If you want a quick lesson on the funhouse mirror that is the world of solar energy economics, look no further than the trade complaint against the Chinese solar industry filed with the Obama Administration by the American solar industry. 
Seven U.S. solar panel manufacturers claim the Chinese government and solar industry are dumping cut-price solar panels in the American market. Dumping claims are as common as flies in international trade, but dumping solar panels has larger implications than dumping consumer electronics or agricultural products. The U.S. needs a domestic solar manufacturing industry. We can’t trade energy dependency on one imported commodity – oil – for dependency on imported solar panels. At the same time, the U.S. also needs market-rate solar power. As this case shows, those two are mutually exclusive as the game is being played right now. Here’s the basic economic and political arithmetic that makes solar such a hairball:
1.) Solar energy = Too expensive
2.) Cheaper solar panels = Cheaper solar power
3.) Chinese solar panel prices < American solar panel prices
4.) Chinese solar panels = Cheaper solar power
5.) Chinese solar panels ≠ America solar manufacturing jobs
Different people will identify different root causes of this problem, and most of them go right back to China. I tend to agree up to a point. The Chinese government’s solar policies – stated and implicit – will lead to Chinese dominance of solar markets on every continent they care to play in. The Chinese, recognizing solar energy’s long-term importance, are developing a deep solar manufacturing base in their country. They offer capital equipment financing, land and facility leases for little or nothing. Like it or not, they’re writing the rules of the game. We encountered the same thing with Japan in the 1980s when the Ministry of International Trade and Industry (MITI) targeted key industries for Japanese dominance. They bent trade policies and funneled money toward companies to further their goals, and succeeded in areas like cars and consumer electronics.
The problem isn’t that China is stacking the deck, it’s that the U.S. won’t even sit at the table. With its traditional skepticism toward government economic planning, the U.S. has no integrated government-industry policy to build a solar manufacturing base. So we’re not going to get one, and if we think we are, then we’re delusional. The Chinese are writing the rules of the game and they’re winning by making long-term investments in a manufacturing infrastructure. The U.S. has to do the same. We can’t compete if we’re not in the game, and right now we’re playing checkers while everyone else is playing chess.