The decision by the Department of Commerce to open an investigation into solar cell and module manufacturers in Malaysia, Thailand, Cambodia, and Vietnam potentially using parts produced by Chinese companies, therefore circumventing existing antidumping and countervailing (AD/CV) tariffs on Chinese goods, has sent shockwaves through the solar industry.
Already, experts are drastically cutting down their predictions on the capacity of new, utility-scale solar that the US will be able to develop and how quickly the US will be able to meet it’s emission reduction goals, as well as increasing project cost predictions. The Solar Energy Industries Association (SEIA) has predicted that 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.
Clean Energy Associates (CEA), a solar and storage technical advisory firm, is anticipating that the investigation alone may lead suppliers to stop shipments from the named countries to the United States at least until the Commerce Department issues a final ruling, which could be as late as April 1, 2023. In the short term, CEA expects module and cell buyers with orders booked before the investigation began and with delivery periods during or after the investigation could face delayed shipments and manufacturer attempts to renegotiate terms. Producers from non-named countries may look to raise prices and cut back on their domestic focus, in order to cash in on the starved US market, but their ability to do so will be limited, as many of these manufacturers operate in the distributed generation space, according to CEA.
In our previous coverage, we included commentary from SEIA and Auxin solar, however the conversation does not end with those two entities. pv magazine has collected a series of responses from other players across the political, regulatory, and industry spaces, and will continue to update this column with additional commentary points as they come out.
8minute Solar Energy
The following statement comes from Founder and CEO of 8minute Solar Energy, Dr. Tom Buttgenbach:
“As one of the country’s leading solar developers, we understand firsthand how damaging the Biden Administration’s decision today will be for the solar industry. This unfair and unwarranted complaint undercuts us at a time when we are working hard to navigate unprecedented uncertainty in the global supply chain, hire U.S.-based workers and build out the solar infrastructure necessary to meet the country’s urgent clean energy goals.
At this moment of sky-rocketing fossil fuel prices driving inflation and causing real pain for Americans at the pump, we should be doubling down on investing in a clean energy future, which will not only fight climate change, but drive down costs for U.S. consumers. Instead, this case is already slowing investment in our country’s clean energy future, including the loss of thousands of domestic jobs, while threatening our technological leadership and independence from volatile global oil prices.”
The following statement comes from President and CEO of the American Council on Renewable Energy (ACORE), Gregory Wetstone:
“Today’s decision by the Department of Commerce will upend the renewable energy industry at the worst possible time. Congress has yet to enact a long-term, full-value clean energy tax package, and the agency’s trade investigation creates uncertainty that will chill new investment and cause layoffs in the nation’s solar energy sector. At a time when the renewable energy industry is working incredibly hard to accelerate deployment to meet the Biden Administration’s climate goals and avert the worst impacts of climate change, we need the federal government working in partnership with an all-hands-on-deck effort. Unfortunately, this investigation will needlessly slow economic growth, raise energy costs for American families, and put our climate at greater risk. ACORE urges the Department of Commerce to quickly end the investigation and reject the dramatic expansion of solar tariffs.”
The American Clean Power Association (ACP), as a group, expressed profound disappointment in the decision, with ACP CEO, Heather Zichal, publishing a statement expanding on that disappointment:
“The Department of Commerce’s decision today signals that the Biden Administration’s talk of supporting solar energy is empty rhetoric. If its commitment to a clean energy future is real, the Administration will reverse this decision immediately. America’s solar workers and the clean energy community are watching and will remember. Overnight, the Commerce Department ignored precedent and subsequently drove a stake through the heart of planned solar projects and choked off up to 80% of the solar panel supply to the U.S. It must fix this now.
American workers will bear the pain of the decision to allow one rogue antagonist to abuse and manipulate trade laws for their own gain. The 230,000 proud Americans who work in the solar industry are calling on President Biden and Secretary Raimondo to reverse their decision and bring this matter to a speedy conclusion. Every day this investigation hangs over the solar community is a day of lost jobs and postponed solar projects critical to the Administration’s climate agenda.
Late last year, Commerce decided not to initiate a similar case. We’re confident that the facts will demonstrate that this case also has no merit, and that Commerce will uphold the decade-long precedent regarding the origin of solar cells and modules that the petitioner is desperately and repeatedly attempting to upend. Without a reliable supply of solar modules while this investigation proceeds, project construction will grind to a halt, American workers risk being laid-off or furloughed, and we will miss our emissions targets – all so that another litigious manipulator can be proven unfounded yet again.
