The Inanity of the Global Solar Panel Market

Last week, the Wall Street Journal gave a fascinating snapshot of the stupidity of the global solar market. As it is with all good news reports, the first paragraph says it all:

BEIJING—Solar-panel makers in China are open to raising prices and limiting exports to the European Union as a way to avoid steep trade tariffs, industry representatives said Thursday.

Allow me to put this in perspective. European consumers want solar panels. Indeed, they are forced to want them, due to Soviet-style green energy production quotas enacted by the EU. That’s the context: Europeans wanting/having to buy this product.

Against this backdrop, manufacturers in China are OFFERING to raise prices. They aren’t colluding to make more money; rather, they are voluntarily raising prices against their better judgment. Why? Because EU officials are threatening to raise prices by slapping tariffs on imports of Chinese solar panels (which, again, are products that Europeans want to buy).

Keep in mind as well that the EU’s threatened tariff would co-exist with national-level subsidies, known as “feed in tariffs,” designed to suppress the price of solar panels. This is true in Germany and Spain, off the top of my head, and likely true in other countries.

So there’s an EU policy that forces Europeans to buy solar panels. Yet there is also an EU policy meant to make solar panels much more expensive. Finally, there are several European policies meant to make them much cheaper. Got that?

Such are the endless and inefficient complexities wrought when government creates an industry out of whole cloth, as any member of the Gosplan could have told you.