Solar developer reduces tariff risk by engaging with supply chain platform

For NewSun Energy, the Anza platform serves as part of its procurement arm, helping the developer mitigate module supply risk and secure fixed pricing and terms despite pending tariffs.

October 17, 2024 Anne Fischer

Fort Rock South solar project, commissioned in 2020.

NewSun Energy

The U.S. International Trade Commission recently announced its decision to maintain section 301 tariffs on goods shipped from China. The tariffs, many of which will take effect on September 27, include 25% on batteries and steel, 50% tariffs of semiconductors, and a 100% tariff rate on Chinese EV imports. The agency said that many of the tariffs will take effect on September 27.

While the tariffs reflect the tough stance taken by the Biden Administration to right harms done to U.S. industry, it adds a level of volatility to the supply chain and a challenge for large-scale solar developers when it comes to making purchasing decisions.

NewSun Energy is a utility-scale developer that experienced tariff risk that delayed construction on several projects in 2022 when the “trade trilemma” occurred. This trilemma was created by the Uyghur Forced Labor Prevention Act (UFLPA), the Hoshine withhold-release order (WRO), and the Auxin Solar-instigated Section 201 anti-dumping tariff case.

The Auxin tariff case alleged four Southeast Asian countries (Vietnam, Cambodia, Thailand, and Malaysia) were harboring Chinese-made goods in violation of anti-circumvention laws. The uncertainty was temporarily lifted when President Biden placed a 24-month moratorium on solar tariffs on the four nations. Now with the pause unpaused, the uncertainty returns for developers like NewSun.

As a result, the risk caused delayed construction on several of NewSun’s projects in 2022 after the Auxin case led to unexpected cost increases throughout the module supply chain.

NewSun told pv magazine USA that it saw module pricing increase immediately when in December 2022 the Department of Commerce issued its preliminary determination regarding the AD/CVD investigation.

“At the time NewSun was in the advanced stages of PPA negotiations with a regional utility. Unfortunately, the resulting increase in module pricing materially impacted the economics of the intended project,” said Erik Richardson, director, transactions and development at NewSun Energy. “While NewSun attempted to negotiate with the utility to allow for some commercial flexibility until module pricing normalized or declined, the utility was unwilling to continue negotiations. That delayed a project that could have been energized in 2024 to 2025.”

To date, NewSun has successfully constructed 80 MWac/120 MWdc of solar projects, primarily in Oregon, where NewSun has several thousand acres of site control and has successfully permitted projects in over a half dozen counties in the state.

NewSun engaged the Anza supply chain platform to procure the products it needed for its future solar projects. Anza, which was spun out of Borrego in 2023, provides a solar and battery storage online marketplace and optimization solution. The software that drives the platform identifies solar module and storage components customized for specific projects, but it can also provide insight into product price, size, supply-chain factors such as UFLPA and Section 201 tariffs, technical specifications, third-party traceability audits, counterparty risk, and more.

While Anza can help developers source domestic content, NewSun told pv magazine USA that for its near-term pipeline, the company is focusing on modules it can acquire today at a competitive price to meet project timelines. Working with Anza, NewSun believes it mitigated its module supply risk and secured fixed pricing and terms despite new pending duties. The company also avoided financial setbacks, maintained project timelines and budgets.

Anza helps NewSun and other partners ensure that the solar products it secures are exempt from Section 201 tariffs vetting suppliers and using its data-driven insights. According to NewSun, the panels it procured did not fall under Section 201 as the country where the cells were procured currently holds an exemption. NewSun added the caveat that there’s a chance the panels could have the tariff applied if said country loses its exemption status. If that occurs, NewSun said the vendor agreed to share the cost impact with us.

“By providing detailed traceability of a given product’s origin and tariff classifications, Anza gives our team unmatched confidence in our purchases. We value the company’s deep industry knowledge and comprehensive pricing database, which help our team navigate regulatory changes in real time and secure tariff-exempt products, optimizing costs and improving project outcomes” said Richardson.

The first deliveries of the supply sources through the Anza agreement are scheduled for Q2 2025 and NewSun included provisions that would ensure the developer’s supply through 2026 with the flexibility to make changes. NewSun has executed PPAs for nearly 100 MWac/150 MWdc capacity and those projects are expected to achieve COD in Q4 2025.

NewSun sees Anza as effectively serving as part of its procurement arm of NewSun, enabling the company to evaluate module pricing across 35+ top tier vendors in a matter of weeks, narrow that list to the most competitive offers that met the developer’s needs, and then further negotiate best-and-final offers. Once a supplier was selected, NewSun said it was able to quickly and effectively negotiate a master supply agreement and lock in the competitive pricing in the face of new market uncertainty and upward price pressures.

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