Earlier this February, a new round of antidumping/anti-circumvention (AD/CVD) cases were filed against Malaysia, Thailand, and now Cambodia. A small US-based panel assembler, Auxin Solar, with about 120MW in development capacity in the US added its name to the petition, reviving what is viewed as a threat to solar development nationwide.
This comes just months after the Commerce Department tossed out an earlier similar request by an anonymous group of solar companies that sought tariffs on a handful of companies that import modules. About 80% of US crystalline-silicon modules are shipped from Vietnam, Malaysia, and Thailand. Auxin claims Chinese manufacturers are shipping cells to these countries to avoid paying tariffs that have been in place since 2012.
Under this case, all crystalline-silicon modules from each of the four countries could be subject to a tariff. Unlike the first case, this one is designed to be focused on entire countries, rather than specific companies. This new petition adds Cambodia, as Auxin claimed Chinese companies were moving operations to the country in anticipation of tariffs. Historically, Cambodia contributes less than 3% of all US C-Si module imports.
AD/CVD tariffs can be as high as 50-250%, a level of uncertainty that has shuddered through the US solar industry. “Deployment is frozen,” said George Hershman, CEO of SOLV Energy in an interview with pv magazine. SOLV is among the largest utility-scale solar contractors in the United States, with a strong project pipeline of over 4GW across the nation.
Hershman said the uncertainty caused by these tariffs is simply too much to digest in a utility-scale solar project, where module prices can account for 50% of the cost or more. SOLV‘s projects can exceed $300 million, so a 50-250% tariff would impose between $75 -$375 million in additional costs. This level of risk is untenable and is why Hershman describes the case as “an affront to the solar industry.”
The effects of US market uncertainty may already be showing, as LG announced it will close its solar module business and close its 550MW module assembly plant in Huntsville Alabama.
Clock is ticking
The petition was filed by Auxin on February 8th, and now the Department of Commerce has 45 days from the date to decide on the case. If passed, the AD/CVD tariffs would be retroactive to the case, levying huge tariffs on solar modules shipped from the four countries in the meantime.
“There is no case law to support this, it is a meritless case. It has been determined that the conversion of wafer to cell is the country of origin,” said Hershman.
Hershman is hopeful that Commerce will throw out the case, just like it did with the previous anonymous petition. His request: don’t wait the full 45 days.
With the nation targeting high decarbonization targets and the clock running, there is little time to pin the industry down with such uncertainty, he said. Based on supply chain constraints alone, Wood Mackenzie lowered its 2022 utility-scale solar projection by 33%, a steep drop of 7.5GW.
In addition to this, Hershman is supportive of US manufacturing, but believes tariffs are the wrong pathway. “We need to align around legitimate industrial policy to support manufacturing in the US,” he said.
In Hershman’s view, tariffs like the ones imposed by the Auxin case are temporary, short-term measures that won’t boost US manufacturing in a meaningful way. Long-term certainty is needed for a company to move a fabrication process to a new country. He called for industrial policy like the Solar Energy Manufacturing for America Act, includes numerous tax credits for US-based manufacturing.
An earlier proposal of the Build Back Better Act included key industrial policy measures, before it was shut down by Sen. Joe Manchin (D-WV). The bill included targeted incentives for full domestic value chains, like solar module manufacturing and lithium battery recycling. Specifically, domestic production of PV modules would be incentivized at $0.07/W, cells at $0.04/W, PV wafers at $12/m², and polysilicon at $3.00/kg. Additional incentives were added for solar trackers, purlins, inverters from residential to utility-scale. Manchin said that he is once again open to talks but wants the conversation to start over “from scratch.”
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