The domestic solar industry calls on President Biden to reverse this decision and put American solar back on the right track. Solar workers and the communities they live in are watching and those who fought and believed in the promises of this Administration to a clean energy future will not forget.”
The following statement comes from NextEra Energy President and CEO and NextEra Energy Partners CEO, John Ketchum:
“We are disappointed with the Commerce Department’s decision to grant Auxin’s request to investigate as we believe it has no merit. However, we are optimistic that the investigation will be resolved favorably and that no additional Antidumping and Countervailing Duties tariffs will be put in place.
While some of NextEra Energy’s solar and storage projects may be adversely impacted by the disruption this decision is expected to cause, we will work closely with our suppliers and customers to assess the potential impacts of this investigation and remain confident in our ability to arrive at acceptable mitigation measures.
Notwithstanding yesterday’s decision by the Department of Commerce, we are confirming that NextEra Energy’s long-term financial expectations remain unchanged, subject to the usual caveats. For 2022, we continue to expect NextEra Energy’s adjusted earnings per share to be in the range of $2.75 to $2.85. For 2023 through 2025, NextEra Energy expects to grow roughly 6% to 8% per year off the expected 2022 adjusted earnings per share. For 2023 through 2025, this translates to adjusted earnings per share ranges for NextEra Energy of $2.93 to $3.08, $3.13 to $3.33, and $3.35 to $3.60, respectively. We will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted earnings per share expectations ranges in each of 2022, 2023, 2024 and 2025.
Additionally, NextEra Energy Partners’ long-term distribution per unit growth rate expectations remain unchanged. From a base of its fourth-quarter 2021 distribution per common unit at an annualized rate of $2.83 per common unit, NextEra Energy Partners continues to expect 12% to 15% per year growth in limited partner distributions as being a reasonable range of expectations through at least 2024, subject to the usual caveats.”
Support for the investigation
While the following statements came out prior to the announcement of the investigation, U.S. Senators Rob Portman (R-OH) and Sherrod Brown (D-OH) sent a letter to Commerce Secretary Gina Raimondo urging her to accept the anti-circumvention petition, providing a rare perspective into the pro-investigation side of the discourse. Below is their letter, in full:
Dear Secretary Raimondo:
We write to encourage you to accept the recently filed petition from a minority-and-woman-owned business related to solar cells and modules imported in circumvention of the existing antidumping and countervailing duty (AD/CVD) orders on Chinese solar cells and modules. A strong commitment to American manufacturing must be paired with proper trade enforcement so that investments in American production, workers, and innovation are not undermined by unfair trade practices. That is why the Department of Commerce must fully and fairly examine these allegations of illegal and unfair circumvention of our trade remedy laws.
In trade remedy cases, the length—on average 14 months from first filing to relief—makes clear that justice delayed is justice denied. Yet, even timely justice can be thwarted by circumvention, which has been a consistent strategy of anticompetitive global actors seeking to escape the requirements imposed by U.S. law. Therefore, after the International Trade Commission (ITC) finds that there is evidence of unfair trade, the Department of Commerce must ensure that the decision by the ITC stands. When duties have been imposed on specific products from specific countries, unfairly traded imports should not then be able escape our AD/CVD orders by being routed through additional third countries. Congress provided anti-circumvention authority to Commerce in 1988 to ensure that injured domestic industries obtained the full relief of the trade remedy laws and not just half loaf.
In this instance, a U.S. manufacturer alleges that after imposition of AD/CVD orders against Chinese-made solar cells and modules, Chinese companies established new operations in Malaysia, Thailand, Vietnam, and Cambodia to escape the strictures of U.S. trade remedy law and maintain control over the global solar supply chain. As we understand it, these operations use raw materials, labor, capital investment, and research and development from China. Moving to a third country to assemble a product with inputs from the country subject to the original AD/CVD order is textbook circumvention. As you know, if legitimate circumvention allegations go unaddressed, entire domestic industries and thousands of American manufacturing jobs are at risk.
Strong enforcement of our trade laws to level the playing field on which American companies and workers can compete lays the foundation to rebuilding a robust solar industrial base in the United States. Thank you for your consideration of our request, and we thank you for your diligence in this circumvention inquiry.
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