First Solar to China

First Solar, US-based and the world's largest solar panel maker, has been seen as competitive with Chinese imports because it uses thin film (technically speaking it is cadmium telluride) technology. Admittedly this blog has also subscribed to this optimistic point of view (see my Aug. 26 post). However, now First Solar has announced plans to build a 2 GW facility in Ordos, Inner Mongolia (link here). One could decry the offshoring of arguably technology-intensive manufacturing, but the price of silicon, which is the material with which Chinese firms make their solar panels, is falling dramatically. In fact, the price of silicon is falling so fast that some Chinese solar panel firms, such as Trina, claim that their unit costs per kwh will be cheaper than First Solar's by 2010. Thus, First Solar's offshoring is an understandable reaction to these shifting materials costs, but this case provides no reassurance to those who aspire to compete with China-based manufacturing through investments in technology.