Photo:lynnieb, Creative Commons, Flickr
Is the solar industry about to sell its soul? The emerging consensus is that solar is a commodity, and the only thing that matters is cost per watt. The quicker the industry can reduce costs, the quicker solar technology can be introduced to the masses, and the more valuable your solar investments become. But how far is the solar industry willing to go to reduce costs and maximize profitability?

China has seen incredible economic progress over the last few years, but unfortunately it has by and large stood still in terms of human rights. China has also inflicted great damage to the environment, and some observers say that China has already overtaken the U.S. as the biggest emitter of greenhouse gases.

Will solar companies now also look to set up shop in China in an effort to reduce costs, turning a blind eye to China’s dismal human rights record and destructive environmental practices? At present there are 150 Chinese companies that make photovoltaic cells, accounting for a third of the world’s solar cell production. China’s share of global solar cell production looks set to increase dramatically due to its lower manufacturing costs, and this expectation has been reflected by the large number of well-received Chinese solar IPOs over recent months. Recent IPOs include the likes of YGE, CSIQ, JASO, SOLF. STP is a more established Chinese solar play. To read some of our previous articles on Chinese solar stocks, click here, here, here, here, here and here.

Why should the solar industry be evolving towards a country that has shown so little respect for the environment or human rights? If China fails to improve its human rights and environmental standards, will consumers eventually boycott solar companies that indirectly endorse those violations by operating in China?

Photo:Klaxor, Creative Commons, Flickr

Or will Chinese solar turn into a juicy piece of steak; you like the taste but you don’t want to think about the unsuspecting cow getting killed and chopped up for your enjoyment. If that is the case, Vegans won’t buy Chinese solar.

Of course, this argument is flawed. As an example, we boycott tobacco companies because cigarettes cause lung cancer, not because of its geographical origins. We don’t boycott tobacco companies because tobacco is grown in places like Zimbabwe, where Robert Mugabe has managed to wipe out democracy and economic growth. But even though the “Vegans won’t buy Chinese Solar” argument is flawed, it demonstrates how solar technology can be part of a new chapter for China.

The solar industry can’t afford to write off China because of its past. China's contribution to the future of solar, by way of reducing costs and facilitating economies of scale, is too important. Instead, we should focus on ways to make solar a part of China’s future, and capitalism (NOT protectionism) is the way to achieve this. I admit that this sounds naive, but by investing in Chinese Solar I am using the language of capitalism to tell the Chinese government that there is a profit to be made in being environmentally responsible.

For now, they are getting the message – some 1,100 solar panels are to be installed over the curved roof of Beijing’s National Indoor Stadium, home of the 2008 Olympics. China has also been installing solar powered streetlights throughout the Olympic Village and Beijing’s suburbs. Let’s hope that this isn’t just environmental posturing.

Disclaimer: I don't own any of the stocks mentioned above. I don't own a solar panel.