Commerce Department Imposes New Duties on Solar Products from China and Taiwan

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Last week, in the latest episode of the solar trade wars, the World Trade Organization (WTO)ruled that some punitive U.S. import duties on Chinese solar panels and other products violate global trade rules.

Today, it was another story. The U.S. Department of Commerce said it will immediately impose anti-dumping duties on China and Taiwan. In the department’s preliminary determination, it found that certain crystalline silicon photovoltaic products from China and Taiwan have been sold in the U.S. at dumping margins ranging from 26.33% to 58.87, with some as high as 165.04%.

Behind the push to impose duties on panel imports has been SolarWorld — which despite its Oregon manufacturing and touting of panels Made in the U.S.A. is actually a German company. That aside, the initial case it brought has been divisive in the the U.S. solar industry, where more jobs are in installation than in manufacturing. The low cost of imported panels has been a major factor in the plummeting price of solar in the U.S., which has led to a booming market.

The industry was quick to weigh in on the ruling.

Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA), said in a statement, “The Department of Commerce continues to rely on an overly broad scope definition for subject imports from China, adversely impacting both American consumers and the vast majority of the U.S. solar industry. We strongly urge the U.S. and Chinese governments to ‘freeze the playing field’ and focus all efforts on finding a negotiated solution. This continued, unnecessary litigation has already done serious damage, with even more likely to result as the investigations proceed.”

“If there’s a silver lining to today’s announcement, “Resch continued, “it’s the fact that the U.S. and Chinese governments, SolarWorld, and Chinese manufacturers now have a brief window of opportunity to move forward on settlement discussions.”

SEIA will hold a webinar on July 29 at 1 p.m. EST to examine the impact of today’s decisions on the U.S. solar industry.

Meanwhile Jigar Shah, president of the Coalition for Affordable Solar Energy (CASE), said in a statement, “Today’s determination is another unnecessary obstacle for the U.S. solar industry that will hinder the deployment of clean energy by raising the prices of solar products. Due to these tariffs, previously viable projects will go unbuilt, American workers will go unhired and consumers that could have saved money through solar energy may not be able to benefit.”

He added, “CASE members are particularly disappointed that SolarWorld’s request to expand the scope of products affected by the solar dispute remains under consideration by the Department of Commerce. Accepting a broader scope would disregard decades of legal precedent that define scope using the ‘single country of origin’ and ‘substantial transformation’ trade rules. The proposed new scope is also fundamentally inconsistent with the Department’s own previous determination in the 2012 solar cell dispute.”

Some analysts believe this won’t affect residential solar customers much but will be more of an issue for larger utility-scale projects, where margins are smaller. John Morrison, COO of North Carolina company Strata Solar, which employs over 1,000 people, said, “Due to their scale, the utility and large commercial solar sectors are particularly sensitive to the uncertainty and price increases caused by these tariffs. Until this dispute is resolved, our industry will build fewer projects and install less solar. It’s time to end the litigation, negotiate a solution and put more Americans back to work.”

Even some manufacturers, which will presumably be helped by the ruling, expressed disappointment with it. Array Technologies in Albuquerque, New Mexico, employs over 100 people. President Ron Corio said in a statement, “As a U.S. solar manufacturing company, we’re very disappointed in today’s anti-dumping determination. By increasing the price of solar power through tariffs, SolarWorld is shrinking the market for our products here in the United States and punishing successful U.S. solar businesses. Our company is proof that American solar manufacturing jobs will decrease under these special trade protections.”

Others, as expected, weighed in on the opposite side of the debate. Matt Card, vice president of global sales at Suniva, which employs about 250 people at its Georgia panel factory, told the Wall Street Journal that the tariffs have helped its American products compete. And SolarCity has said that the tariffs, while not a deciding factor in its plans for a new factory in New York, do help make that plan viable.

Arndt Lutz, Senior Vice President for North America and Caribbean at REC Solar ASA, based in Norway, told us he is not a fan or supporter of trade wars, though he acknowledged that the ruling is “giving us a tailwind.” The company recently signed an agreement with SolarCity to supply up to 240 MW of tariff-free panels and has said that the U.S. market is becoming increasingly important for its sales.

“Since the countervailing duty decision,” Lutz said, “we’ve been getting more calls from EPCs and utility customers. We’re suddenly the popular kid on the block. Before, we were perceived as high quality but a niche player, and now everyone is interested in our product.” But he called out a couple reasons for that not related to trade disputes: “REC has always emphasized the quality of our product and our reliability as a partner.”

Lutz made an important point that’s worth reflecting on. “If an industry is built on subsidized equipment,” he said, “there will be inefficiency. The success of the U.S. market has relied heavily on subsidized products. There are other parts of the solar market where we can cut costs. The industry still has great potential to bring down overall costs. The cost of acquiring clients is very high in the U.S. compared to other countries. The residential segment is booming because financing has become streamlined, easy, straightforward. When the industry finds a similar way to make financing more straightforward in the commercial sector, we will see a similar boom in that segment.”

Lutz concluded, “The U.S. industry will continue to grow. There’s too much momentum. The current tariffs will not kill the U.S. industry.”

The case is not closed on the duties; the Department of Commerce is slated to make a final decision on the matter by December 16, followed by the U.S. International Trade Commission ruling by January 29 on whether the imports threaten U.S. producers. But as Lutz noted, even though decision is not final, it’s likely to stick — and in any case, the effects are immediate. Let’s hope he’s right and those effects will be minimal.