel that many of those firms, not all mind you, were simple pump-and-dump schemes that had no intentions of succeeding at anything.
There is a two-way battle between the installation and service companies that use panels manufactured in the EU and other installation and service companies which use Chinese panels and equipment. The former claims potential job losses of 25,000 but the latter claim that over 70,000 jobs are also at risk in Germany and many thousands more across the EU if tariffs are imposed.
The media appear to be presenting this as a clear-cut issue of dumping to destroy European jobs but the reality is far from it. The BBC seems to be one of the better sources for dis-entangling the various points of view, http://www.bbc.co.uk/news/business-22766639, but the coverage does appear to favour the anti-dumping suits.