THE NEW SOLAR SYSTEM CHINA’S EVOLVING SOLAR INDUSTRY AND ITS IMPLICATIONS FOR COMPETITIVE SOLAR POWER IN THE UNITED STATES AND THE WORLD JEFFREY BALL | DAN REICHER | XIAOJING SUN | CAITLIN POLLOCK A Joint Initiative of Stanford Law School MARCH 2017 And Stanford Graduate School of Business The New Solar System China’s Evolving Solar Industry And Its Implications for Competitive Solar Power In the United States and the World Jeffrey Ball Dan Reicher Xiaojing Sun Caitlin Pollock steyertaylor.stanford.edu A Joint Initiative Of Stanford Law School And Stanford Graduate School of Business March 2017 Funding for This Study The New Solar System was funded by a research Government nor any agency thereof, nor any of grant from the U.S. Department of Energy (DOE). their employees, makes any warranty, express or The grant provided Stanford’s Steyer-Taylor implied, or assumes any legal liability or Center with full independence and authority to responsibility for the accuracy, completeness, or frame the inquiry, conduct the research, draw usefulness of any information, apparatus, product, conclusions, and write this report. The following or process disclosed, or represents that its use language is required by the DOE on material it has would not infringe privately owned funded: rights. Reference herein to any specific commercial product, process, or service by trade This material is based upon work supported by the name, trademark, manufacturer, or otherwise Department of Energy's Office of Energy Efficiency does not necessarily constitute or imply its and Renewable Energy (EERE) under the Solar endorsement, recommendation, or favoring by the Energy Technologies Office under Award United States Government or any agency thereof. Number DE-EE0006515. The views and opinions of authors expressed herein do not necessarily state or reflect those of This report was prepared as an account of work the United States Government or any agency sponsored by an agency of the United States thereof. Government. Neither the United States 2 The New Solar System About the Authors Jeffrey Ball led this project from its conception Xiaojing Sun worked as co-manager of research for through its research and writing. He is the primary this study. She coordinated research on the author of The New Solar System. A writer on research-and-development chapter and on the energy and the environment, he is the scholar-in- supply-chain component of the manufacturing residence at Stanford’s Steyer-Taylor Center for chapter. She received her PhD in public policy from Energy Policy and Finance and is a lecturer at the Georgia Institute of Technology in 2016, Stanford Law School. His writing has appeared in specializing in energy and climate policy with a The Atlantic, Foreign Affairs, Fortune, the New minor in international affairs. She wrote her Republic, Slate, and The Wall Street Journal, dissertation about the solar industry in China and among other publications. He came to Stanford in the United States. She is chief technology officer at 2011 from The Wall Street Journal, where he The Greenlink Group, a clean-energy consulting worked for 14 years as a reporter, a columnist, and and analytics company based in Atlanta. the environment editor. Caitlin Pollock worked as co-manager of research Dan Reicher helped frame the research for, and for this study. She coordinated research on the collaborated in the writing of, this study. He is finance and deployment chapters and on portions executive director of Stanford’s Steyer-Taylor of the manufacturing chapter dealing with the Center for Energy Policy and Finance and holds evolution in the Chinese solar industry’s faculty positions at Stanford Law School and manufacturing footprint. She has more than 11 Stanford Graduate School of Business. He has years' experience in analyzing the renewable- more than 30 years of experience in energy and energy and energy-efficiency industries, including environmental policy, finance and technology, having worked as an analyst at IHS Emerging having served three presidents, including as Energy Research overseeing the firm’s Asia-wind- assistant secretary of energy for energy efficiency industry analysis. She is a senior energy efficiency and renewable energy under President Bill Clinton. and policy and strategy analyst at Pacific Gas and He came to Stanford in 2011 from Google, where Electric Co. he directed the company’s climate and energy initiatives. The New Solar System 3 Acknowledgments This study, the result of some two years of work, Jingfan Wang, Jianhui Xing, and Di Yao. These would not have been possible without the support students hailed from a variety of Stanford schools of a wide group of individuals and organizations. and departments: law, business, international The