Commerce Department’s AD-CVD threat cripples US solar

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The Commerce Department’s anti-dumping and countervailing duty (AD-CVD) investigation into solar energy imports from Vietnam, Cambodia, Malaysia and Thailand continues to threaten the U.S. solar industry. One month after the first March 25and reports that the fallout is continuing, with a survey of members of the Solar Energy Industries Association (SEIA) revealing that 83% of its 730 respondents (as of 26and of April) saw their module supplies canceled, with 318 large-scale projects, 51 GW of solar power, 6 GWh of batteries and $52 billion in investments at risk.

This week saw a statement from US tracker maker Array Technologies strongly criticizing the investigation. Also interested, Array Technologies is just right when it says that US solar manufacturers are exhausted until 2024 and the domestic industry cannot ramp up solar manufacturing to get closer to US demand.

The United States doesn’t have a large-scale, moribund solar manufacturing industry waiting to spring into action: it has an industry that never grew to the scale of 2022 in the first place. There’s only one big company, First Solar, and lots of start-ups. Take the company that seized the Ministry of Commerce, Auxin Solar, with its 100 MW of production capacity. If it doubles every two years, it will reach a production of 6.4 GW – still tiny compared to the Chinese giants – in 2038. There are many other small solar manufacturers, some very interesting and of high quality, but they they just don’t. t have scale.

SEIA released a forecast halving planned solar deployments in 2022 and 2023, with 24 GW less solar installed. The SEIA forecast also predicts 100,000 job losses, while the American Clean Power Association (ACP) predicts 38,000 lost jobs. The SEIA survey also indicates that even US solar manufacturers will be negatively affected, at least in the short term, with imports of manufacturing equipment being affected.

NextEra Energy expects the Ministry of Commerce to decide not to impose anti-dumping tariffs on Indochina, and there will be a preliminary decision in August – so we are looking at potentially four months of uncertainty. NextEra also says it is ramping up to 2.8GW, or about half of its 2022 solar-plus-storage build, in 2023. The Department’s final decision could take longer than that, and then there would be an additional wait that may go up to two years. if there were tariffs, for the decision on their level – and these could be retroactive.

These four Indochinese countries are the source of more than 80% of American imports of solar modules, mainly thanks to Chinese companies, these modules having a large part of their components made in China itself. Consider that NextEra Energy was able to talk about its wind developments to soften the blow.

This type of petition to the Department of Commerce has been raised repeatedly under the Biden administration. First there was the anonymous business group American Solar Manufacturers Against Chinese Circumvention (A-SMACC) which filed a petition in August 2021 and was rejected in November, with anonymity cited as the main reason for rejection. . The Auxin Solar petition was then filed in February 2022 – so first you have several companies asking anonymously, then a very small one in public. While the failed A-SMACC petition targeted foreign companies, the so far successful Auxin petition mentions companies but targets countries.

The only relevant assurance the solar industry received during this period was a directive from Gina Caramond of the Department of Commerce to “integrate climate considerations into its policy making”.

An interesting theory advanced by NextEra CFO Kirk Crews is that solar module exporters are deliberately withholding their products from US developers, so the developers will pressure the Biden administration to cancel the DoC probe.

NextEra said, “We believe the Commerce Department has already addressed this issue when it concluded in 2012 that the process of converting solar wafers into power-generating solar cells is technologically sophisticated and the most capital-intensive part of the process. manufacturing of solar panels…when that occurs outside of China, sales are not subject to the 2012 anti-dumping and countervailing duties applicable to Chinese imports of solar cells. Subsequent Commerce Department rulings in 2014, 2020, and 2021 are consistent with this.”

Circumvention allegations may have a technical basis, but we cannot know the whole truth, as Chinese companies have been ordered not to cooperate with foreign inspections, just like with supply chain inspections in “forced labor” polysilicon from Xinjiang.

In any case, the decision to draw the line must be part of a coherent solar development policy. Given that the Biden administration was unable to secure the budget reconciliation before Senator Manchin, which would include Senator Ossof’s SEMA Act solar manufacturing subsidies, the United States could find itself in the worst of both worlds with tariffs on imports and no internal market. production incentives, just before Republicans swept the House and Senate to seal the deal. In that case, the solar industry would contract and stagnate for years and President Biden’s ambition for a clean electric grid by 2035 would die on the vine. But that’s only if the Commerce Department decides to act, which it probably won’t.

The confusing situation in America contrasts with India’s conduct – India introduced a hefty 40%/25% tariff for modules and cells from April 1, but only after putting in place subsidies, massive manufacturing incentives and tenders, and only after waiving existing tariffs for a grace period of a few months during which imports nearly tripled. The decision to implement the Basic Customs Duty (BCD) was made by the President and announced long before it was imposed, rather than being vaguely threatened by a regulator. And even then, India’s protectionism will reduce its solar deployments.

Anti-dumping tariffs on solar energy can reach 250%, which is completely exclusive. It’s the last thing the solar industry needs when it’s already grappling with natural price increases generated by post-pandemic-era supply chain issues – US solar imports have already fell in the first quarter of 2022, before the impact of the petition.

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