China's Solar Firms Get A Boost
Government loans give Chinese solar companies an even bigger edge over U.S. rivals.
It used to take decades for whole industries to shift overseas. Not anymore. Solar panel manufacturing is moving to Asia, and Chinese and Taiwanese companies especially are the beneficiaries--thanks to their low cost of production. Now come reports that the Chinese government is extending billions of dollars in loans to domestic firms, making life even tougher for U.S. competitors.
Suntech ( STP - news - people ) will reportedly get a loan of $7.3 billion from the state-run China Development Bank while Trina Solar ( TSL - news - people ), not so long ago a marginal player, will get a hefty $4.4 billion in funding. "It marks a dramatic bump in funding for the China solar PV [photovoltaic] industry," writes Deutsche Bank ( DB) analyst Steve O'Rourke. "China considers solar PV and broader renewable energy as strategic."
The loans will likely help the companies move from pure manufacturing operations into what many perceive to be a more lucrative long-term strategy: planning, financing and building large-scale projects for utilities and commercial customers. China has an extra incentive to fund such activities since the industry expansion will create jobs and help the nation move toward its renewable energy goals.
While the loans, if confirmed, would be good news for China's industry and (possibly) its environment, it's bad news for U.S. firms like Evergreen Solar ( ESLR), SunPower ( SPWR) and Energy Conversion Devices ( ENER). Plummeting prices recently erased the remaining efficiency advantages of many Western producers, which are themselves moving manufacturing to Asia....MORE