Chinese renewable industry faces lawsuits

The growth of the renewable industry in China in recent years not only brought benefits to the nation, but also some headaches in the legal field. Currently, the country faces several lawsuits against U.S. companies and their firms are accused of providing illegal subsidies for solar panels sold in the U.S. and Chinese theft of intellectual property. And the actions may not stop there: in Europe, solar companies threaten to sue the country, also for providing illegal subsidies for solar panels.

The case of the lawsuit process follows the European North of U.S. illegal subsidies, both required by the U.S. maker of solar panels SolarWorld, who owned subsidiaries in Europe. In the U.S., the company, along with six other firms, filed a lawsuit against the Chinese solar industry, claiming that the illegal subsidies offered to Chinese products sold in the region were making competition with local businesses unfairly.

"The expectations are too high to do something similar in Europe," said Milan Nitzschke, spokesman SolarWord. The company is trying to collect signatures from other European solar firms to gather at least 50% of production capacity of the solar industry in Europe before taking a formal complaint against Chinese producers for the European Commission.

Nitzschke not commented on which companies have joined or not the complaint, but believes that, as happened in the U.S., many companies may join the claim "in the last minute." Still, the spokesman believes that some firms refuse to participate for fear of retaliation that may suffer in the Chinese market.

To Nitzschke, the industry of China resorts to heavy subsidies because they are able to compete equally with the production of European and North American. He said Chinese producers do not produce efficiently, many workers use a machine, there are many problems of quality and transport costs are higher. "Without subsidies they would have a zero chance of being competitive," he said.

But not everyone agrees with actions against the Chinese industry. Adam Krop, vice president for research of shares of Ardour Capital Investments, think of processes such as SolarWorld is not a good idea because they would make solar energy more expensive, making it less competitive with other options.

"A likely result would be a significant reduction in the growth of global solar energy as fewer structures FIT [feed-in tariffs] are found [the market], with higher project costs," Krop said.

With respect to Chinese earthquake in the industry, Vice President of Ardour Capital Investments believes that the country will do well invested in other markets such as South Africa, Australia, India and the Middle East.

"With or without the trade dispute, we believe that the Chinese market will be stronger than expected in the coming years, as the government seeks to build solar infrastructure program supported by the FIT recently introduced," said Krop.

Still, as the U.S. and Europe totaled approximately 80% of the market volume of the solar industry over the past year, the restricted access of Chinese manufacturers in this market "could be devastating."

And the renewable sector legal problems do not end there. Scheduled for Monday (09), the first hearing of the charge of theft of intellectual property of the North American manufacturer of wind turbines American Superconductor (AMSC) by his former partner, also Chinese wind turbine manufacturer Sinovel Wind Group, was postponed to next week.

In addition to marking the fate of two companies, the case should also have repercussions in the race to dominate the growth of clean technology industry. "What is at stake here is not only the interests of both companies, but who will become the largest supplier in the market for renewable energy. This has even wider implications for energy security, "said Colleen Chien, a professor of patent law at the University of Santa Clara.

The move marks the renewable sector not only the relevance of the two companies in the world market, but also because it is rare for Western firms to sue Chinese companies for intellectual property theft, in part because they think the case will not be judged fairly and also because they fear a retaliation in the Chinese market. "Once you make accusations, you have to be prepared for the consequences," said Chien.

Added to this the fact that the theft of intellectual property is one of the most complicated relationship between the U.S. and China, it is difficult to determine how such fraud occurs. Much of solar technology, wind and other renewables, for example, was developed in the West, but was absorbed by China, which became a major player in this field.

However, AMSC said it holds a lot of evidence against Sinovel, as the declaration of Dejan Karabasevic, former employee of the AMSC, who admitted having supplied the software code control systems of wind turbines from American company to Sinovel.

Already Xiao Qiang, spokesman Sinovel, claimed that the company ended its contract with AMSC because the equipment of the U.S. have fallen short of the quality standards of Chinese company, and that intellectual property rights of Sinovel "are protected by law ".

It is unclear how the case will affect the companies' business, but many Wall Street analysts, for example, are not recommending the shares of AMSC, the price plummeted from about $ 30 for under $ 4, mainly because of fears that the process does not have good results for the U.S..

"On Wall Street there is some concern: The AMSC will be treated fairly?" Asked Daniel McGahn, executive director of the firm. The Sinovel, which was responsible for about 75% of AMSC's revenue, since the profits of the U.S. fall from $ 98.1 million in the last quarter of 2010 to $ 20.8 million in the same period of 2011. Because of this, the AMSC was forced to lay off half of its employees.

Nevertheless, McGahn says the company would not be moving if he believed the actions would not receive fair treatment. The executive director also added that the company is recovering thanks to a diversification strategy, focusing even in China, but expanding business in Australia, South Korea, the United States, Europe and India, and that the profit is expected to double in the current quarter from the previous period.

Sinovel's business also suffered concussions, and an agreement to provide for a gigawatt of wind power Irish company Mainstream Renewable Power is suspended until the case is resolved. "The Mainstream has discussed the matter thoroughly with both parties and looks forward to Sinovel and AMSC resolve this very serious matter as soon as possible," the company said.