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|Subject: A lesson in central planning (hint: don't do it)||Date: 10/5/2012 4:10 PM|
|Author: TheDope1||Number: 1821537 of 1947230|
And from the NYT, no less:
Though worldwide demand for solar panels and wind turbines has grown rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a ferocious price war.
The result is a looming financial disaster, not only for manufacturers but for state-owned banks that financed factories with approximately $18 billion in low-rate loans and for municipal and provincial governments that provided loan guarantees and sold manufacturers valuable land at deeply discounted prices.
China’s biggest solar panel makers are suffering losses of up to $1 for every $3 of sales this year, as panel prices have fallen by three-fourths since 2008. Even though the cost of solar power has fallen, it still remains triple the price of coal-generated power in China, requiring substantial subsidies through a tax imposed on industrial users of electricity to cover the higher cost of renewable energy.
The outcome has left even the architects of China’s renewable energy strategy feeling frustrated and eager to see many businesses shut down, so the most efficient companies may be salvageable financially.
In the solar panel sector, “If one-third of them survive, that’s good, and two-thirds of them die, but we don’t know how that happens,” said Li Junfeng, a longtime director general for energy and climate policy at the National Development and Reform Commission, the country’s top economic planning agency.
Mr. Li said in an interview that he wanted banks to cut off loans to all but the strongest solar panel companies and let the rest go bankrupt.
Long story short? Government couldn't predict the uptake of solar cells very well, so it overbuilt on capacity and now faces the real possibility of a number of its wind turbine and solar cell fabs going away, potentially opening the door on $billions in losses.
As a side note. I'm perfectly fine with China building all the solar cells it can make. In terms of semiconductor processing, it's not all that hard to build one. Let US fabs build microprocessors and SOCs and let China build this stuff.
BTW. Here's how to make a solar cell in your kitchen:
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