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Opinion: Let China pay for India’s solar push
標題＊
1
Title The safeguard duty on solar cells and modules from
China and Malaysia is wholly counterproductive
國家區域＊ India
2
Country
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新聞日期＊ 09/08/2018
5
Date
6 商情內容＊ It is a well-known fact that China’s solar sector is
Content highly subsidized. This was the official reason for US
President Donald Trump’s announcement of a 30% tariff
on imported solar equipment in January as Chinese solar
companies undercut US solar manufacturers. The Narendra
Modi government is walking down the same path; it has
imposed a safeguard duty (SGD) on solar cells and
modules from China and Malaysia, effective 30 July.
About 85% of India’s solar cells come from both
countries. The argument for such a trade intervention
is the rising “dependency” on China on one hand and
economic and employment loss on the other.

From an environmental, economic as well as (energy)

security standpoint, such tariffs are unfortunately
counterproductive. China has acquired tremendous
experience in the production process, which gives its
companies a worldwide lead in production efficiency. As
a result, China can offer low prices due to economies
of scale. And abundant supply means prices may drop by
about 35% in 2018 and another 10-15% in 2019.

Compared to India, the US has significant solar

production capacity. There, higher prices could be
partly compensated by better quality. However, India’s
current production of solar cells and modules is much
less sophisticated and not competitive enough to
replace the Chinese product. Catching up with China
would require tremendous capital investment—with no
promise of return as the decreasing prices further
reduce profit margins. In short: India will not be able
to generate significant profit from national solar cell
production.

Germany’s solar industry has already experienced this

conundrum. Once prosperous and driven by subsidies, it
could not keep up with China’s low-cost production. In
2013, Robert Bosch GmbH, a leading supplier of
technology and services, sold all solar cell related
operations, losing around €4 billion. It has the same
problem with another technology too: Today, nine out of
10 batteries are produced in China, South Korea or
Japan. This year, Bosch decided to stall further
investment in battery technologies as 20% of market
share would have required an investment of €20
billion. The train left the station many years ago.

What about employment? Import tariffs will raise the

general price levels for solar cells and solar
photovoltaic power plants, the number of installations
will drop and employment will be affected. Solar cell
and module production is a highly automated process,
which requires high-end precision machines rather than
headcount. The real job potential is in installation
and maintenance. It is this field which will be
negatively affected. In the US, renewable energy
companies cancelled investments of more than $2.5
billion in large installation projects shortly after
Trump’s intervention. Thousands of jobs were lost.
Ultimately, the consumer will pay the premium. This is
particularly true and an even more sensitive matter in
India, where a significantly lower per capita income
and limited capital are closely related to economic
development and growth rates. Higher energy prices
drive costs. Lower energy prices drive the economy. A
growing economy increases energy demand—and prices if
energy supply does not grow accordingly.

This is why an import tax on solar cells ironically

undermines India’s own magic formula for the energy
transition: an effective carbon emissions reduction
along with economic development and electrification of
the country. The ambitious target of 175GW renewable
energy capacity by 2022—now raised to 227GW—could
lead to a price drop in energy prices if realized.
Today, electricity from renewables is offered for ₹2.4
per kilowatt-hour (kWh) while coal-based power is sold
for less than ₹3.7 per kWh—far below its break-even of
an estimated ₹5. It is no surprise that discoms prefer
the cheaper energy while coal power plants are faced
with load factors below 57%.

These historic low levels, however, are accompanied by

rising coal imports—from 137 million tons in 2017 to
an expected 145 million tons this year. This does not
map with the often promised energy independence gained
by national coal power. And as thermal power is
freshwater-dependent, losses are increasing further,
together with the number of droughts. More and more
conventional power plants are turning into stranded
assets and are being pushed out of the market.

Coal, often pushed as the perfect energy source for

India, will further lose its significance. This is why
the energy transition is inevitable and more a
political than a technological challenge. Jobs will be
lost on one side and will have to be created on the
other.
 Instead of a threat to India’s security and economy,
China’s subsidized solar sector can be seen as a gift.
China practically pays for India’s energy transition,
which will help to end the dependency on fossil fuels
and will reduce the effects on climate and public
health in the long run. Given the chance to get the
transition subsidized by another country, the Indian
government’s introduction of the SGD seems irrational.
It will increase solar power rates to around ₹3 per
unit, diminish employment potential, reduce power
supply, and drive up energy prices. In other words,
this policy helps nobody—not even the coal industry.
It is a market intervention which sounds more like
Trump than Modi.
Christoph K. Klunker is senior fellow, climate, energy
and resources, Observer Research Foundation.
資料來源＊ https://www.livemint.com/Opinion/pLlMouxyl5xpjoCHRvRVFL
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Resources /Opinion-Let-China-pay-for-Indias-solar-push.html
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