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Researched by Industrial Info Resources (Sugar Land, Texas)--Before this year, San Jose, California-based solar panel manufacturer Auxin Solar was a relatively obscure U.S. solar panel producer, but now that's changing. Earlier this year, the company made a complaint to the U.S. Commerce Department that set in motion an investigation that is shaking up plans by U.S. solar developers and threatens to derail President Joe Biden's goal of ending greenhouse gas emissions from the U.S. power industry by 2035.
At least one power generator cited the potential supply fallout from the federal investigation in delaying the retirement of two coal-fired units. Power produced by the coal-fired units is supposed to be replaced by power from solar panels.
At the heart of the complaint is that solar panel producers in four nations--Malaysia, Thailand, Cambodia and Vietnam--are circumventing U.S. tariffs placed on Chinese solar manufacturers by using Chinese components and then shipping the completed panels to the U.S. The tariffs on China were initiated under the Trump administration, starting at 30%; they were cut to 18% and then to 15%. While the tariffs were set to expire under Biden, his administration has opted to keep them in place at the lower rate of 14.75%, which gradually will be reduced to 14%.
And the tariffs seem to have been positive for U.S. solar panel production. According to news media, since the tariffs were imposed, solar panel production in the U.S. has tripled. One the largest manufacturers in the U.S., First Solar Incorporated (NASDAQ:FSLR) (Tempe, Arizona), for example, kicked off construction of a grassroot 1.8 million-square-foot solar module manufacturing plant in Walbridge, Ohio, in 2018, which is planned to be completed early next year. Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here for the detailed report.
But with the massive buildout of solar power facilities underway in the country and limited domestic supply of panels, imports still play an outsized role for many developers, and according to the American Clean Power Association (Washington, D.C.), more than 80% of solar panel imports into the U.S. come from the four countries under investigation.
This isn't good for utilities and solar developers that are looking to keep costs down and have timely access to supplies for their projects. In an April earnings conference call, Kirk Crews, the chief financial officer of NextEra Energy Incorporated (NYSE:NEE) (Juno Beach, Florida), which is constructing a substantial buildout of solar facilities in Florida and elsewhere, said, "We are disappointed by the Commerce Department's decision to conduct this investigation. We believe the Commerce Department already settled this issue when it concluded in 2012 that the process of converting solar wafers into electricity-producing solar cells is technologically sophisticated and the most capital-intensive part of the solar panel manufacturing process, and when that occurs outside of China, the cells are not subject to the 2012 anti-dumping and countervailing duties applicable to Chinese solar cell imports. The Commerce Department's later rulings in 2014, 2020 and 2021 are consistent with this and have been relied upon by the solar industry as it continued to invest billions of dollars in new solar generating facilities in the United States over this period."
Crews asserted that that if the Commerce Department did find that the four nations were circumventing antidumping measures, panel prices from the nations would cause significant price uncertainty, as what exactly the tariffs on panels from Malaysia, Thailand, Cambodia and Vietnam would be would likely remain unknown until about 2025, "as final tariff amounts are not determined for about two years after the year of importation." The effect of this would ultimately lead to more imports from China, said Crews, where at least the existing tariffs are a known quantity. Clean energy leaders speculate that such retroactive tariffs could be as high as 240%.
Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina), another leading renewable energy developer with net-zero carbon goals, also expressed concern about the long-term results of the investigation. In the company's earning conference call earlier this month, Chief Financial Officer Steve Young said, "We are well-positioned on all solar projects slated for 2022 across our regulated and commercial operations. Looking to 2023 and beyond, we're closely monitoring the Department of Commerce investigation as we assess the timing of our solar projects. ... The remaining solar projects are under development and largely dependent on panel-price clarity. If delays persist, we may see a few projects shift from 2023 to 2024."
Other developers aren't expecting to fare as well. Indiana utility NiSource Incorporated (NYSE:NI) (Merrillville) said earlier this month: "The U.S. Commerce Department circumvention investigation related to the import of solar components from select geographies has brought uncertainty and delays to the solar panel market."
"NiSource is working with its renewable generation developers to better understand the potential project impacts," the company continued. "The company anticipates that most solar projects originally scheduled for completion in 2022 and 2023 will experience delays of approximately 6 to 18 months. In connection with these delays, the company now expects to retire Schahfer Generating Station's remaining two coal units by the end of 2025."
Subscribers to Industrial Info's Power Plant can click here for the Schahfer plant profile.
Earlier this month, a bipartisan group of 21 senators wrote President Biden, asking the situation be resolved quickly: "Already, as a result of Commerce's decision to initiate this investigation, industry surveys indicate that 83% of U.S. solar companies report being notified of canceled or delayed panel supply. ... Left unaddressed, cutting off this supply of panels and cells also could cause the loss of more than 100,000 American jobs, including approximately 18,000 manufacturing jobs."
Abigail Ross Hopper, president and chief executive officer of the Solar Energy Industries Association, said, "Solar prices are increasing, federal climate legislation is stalled, and trade restrictions are now compounding. Commerce should quickly end this investigation to mitigate the harm it will cause for American workers and our nation's efforts to tackle climate change."
But not everyone sees it that way. Mamum Rashid, chief executive of Auxin Solar, which filed the complaint with the Commerce Department, said in a 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."
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
At least one power generator cited the potential supply fallout from the federal investigation in delaying the retirement of two coal-fired units. Power produced by the coal-fired units is supposed to be replaced by power from solar panels.
At the heart of the complaint is that solar panel producers in four nations--Malaysia, Thailand, Cambodia and Vietnam--are circumventing U.S. tariffs placed on Chinese solar manufacturers by using Chinese components and then shipping the completed panels to the U.S. The tariffs on China were initiated under the Trump administration, starting at 30%; they were cut to 18% and then to 15%. While the tariffs were set to expire under Biden, his administration has opted to keep them in place at the lower rate of 14.75%, which gradually will be reduced to 14%.
And the tariffs seem to have been positive for U.S. solar panel production. According to news media, since the tariffs were imposed, solar panel production in the U.S. has tripled. One the largest manufacturers in the U.S., First Solar Incorporated (NASDAQ:FSLR) (Tempe, Arizona), for example, kicked off construction of a grassroot 1.8 million-square-foot solar module manufacturing plant in Walbridge, Ohio, in 2018, which is planned to be completed early next year. Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here for the detailed report.
But with the massive buildout of solar power facilities underway in the country and limited domestic supply of panels, imports still play an outsized role for many developers, and according to the American Clean Power Association (Washington, D.C.), more than 80% of solar panel imports into the U.S. come from the four countries under investigation.
This isn't good for utilities and solar developers that are looking to keep costs down and have timely access to supplies for their projects. In an April earnings conference call, Kirk Crews, the chief financial officer of NextEra Energy Incorporated (NYSE:NEE) (Juno Beach, Florida), which is constructing a substantial buildout of solar facilities in Florida and elsewhere, said, "We are disappointed by the Commerce Department's decision to conduct this investigation. We believe the Commerce Department already settled this issue when it concluded in 2012 that the process of converting solar wafers into electricity-producing solar cells is technologically sophisticated and the most capital-intensive part of the solar panel manufacturing process, and when that occurs outside of China, the cells are not subject to the 2012 anti-dumping and countervailing duties applicable to Chinese solar cell imports. The Commerce Department's later rulings in 2014, 2020 and 2021 are consistent with this and have been relied upon by the solar industry as it continued to invest billions of dollars in new solar generating facilities in the United States over this period."
Crews asserted that that if the Commerce Department did find that the four nations were circumventing antidumping measures, panel prices from the nations would cause significant price uncertainty, as what exactly the tariffs on panels from Malaysia, Thailand, Cambodia and Vietnam would be would likely remain unknown until about 2025, "as final tariff amounts are not determined for about two years after the year of importation." The effect of this would ultimately lead to more imports from China, said Crews, where at least the existing tariffs are a known quantity. Clean energy leaders speculate that such retroactive tariffs could be as high as 240%.
Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina), another leading renewable energy developer with net-zero carbon goals, also expressed concern about the long-term results of the investigation. In the company's earning conference call earlier this month, Chief Financial Officer Steve Young said, "We are well-positioned on all solar projects slated for 2022 across our regulated and commercial operations. Looking to 2023 and beyond, we're closely monitoring the Department of Commerce investigation as we assess the timing of our solar projects. ... The remaining solar projects are under development and largely dependent on panel-price clarity. If delays persist, we may see a few projects shift from 2023 to 2024."
Other developers aren't expecting to fare as well. Indiana utility NiSource Incorporated (NYSE:NI) (Merrillville) said earlier this month: "The U.S. Commerce Department circumvention investigation related to the import of solar components from select geographies has brought uncertainty and delays to the solar panel market."
"NiSource is working with its renewable generation developers to better understand the potential project impacts," the company continued. "The company anticipates that most solar projects originally scheduled for completion in 2022 and 2023 will experience delays of approximately 6 to 18 months. In connection with these delays, the company now expects to retire Schahfer Generating Station's remaining two coal units by the end of 2025."
Subscribers to Industrial Info's Power Plant can click here for the Schahfer plant profile.
Earlier this month, a bipartisan group of 21 senators wrote President Biden, asking the situation be resolved quickly: "Already, as a result of Commerce's decision to initiate this investigation, industry surveys indicate that 83% of U.S. solar companies report being notified of canceled or delayed panel supply. ... Left unaddressed, cutting off this supply of panels and cells also could cause the loss of more than 100,000 American jobs, including approximately 18,000 manufacturing jobs."
Abigail Ross Hopper, president and chief executive officer of the Solar Energy Industries Association, said, "Solar prices are increasing, federal climate legislation is stalled, and trade restrictions are now compounding. Commerce should quickly end this investigation to mitigate the harm it will cause for American workers and our nation's efforts to tackle climate change."
But not everyone sees it that way. Mamum Rashid, chief executive of Auxin Solar, which filed the complaint with the Commerce Department, said in a 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."
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
