The Department of Commerce (DOC) has decided to act on a petition filed by California-based solar module manufacturer Auxin Solar requesting that DOC review solar panel imports from Chinese companies working in Cambodia, Malaysia, Thailand and Vietnam, announcing that it is launching an antidumping investigation into those companies.
Auxin’s petition alleges that solar cell and module manufacturers in Malaysia, Thailand, Cambodia and Vietnam are using parts produced by Chinese companies, as a way to keep production cheap, while also skirting existing antidumping and countervailing (AD/CV) tariffs on Chinese goods, which have been in place since 2012.
The announcement of an investigation has begun to cast a dark shadow on the solar industry, as the findings of said investigation could massively disrupt supply for and the manufacture of solar modules, as about 80% of US crystalline-silicon modules are shipped from Vietnam, Malaysia, and Thailand.
Responses and Repercussions
In response to the decision, Auxin Solar released the following statement:
“For years, Chinese solar producers have refused to fairly price their products in the U.S. and have gone to significant lengths to continue undercutting American manufacturers and workers by establishing circumventing operations in countries not covered by those duties. We are grateful Commerce officials recognized the need to investigate this pervasive backdoor dumping and how it continues to injure American solar producers. Fair trade and enforcement of our trade laws are essential to rebuilding the American solar supply chain and making Solar in America again.”
Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA) has also released a statement:
“Contrary to the Biden Administration’s goal of growing clean energy in the U.S., the Department of Commerce has decided to consider up to 50%-250% tariffs on the solar industry in the United States. This misstep will have a devastating impact on the U.S. solar market at a time when solar prices are climbing, and project delays and cancellations are adding up. The solar industry is still reeling from a similar tariff petition that surfaced last year. The mere threat of tariffs altered the industry’s growth trajectory and is one of the reasons why we’re now expecting a 19% decline in near-term solar forecasts. Taking up this case will have a chilling effect on the solar industry.”
Shortly after the decision was made public, Clean Energy Associates (CEA), a solar and storage technical advisory firm, offered insights into the potential repercussions of the investigation, in both the short- and long-term.
CEA attests buyers of cells and components from companies in the affected countries will likely face delayed shipments and manufacturer attempts to renegotiate term. As for companies in countries not under investigation that make up the remaining 20% of imports, there are a myriad of possibilities.
First and foremost, module and cell prices are expected to increase, potentially significantly. These sellers will likely shift their customer base to the US, rather than catering to domestic customers, however this won’t be a quick fix, as many of the non-listed countries with supply focus on the distributed generation segment as non-utility applications are better able to absorb price increases and afford suppliers better margins, according to CEA
The Petition
Since it was published, the Auxin Solar petition has been disparaged and disregarded by leading organizations across the solar industry, with John Smirnow, vice president of market strategy with the SEIA, calling it “a blatant attempt by Auxin to unfairly gain a competitive advantage, to the great detriment of other domestic module manufacturers and the American solar industry at large.”
Auxin’s petition is very similar to one that was thrown out by DOC in November 2021, but not identical. American Solar Manufacturers Against Chinese Circumvention (A-SMACC) filed a series of petitions in mid August seeking a Commerce Department investigation into its allegations that module imports from the three countries represented an attempt by the companies to skirt existing U.S. rules against dumping.
In a November 10 decision, Abdelali Elouaradia, director of DOC’s AD-CVD office, said that A-SMACC’s insistence to keep the names of its member companies from the public would “prevent Commerce from obtaining and considering” information related to an inquiry.
The difference in the Auxin petition is that, instead of focusing on specific yet unnamed companies, Auxin is asking for a review of entire countries.
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.
Potential Impact
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.
Outside of trade industry organizations, other American module manufacturers have also decried Auxin’s petition. Silfab Solar, a Canadian-owned manufacturer with 800MW of module manufacturing capacity located in Washington state, attested that a anticircumvention review would cause immediate and direct harm to American crystalline-silicon module producers, as these companies are dependent on imports of solar cells, because there is no commercial production capacity at all in the United States.
According to SEIA, the implementation of AD/CV tariffs would result in the loss of 14GW of new solar installations, a figure which represents more than half of what was installed in the US last year.
The move by Auxin has been seen as an attempt for the company to better position itself against foreign manufacturing competition and boost the power of American manufacturers, but Hershman shares that the implementation of AD/CV tariffs would have the exact opposite effect.
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.
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“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.”
EXACTLY! Let’s hope tax-credits prevail over poor ideas like tariffs.
The solar energy industry is not vertically integrated meaning from end to end like manufacturing all way to installment and financing, etc.. so the installers are mostly independent and are more inclined to encourage Chinese backdoor manufacturing for their own gains.. at expense of our domestic manufacturing that are not even vertically integrated at all. The government policymakiings did nothing but encourage unnecessary conflicts of interest.. I think perhaps if we want cheap Chinese solar panels then we have to require those Chinese manufacturers to come abroad here to do the installations and financings themselves.. Our domestic consumers will realize about that and start paying closer attention to our domestic manufacturers .. Also, we are still not addressing the recyclability or disposal issues of solar panels that are at end of lifetime cycle.. Who will accept those old broken solar panels that will grow rapidly after next decade and keep on exploding with nowhere to dump them or recycle them.. I notice that recyclers typically charge to accept whatever you hand off to them for disposal or recyclablity. Those are issues waiting to rear up ugly faces.. I predict that many rooftops will still have broken solar panels lying there unused.. It will be expensive to remove them off rooftops.. won’t it? Nobody is really thinking things through.. It seems to make most sense to do it out in the utility farms than on rooftops.. but it is hard finding land for those utilty sized farms , though. We are kicking cans down the streets.. then boom it will become another new big headache! I am still hesistant to have my rooftop solar despite the tax credits . I wonder how much it will cost to replace my rooftop at end of lifecycle.. The government can start with banning gas flares at oil patches that will go a long way toward resolving climate change.. it should be done internationally which will also mean Russians and OPEC must do same .
“…we are still not addressing the recyclability or disposal issues of solar panels that are at end of lifetime cycle.. Who will accept those old broken solar panels that will grow rapidly after next decade and keep on exploding with nowhere to dump them or recycle them.” . Yes, and after 100 years, we’re still not addressing the disposal issues of the crap being spewed into the air by every plane, train, power plant, and automobile either. Solar energy is still in its infancy and panel recycling will evolve, just as battery recycling will evolve. Getting rid of dirty coal, oil, and gas combustion for energy production is the highest priority today.
https://www.nrel.gov/docs/fy21osti/74124.pdf
NREL is researching ways to recycle modules, which have a useful life of 25+ years. By the time current systems are decommissioned they will have implemented the necessary systems to properly recycle the components (article above has goals of 2030, well before decommissioning of current systems). We already have the means to recycle a large portion of the materials in a solar system, with the main complication being the separation of materials within the module only. In addition, a majority of “greenfield”, or utility scale ground mounted, systems are required to post decommissioning bonds with their local AHJs, which are used to cover the cost of removing all system components and returning the land back to its original state. These bonds also cover the removal in case the company that owns the system goes bankrupt. Speaking from experience, these bonds tend to assume no salvage value for materials and cover the full cost to remove and recycle the materials.
For rooftop systems, cost for removal of the system will be minimal compared to the cost to install. All of the components will have a salvage value that will aid in paying for part of this decommissioning. In addition, most asphalt/shingle roofs have a lifespan of 20-25 years, so by the time an owner removes modules, it’s probably time to fix your roof anyway. Having been an installer, there are minimal roof penetrations and the cost to “repair” the roof would be minimal as well. For flat roof installations, there are many racking options that do not have any penetrations at all. The savings from installing a solar system for your home will by far out weigh the costs to install and remove the system.
Here’s a headline for the NYTimes: “Biden’s DOC Brings US Solar Industry to a Halt: 150,000 jobs lost and 66% reduction in solar installations”
Gawd. Why? America can’t get out of its own way with its trade courts so easily highjacked by special interests. The strategic folly of slowing our PV deployments to try and carve out a foothold in a low-labor-intensity manufacturing industry could spell the end of American economic supremacy as we’ve known it.
