The Biden administration announced yesterday an investigation into imposing import taxes on solar panels and critical equipment, angering supporters who said it could stifle industry growth enough to thwart climate targets.
The investigation, which could take a year to complete, was triggered by a February petition by US solar producer Auxin Solar Inc., which asked the Department of Commerce to investigate whether Chinese companies were circumventing applicable tariffs by opening factories in Southeast Asia. About 80 percent of the solar panels installed in the US last year came from Cambodia, Malaysia, Thailand and Vietnam, according to industry trade groups.
The trade move increases the possibility of introducing new anti-dumping duties on solar panels, cells and other components originating in these four countries.
The Solar Energy Industries Association and the American Clean Power Association (ACP) described the decision as a knife in the back for the technology that the Biden administration elsewhere crowned as the future king of the national energy grids.
Heather Zichal, chief executive of the AKP, called the launch of the Commerce investigation a “catastrophe” that “has effectively held back the development of the US solar industry.”
Work on virtually any new photovoltaic project could be put on hold or even completely stopped as developers are waiting to see how project financing could change with tariffs, she and other ACP officials said at yesterday’s webinar.
“Today’s Department of Commerce’s decision signals that the Biden administration’s talk about supporting solar energy is empty rhetoric. If its commitment to a clean energy future is feasible, the administration will immediately reverse that decision, the group said in a statement after the decision was made public.
Should the trade eventually introduce new tariffs, the PV sector will be a catastrophe – and possibly the Biden administration’s bigger climate targets – warned in a joint article yesterday published by management from AKP, SEIA and the Edison Electric Institute (EEI), which represents the investor’s utilities.
“Make no mistake, if the complainant is successful, solar energy will be two to three times more expensive than it was just a year ago,” the groups wrote, adding that this would permanently tarnish Biden’s presidency record for solar energy. by slowing implementation below the levels achieved in the Trump years.
“If these tariffs are applied, we expect the US to install significantly less solar power over the four years of the Biden administration compared to previous administrations,” the directors wrote.
In a statement, Auxin CEO Mamun Rashid praised the Commerce study on what he described as undercutting US solar power by Chinese producers.
The warnings from solar trading groups have been “a classic fear-spreading tactic,” added Rashid, arguing that past industry growth has exceeded forecasts despite new import duties.
“We are grateful that trade officials recognized the need to investigate this pervasive back door dumping and how it continues to harm US solar power producers,” he said in a statement.
Trade ombudsmen promised an “open and transparent inquiry” and added that so far no findings on the merits of the Auxin customs case had been made.
“Our laws on anti-dumping and countervailing duties are written to remove them entirely for political reasons. This process is transparent, accepted worldwide, and has been in force since 1930,” trade spokesmen wrote in an emailed statement to E&E News .
‘Favorable prospects’?
Last summer, the Department of Energy released a carbon-free grid project that gave solar energy the greatest responsibility of all electricity sources, providing 37 to 42 percent of the country’s electricity. Read also : Light may increase performance of fuel cells and lithium-ion batteries. It was found that this would mean a fourfold increase in the level of annual increases by 2035.
However, the Biden administration’s broader clean energy agenda includes a cross-over of priorities, not all of which are purely growth-driven – for example, reducing dependence on Chinese supplies.
The administration and trading groups of the photovoltaic industry are aligning with the need for wider incentives, including new ones to domestic manufacturers of solar panels, cells and other parts.
However, Congress failed to turn the idea into law, leaving solar energy to weather the storm of inflation, supply hiccups, and import seizures by customs officials suspected of being linked to Chinese forced labor. Earlier this month, analysts backed by SEIA reported that the price of solar energy had risen by as much as 18 percent last year, and that utility-scale installations could fall by 14 percent in 2022.
Abby Ross Hopper, CEO of SEIA, cited studies commissioned by her group, describing what the new tariffs would mean. It argued that about 14 gigawatts of new investment, roughly equivalent to two-thirds of all solar power installed in the US last year, would be lost.
“This mistake will have a devastating effect on the US solar power market at a time as solar prices are rising and project delays and cancellations are accumulating,” she said in a statement.
“President Biden has made it clear that the best way to develop domestic production is to create a political environment that encourages private investment. This decision directly contradicts this goal – more tariffs are not the answer, ”said Hopper.
The earlier position of the administration on applications for solar tariffs is mixed. Last November, Commerce refused to consider new duties on Southeast Asian panels, as requested by a group called American Solar Manufacturers Against Chinese Circumvention (A-SMACC), whose members tried to remain anonymous.
In February, Biden extended the Trump administration’s existing tariffs on photovoltaic products – which is desired by US manufacturers – but with large cuts that pleased developers.
Some analysts were of the opinion that the trade could oblige Auxin and hit the industry with a whole new set of tariffs.
ClearView Energy Partners LLC said in a research note that “protectionist tendencies within the department suggest us a favorable outlook” for the success of the Auxin petition.
“If so, then the domestic deployment of solar energy will face new and significant price increases in its supply chain,” they wrote.
ClearView analysts also noted that customs officials are likely to start levying tariffs on solar energy imports immediately after Commerce initially positively determined, based on an estimate of a future tariff rate – something that major developers such as NextEra Energy Inc. had predicted. “A significant chilling effect in trade”.
One of the peculiarities of Auxin’s tariff application is its little support among other solar panel manufacturers with a manufacturing footprint in the US.
Several of these manufacturers – including Hanwha Q Cells, JinkoSolar, and Silfab Solar Inc. – sent letters to the trade expressing concerns that the tariffs could raise costs for them as well, as they are sourcing parts from the four Asian countries concerned by the petition.
The American Clean Energy Association, which counts major solar energy developers as influential members, has drawn attention to this criticism. Zichal, chief executive of ACP, dismissed Auxin as a “rogue actor” who did not represent most of the domestic producers.
The Auxin petition won the support of both Ohio Senators Rob Portman (R) and Sherrod Brown (D) who backed the company’s case in a mid-March letter to Commerce.
However, the Democrats got the most attention from Congress, urging Commerce to ignore the petition.
In two letters this month from the House of Representatives and the Senate, Democratic members of Congress criticized the Auxin petition as flawed and warned that the increase in solar energy would be halted if Commerce opened an investigation.
One of the leading democratic opponents of tariffs, Nevada Senator Jacky Rosen, said yesterday that she was “disappointed that the administration is launching this investigation because we should abolish existing solar tariffs and not consider adding new ones.”
Several energy industry groups, such as the American Council on Renewable Energy and EEI, have called on Commerce to act faster than usual to deliver the preliminary findings that must come within 150 days. At this point, the investigation may either end, meaning no tariffs will be introduced, or it may continue with a final decision to be made within a year.
Explanation: At the time of publishing this story, ClearView analysts wrote that customs officials could “immediately” start levying tariffs on solar energy imports. The company later explained that rebounds could begin after an initial determination in favor of Auxin. The trade will decide this within 150 days.
