Written by Mike Shedlock via MishTalk.com,
The United States wants to get into the solar panel business. If this is possible, it will mean that the cost of solar panels and electricity will rise...
China's influence on solar energy
The Wall Street Journal asks: Will the United States be able to break China's grip on solar energy?
This is a free link worth reading. The short answer is that everything is cheaper in China, from materials to electricity to labor.
However, the process deserves a closer look, and the United States is far behind at all stages.
polysilicon
The main component of 97% of solar panels worldwide is high purity silicon or polysilicon. The production of this silicon is an important first step in the solar manufacturing process. This is the part that requires the most energy and capital due to the high temperatures and expensive equipment used for refining.
Until 2005, polysilicon production was dominated by companies from the United States, Europe and Japan. With China's massive expansion and investment in solar energy, the situation has reversed. By 2023, about 91% of polysilicon for solar panels will be produced in China.
The United States recently effectively banned the use of most Chinese polysilicon in imported solar panels because much of it is produced in China's western Xinjiang region, where the United States has accused Chinese authorities of human rights abuses, including forced labor. . Which Beijing denies.
Today, American buyers increasingly rely on solar panels that use polysilicon manufactured outside of China. These supplies are scarce and keep prices higher in the US market compared to other markets.
Ingots and wafers
In the next part of the process, solar silicon is melted in furnaces and then cooled to form large rod-shaped crystals called ingots. The blocks are cut into thin sheets called wafers.
China produces more than 97% of the world's solar blocks and wafers. The United States does nothing.
The production of blocks requires a lot of energy due to the high temperatures used.
China has built many factories in areas where electricity is cheap, either from hydroelectric plants or coal. Most of China's solar power production takes place in provinces where the cost of electricity is nearly 30% lower than the global industrial average .
Sand and other materials.
Special vessels, called crucibles, are made of high-quality quartz sand to dissolve the silicon.
Most of the world's sand used in gold production comes from the Appalachians of North Carolina. But almost everything is shipped directly to China, which accounts for the majority of the world's shipping.
Future crucible manufacturers in the United States may have difficulty obtaining sand. And future ingot and wafer makers in the United States will buy the crucible from China, driving up costs.
Cell production
At this point, silicon becomes a device that can convert sunlight into electrical energy. There are many ways to make solar cells, but in most cases the wafers are treated with chemicals and etched with circuits.
China controls about 80% of the solar cell market, largely because of its cost advantages and control over other stages of the supply chain, enabling it to create supplier ecosystems. Many Chinese cell manufacturers also produce wafers or panels.
The United States currently has no solar cell manufacturers , and in recent years they have either moved out of the country or gone out of business. Many companies said they plan to build solar factories after the passage of the Inflation Relief Act. Further announcements are expected, as it does not require as much investment as silicon or wafer production.
Solar panels
The manufacture of solar panels is an assembly process. Companies take cells and insert them between sheets of glass or other material, connect them with wires, laminate the whole thing and put it in a frame. Wires and other electronics are then added to connect the panels to each other and to the larger electrical system.
It is the simplest and least capital intensive element of the solar supply chain, and the most widespread in the world. As of 2023, China accounted for 83% of global solar panel production and the United States less than 2% .
in Europe
Reuters reports that the solar industry is in crisis and Europe is facing Chinese imports
The transition to green energy in Europe is between a rock and a hard place. A wave of cheap solar panel imports from China is leading to record solar installations. But those same imports are crushing the few domestic solar producers in Europe.
Europe experienced an exceptional year for green energy. European Union countries installed record solar capacity, 40% more than in 2022. According to data from the International Energy Agency, most of these panels and components came from China (in some cases the 95%).
German Economy Minister Robert Habeck wrote to the European Commission in November expressing concern that the EU executive was close to imposing trade restrictions on Chinese solar energy imports, according to a letter seen by Reuters.
Habeck warned that restricting Chinese imports could halt the rapid expansion of green energy in Europe and make 90% of the solar market more expensive. It risks bankrupting European companies that assemble and install solar panels with imported parts, he said.
"The dependence on China cannot be reduced in the short term or projects will not be realized," Miguel Stilwell d'Andrade, CEO of the Portuguese company EDP, told Reuters.
He pointed out that the price of solar panels has increased in the United States , which imposes tariffs on Chinese imports. "It has an inflationary effect... the price of panels is more than double that of Europe ," he said.
Instead of praising the economic committees that help the green transition, the EU babysitters rebelled. The same goes for President Biden and Donald Trump.
Rates of 60%.
The Inflation Reduction Act aims to bring some of the previous processes back to the United States. But it will not guarantee the same in terms of labor cost or electricity. The United States also lacks the necessary factories.
The United States can easily absorb the technical expertise, but will miss out on all other steps without large customs officials.
Biden and Trump are ready. Trump proposes 60% tariffs on China. So far, Biden has accepted the tariffs imposed by Trump and raised most of them.
If the United States imposes 60% tariffs on China, final costs will increase by at least 60% and we will need much more electricity. Therefore, the cost of electricity will also increase.
There are strong inflationary pressures on several fronts.
California fast food minimum wage increase
I noted on September 28 that the minimum wage for fast food workers increased 30% to $20 an hour in California.
Inflation is rising. California is ahead once again. The bill would force many small restaurants to close or disappear. If McDonalds pays $20, why get $15.50 somewhere else? A $4.50 increase from $15.50 to $20 represents a huge 30% jump. Higher inflation is coming. California is ahead once again.
Student debt cancellation
President Biden brags that the Supreme Court hasn't stopped him from handing out even more free, inflationary money.
" The Supreme Court didn't stop me ," Biden said about canceling student debt.
The true cost of net zero is becoming impossible to hide
On February 6, I pointed out that the real cost of net zero is becoming impossible to hide.
Bloomberg reports that 48% cost increase destroys Biden's highly prized wind projects.
Even with massive subsidies, these projects are not profitable.
The great explosion of employment in government and social work
President Biden predicts job growth in 2023, but doesn't say where those jobs will be.
Mish BLS data, charts and calculations.
As a direct result of migration, Denver Health is at an "inflection point," with 8,000 immigrants making 20,000 emergency room visits.
Donna Lynn, CEO of Denver Health, warned that Denver Health is at a crisis point . In 2023, the eight thousand migrants from Central America received approximately 20,000 visits .
Denver Health asked the Federal Emergency Management Agency to fund medical expenses for immigrants. The state and federal governments are not paying the hospital, which spent $136 million on non-paying patients .
For more information, see Big Blast in Government and Welfare Jobs in 2023 to Help Immigrants.
Right now we have disinflation, a slower rise in prices, not a fall in prices.
I wonder how long that can last, given the enormous amount of inflationary pressure being maintained.
The chairman of the Federal Reserve says the US fiscal path is unsustainable in 60 minutes
Also note that Jerome Powell told 60 Minutes that the US fiscal path is unsustainable.
Federal Reserve Chairman Jerome Powell told 60 Minutes it was "urgent" for the United States to address its "unsustainable fiscal path."
List 15 key points from the interview.
Considering unsustainable fiscal policy , the end of global wage arbitrage, the end of just-in-time manufacturing, and massive tariffs, I don't see the happy soft landing that almost everyone else, including the Federal Reserve, sees today. .
By Zerohedge.com
Keynote on Oilprice.com:
