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
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.
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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