Don’t get me wrong. I totally resent the PV manufacturing jobs that Chinese robots are doing in gleaming Industry 4.0 factories in Xian. Surely those jobs should be getting done by American robots (that, just like their Chinese counterparts, are also mostly made in Germany and Japan). Surely no cost is too high to ensure that Japanese and German-built robots will get to do a freedom inside of the great liberty, or somesuch … but what … and hear me out here … what if the economic potential of solar PV has effectively nothing to do with manufacturing and nearly everything to do with cheap, sustainable electrical generating capacity?
The experts estimate that China will be supplying more than 40% of its power with solar PV at a cost of no more than 2.5 cents per kWh in 2060 (a lot of analysts happen to think they’ll beat that cost target). China’s electricity costs are now 9-10 cents vs. about 11 cents in the U.S. — and some would argue they are already kicking our butts in every industrial sector already. What do we think will happen when they’re producing energy at a quarter of the cost we pay 20-30 years from now when everything is automated and operates at the cost of the energy required to feed it?
This is madness. By all means, let’s build a domestic manufacturing sector — if we hurry we might have something workable inside of a decade. In the meantime, buy the panels and get them deployed. We’re losing ground, fast!
https://www.statista.com/statistics/183700/us-average-retail-electricity-price-since-1990/#:~:text=The%20retail%20price%20for%20electricity,per%20kilowatt%20hour%20in%202020.
https://www.statista.com/statistics/263492/electricity-prices-in-selected-countries/
https://thehill.com/policy/equilibrium-sustainability/577412-solar-power-now-cheaper-than-coal-in-most-of-china-study
Agree!!
Electricity in China is not 9c/kWh. The US has significantly cheaper electricity prices than China due to an abundance of natural gas.
https://blsstrategies.com/docs/news/News_181.pdf
The cited BLS report investigates industrial-scale consumption only, and it is based on 2015 data. I’d counter that 7 years is a very, very long time in the middle of an industrial paradigm shift. Also, I’d add that America is a service economy, so commercial & residential costs are very important to our competitive position in the world. But putting that all aside, even if is still the case that the U.S. still retains its 2015 industrial power cost advantages, it should trouble us (even more) that China’s overall power cost basis is heading from 2.5x our average 2015 rates to less than 0.5 of those average rates, given that we have no formal plan of our own plan to keep up (and given that our short-term trade policy favors us falling further behind).
What’s happening right now is a radical, technology-driven transformation of global energy economics. I don’t think we (broadly speaking) really appreciate the speed or the extent of this change, or the implications for our place in the world. Within the decade, we could easily lose a half million EPC and O&M solar jobs, along with an ever-aggregating pile of lost jobs in energy-intense/dependent sectors across the entire economy, all for the theatrical politics of appearing to “secure” maybe 20,000 PV manufacturing jobs. By all means, let’s get both sets of jobs if it’s so important to us — but the only path to this double-win prioritizes buy/deploy in the decade it will take to also industrialize/scale-up our own PV manufacturing. Given that panels deployed today will reliably operate until 2050, we could be in a position to be entirely energy independent AND energy sustainable by say, 2035 (if we hurry). I propose that “walking and chewing gum at the same time” secures both our economic competitiveness while also protecting our energy independence.
I couldn’t agree more. Hopefully, this kind of reasoning will prevail. As one of the other PV Mag articles said, we need something like 5.2 terawatts of solar installed THIS decade to avoid climate disaster. We sure aren’t going to be able to do that by shooting ourselves in the foot again, through tariffs on imported panels.
Agreed completely, this is a thoughtless move that will lead to jobloss in the installer sector and will directly harm US installed capacity.
Bet the utilities are happy though, probably supporting Axion in some way or shape.
Shaun, what NREL is researching is not always put on market.. I have yet to hear about C Si panels being recycled at all. All I keep hearing about is that they are being piled up in scrapyards or repurposed for shipping to Third World nations if deemed in good condition to last a few remaining years of lifecycle.. We are dumping to other countries.. Thin film panels are accpeted by manufacturers as part of purchase contracts.. it is a real recycling thing not NREL study ….