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Leveling the playing field: an interview with CASE Chair and Co-founder Jigar Shah on the SolarWorld trade case, the advantages of low-cost modules and national policy

Jigar Shah
Jigar Shah

Jigar Shah is chairman and co-founder of the Coalition for Affordable Solar Energy (CASE), which describes itself as an organization dedicated to creating a level playing field for the solar industry and supporting policies and business models that make solar accessible and affordable. He is also the CEO of the Carbon War Room.

In 2003, Jigar founded SunEdison. Under his leadership, the company revolutionized the solar industry by introducing a business model to sell solar as a service. The subsequent transformation to solar power service agreements turned solar services into a multi-billion dollar industry.

Jigar is also an expert on energy project finance, changing energy policy, working with entrenched stakeholders, and convincing individuals to embrace energy technology. He works closely with entrepreneurs, policymakers, and investors around the world to develop, incubate, and implement sustainable solutions.


Solar Server: Can you summarize for our readers CASE's specific objections to the trade petitions filed by SolarWorld and the six other companies, and what dangers you feel the current actions by the Department of Commerce and the ITC pose for the U.S. solar industry?

Jigar Shah: The challenge that CASE has is that the vast majority of jobs in the United Solar Industry really come from the downstream sector, and the downstream sector is very vulnerable to price increases from modules. And our sense is that in fact lower cost modules in a competitive environment is better than the alternative.


Solar Server: As detailed in a recent report by Greentech Media Research, the United States is also exporting large amounts of polysilicon and PV manufacturing equipment. Can you talk about the potential impacts on those sectors as well?

Jigar Shah: CASE really represents users of solar panels in the United States, but there is no doubt that the SEMI release talks about the fact that there are risks to equipment manufacturers as well as polysilicon manufacturing in the United States who could be negatively affected by a trade war.


Solar Server: Ontario has a very strong policy with its domestic content requirement in its feed-in tariff, and the United States has a less strong policy, the "Buy American" provision in the ARRA. Do you feel that protectionism is ever justified, and is CASE's opposition to this particular action or to protectionism in general?

Jigar Shah: CASE has been brought together for this specific instance, but ultimately when you look at the track record of local content requirements, from Ontario to Los Angeles, to other places, you find that in fact they have a negative impact in terms of prices.

And so Los Angeles' local content requirement caused modules to be a good 10-20% more expensive than the rest of California when they had those rules in place. The same thing is true with Ontario today, where modules are about 20% more expensive than they are in the United States.


Solar Server: What is interesting to me is that this issue of protectionism keeps coming up in policy. Do you feel that the benefit to a local economy of keeping manufacturing local could ever outweigh these increased costs?

Jigar Shah: No, because ultimately if the manufacturing is solely created to meet the domestic market, then the domestic market has to pay for all the non-cost effective portions of the scale that they reach. So in Ontario, none of those modules are being exported to other countries, and therefore you are not getting the multiplication effect.

And so ultimately, if you want the multiplication effect, then you have to provide general industrial policy, but not link the manufacturing industrial policy to the deployment policy.


Solar Server: Recently CASM accused CASE of misrepresenting a statement by SEMI regarding this trade case. How do you respond to CASM's allegations, and do you feel that the SEMI statement was an endorsement of CASE's position?

Jigar Shah: I think that SEMI has been quite careful not to endorse either position, but I think that their words speak for themselves, right? They say "This case could lead to significant price increases that could have a significant deleterious impact on SEMI members, many of whom are upstream providers of high-value materials. It will also impact downstream service providers, such as installers, where a majority of solar industry jobs are concentrated."

I can't imagine that it takes more than a sixth-grade education to figure that out.


Solar Server: Chinese PV manufacturers have come to dominate crystalline silicon PV manufacturing very rapidly. Do you think that in time China could also come to dominate the areas where the U.S. is currently strong, including polysilicon production and PV equipment manufacturing, and take many of the economic benefits of the upstream PV industry with it?

Jigar Shah: No. I think that China has replaced the Japanese as the largest manufacturer of solar panels in the world, and then replaced the Germans as well. But ultimately there is a tremendous amount of innovation still left in this industry. So as silicon wafers become thinner, many of the Chinese manufacturers are still using manual processes and can't use thin wafers. So automated manufacturers will have an advantage over the Chinese.

Or, there is lots of low-cost electricity in Quebec, or in Northern parts of the United States of America, or Iceland, etc. that could maintain the same polysilicon advantage that China is trying to gain.

And so my sense is that the Chinese don't have a lock on innovation, and therefore they don't have a lock on manufacturing.

Solar Server: However, we have also seen that the intellectual property advantages in one nation are quickly transferred to other nations. Do you feel that innovation will help nations to maintain industries within their borders?

Jigar Shah: I think it has so far. So when you look at German manufacturing, as well as Chinese manufacturing, very little of it was innovative. Most of it was incremental increases in manufacturing, but very little of it was a new diffusion method, or higher-efficiency cells.

Most of that has come out of the United States. The problem is that the United States broadly, there hasn't been a huge domestic market for the product. So the manufacturers, like First Solar, build a pilot plant in Ohio, but then built their second plant in Germany where their market was. And now they have built their third, fourth and fifth plants in Malaysia, where there is really good industrial policy.
But the profits and the innovation profits are still maintained by the United States company. And that's true with Innovalight as well. So I do think that we have a good track record of keeping innovation profits in the United States.


Solar Server: When I see the arguments being made by CASM, I hear the same basic logic that goes back to Van Jones - a vision of job growth through green jobs, specifically within the United States, and PV manufacturing as a means to that end. Whether or not this trade case is successful, do you think that the United States will ever be a global center for crystalline silicon PV manufacturing?

Jigar Shah: I think there is a couple of questions in there, so let me unpack them specifically. In terms of Van Jones' argument, the U.S. has been a beacon of job growth, and if you talk to the Solar Energy Industries Association, they have data showing that the solar industry has been the largest job creator in the United States over the last three years based on percentage terms.

Second of all, I think that manufacturing in the United States will happen when deployment is high in the United States. Deployment this year is expected to top 2 GW in the United States, which is roughly the same as the manufacturing capacity in the Untied States. As the deployment numbers grow to four, six, eight GW per year, I think you will see manufacturing be installed locally in the United States not because of any other reasons except for the costs of shipping and working capital.

As solar becomes more and more automated as a manufacturing activity, what you are finding is that labor is actually not a huge cost of making solar panels, just as it is not a huge cost of making automobiles. So what ends up happening is that the cost of shipping and the cost of working capital become determining factors, as well as the cost of currency, and dealing with all the currency fluctuations that have been going on for the last three years.
So what we need to do is to make sure that the U.S. can maintain its momentum around deployment, and that will lead to manufacturing by the end of this decade.


Solar Server: Is there anything else that we haven't discussed about the trade case, and about these issues broadly, that you think is important for our readers to know?

Jigar Shah: I think it's important to know that the U.S. trade case law is very anti-China and anti-Vietnam. So the reason that CASE was formed is that all things being equal, the Chinese and the Vietnamese always lose their trade cases in the United States. And the Office of Management and Budget has actually issued a statement saying that they need to update their procedures, because the current process is biased against the Chinese and the Vietnamese.

And that is why CASE is so important. It's the only way that we have of making sure that this doesn't occur is to make sure that the American companies that are negatively affected by this speak up.

Conducted by Solar Server International Correspondent Christian Roselund