U.S. Department of Energy’s Solar Energy policy, East Asian studies, and various types of Technologies Office (SETO) provided a research engineering. Several of them are native Chinese grant that funded the majority of the work behind speakers. In addition, Zhao (Joy) Zhu, then a recent this report. The grant provided the center with full graduate of Tsinghua University, provided independence and authority to frame the inquiry, particularly valuable assistance researching solar- conduct the research, draw conclusions, and write cell innovation in China for this project before this report. heading to a graduate program at the University of Cambridge. These students’ excitement about the A wide range of faculty and staff at Stanford research behind The New Solar System, their fresh University lent their time and assistance. Elizabeth perspectives on it, and their diligence in pursuing Magill, the Richard E. Lang Professor of Law and it made them a pleasure to work with. Dean of Stanford Law School, and Ann Arvin, Stanford vice provost and dean of research, Luciana Herman, lecturer in writing and rhetoric at supported the work at crucial points. Mark Lemley, Stanford Law School, provided enormously helpful the William H. Neukom Professor of Law at counsel about writing structure and style to a Stanford Law School and the Director of the number of these students as they translated their Stanford Program in Law, Science and Technology, research into memos. Her skill was profound and provided valuable guidance in discussions about her enthusiasm about this project was infectious. the interplay between intellectual property and Several solar experts at the DOE’s Solar Energy technology, an important topic of this report. Technologies Office—some still at the department Sergio Stone, deputy director of the Stanford Law and some now elsewhere—answered questions School Library and a lecturer at Stanford Law throughout the research for this report: David School, and George Wilson, reference librarian at Danielson, assistant secretary for the Office of the Stanford Law School library, lent their time and Energy Efficiency and Renewable Energy as of the considerable research skill to helping locate data start of this research and through May 2016; Minh for the study. Nora Richardson, librarian for Le, director of the Solar Energy Technologies Office research and discovery at the Stanford Graduate (SETO) as of the start of this research and through School of Business library, also was extremely October 2015; and Lidija Sekaric, deputy director helpful in finding data. Joel Greene, accounting of the SETO during this research, and Charlie Gay, assistant at Stanford Law School, provided the current director of the SETO, were particularly valuable help with the administration of the helpful. In addition, Daniel Stricker, technical Department of Energy research grant that funded project officer at the DOE, and Garrett Nilsen, this work. technical advisor to the DOE during much of the A number of Stanford students helped with the research for this project and, starting in January research for this study as participants in research 2017, the manager of the SETO’s Technology to seminars taught in 2014 and 2015 by Jeffrey Ball Market Program, were extremely helpful in the and Dan Reicher as part of Stanford Law School’s administration of the DOE grant. Law & Policy Lab program. They include: Sida Chen, Several solar experts at the DOE—some still at the Zhaoxi (Chelsea) Chen, Carlos Gomez, Xiaoxi Jin, department and some now elsewhere—answered Spencer Kim, Ivan La Frinere-Sandoval, Igor Leroux, questions throughout the research for this report. Yiyi Liu, Laurel Mills, Brian Miranda, Gonzalo Particularly helpful were David Danielson, Paredes, Greg Stillman, Ben Sumers, Hara Wang, assistant secretary for the DOE’s Office of Energy 4 The New Solar System Efficiency and Renewable Energy as of the start of The Stanford research team held three half-day this research and through May 2016; Minh Le, workshops—two in Beijing and one in director of the DOE’s Solar Energy Technologies Washington—as part of this project. The attendees Office (SETO) as of the start of this research and at all of the workshops were generous with their through October 2015; Lidija Sekaric, deputy time and were extraordinarily helpful with the director of the SETO during this research, Charlie insight they offered during the discussions. Gay, now director of the SETO, and Becca Jones- One Beijing workshop focused on investment in Albertus, now acting deputy director of the SETO. the solar industry. Attendees included Zhipeng In addition, Daniel Stricker, technical project Liang, deputy director general China’s National officer at the SETO, and Garrett Nilsen, technical