Solar Panel Makers Sound Alarm Over 'Critical' Import Surge

merican solar panel producers are once again ringing the alarm bell, asking for governmental support. They've made a new plea, expressing how the circumstances have only gotten worse since their last petition in April.

The import volumes from Vietnam and Thailand have seen a sharp rise, making it tough for them to compete with these low-cost alternatives. Now, the manufacturers are urging the government to act fast and enforce retroactive tariffs. Let SunValue guide you through the latest updates in this endless tariff struggle.

Quick Recap on Solar Panel Trade Disputes

The United States has laws in place to protect the market from unfair trade situations. These are known as anti-dumping and countervailing duties (AD/CVD) on solar imports. Anti-dumping duties are essentially a safety net for U.S. industries. They stop foreign companies from selling goods at less than market value, which can harm local production.

On the other hand, countervailing duties are like a balancing act. They work to neutralize any special privileges foreign governments might give to their exporters. The idea behind this measure is to ensure everyone gets a fair shot at competition.

In August of 2023, the Department of Commerce confirmed that some Chinese companies were sending their solar products through Cambodia, Malaysia, Thailand, and Vietnam to sidestep AD/CVD charges. As a result, the duties have been extended to include solar manufacturers from Southeast Asia.

But the law gave them a loophole: the companies could dodge these constraints if they chose to use non-Chinese wafers or at least four different solar components. Seeing this as an opportunity, many manufacturers moved their supply chains to make solar goods that don't breach the rules. As a result, the US is now importing more from Southeast Asian countries than ever before.

American Producers Take Action

Leading U.S. panel producers, such as First Solar and Qcells, have united as the American Alliance for Solar Manufacturing Trade Committee (AASMTC). In April 2024, they filed a petition to the governing bodies, claiming that China is using factories in Vietnam, Malaysia, Cambodia, and Thailand to avoid US import tariffs. According to them, this maneuver floods the US markets with cheap solar panels, hurting local businesses.

As a reaction, USITC has agreed that solar imports from Cambodia, Malaysia, Thailand, and Vietnam are causing harm to the domestic industry. The ball is now in the Department of Commerce's court to decide what to do next. They plan to make preliminary decisions about subsidy-related charges in September and import-related charges in November. The final decisions, including the specific tariff amounts, are expected to be made by spring 2025.

The August Petition: Seeking Immediate Relief

However, things took a turn for the urgent. Right after the manufacturers put in their request in April, imports from Vietnam and Thailand skyrocketed. In response, they once again filed a petition and called for "critical circumstances", asking for retroactive tariffs on all solar panels imported since April.

“When we submitted our petitions a few months ago, several China-based companies operating in Thailand and Vietnam appear to have actively accelerated their U.S. solar exports, likely to evade impending duties. We were therefore compelled to file these critical circumstances allegations in response to these new surges of imports,” explained Tim Brightbill, head of Wiley's International Trade Practice and chief advisor to the petitioners.

Should Commerce agree that we indeed have "critical circumstances", they can put duties on solar products retroactively. This means that charges could be added to imports that arrived up to 90 days before any decisions were even announced. This move could help our homegrown U.S. manufacturers compete better by making foreign solar panels less attractive.

Impact On The U.S. Solar Industry: a Lot of Nuance

The suggested duties on foreign-made solar panels could greatly change the course of the US solar industry. But the catch is, these changes could swing both ways - for better or worse.

Weighing the Risks

The US solar industry is heavily dependent on cheap solar imports. In 2023, we brought in 55.6 GWdc of PV modules - that's almost twice as much as in 2022, says the National Renewable Energy Laboratory (NREL). The four Southeast Asian countries that are under AD/CVD investigations made up 78% of the total.

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Source: National Renewable Energy Laboratory (NREL)

Thanks to these low cost solar panels, the industry is booming like never before. For example, Wood Mackenzie found that in the first three months of 2024 alone, the US installed a huge 11.8 gigawatts of solar capacity – this was the second-best quarter ever for the sector.

A report from Clean Energy Associates and the American Council on Renewable Energy states that the import duties can be tough on the solar industry. They are hard to predict, as their rates can change quickly and may pop up even after buyers have signed contracts or received the products. To add to the confusion, these charges can change every year and apply differently to different suppliers or countries.

Most importantly, these duties could seriously raise manufacturing costs. According to the study, they can add an extra 10 to 15 cents per watt to the total cost of solar panels. Barely profitable solar projects might become unworthy investments, delaying U.S. climate targets. And naturally, strict import tariffs would impact how much solar panels cost for homeowners.

The Potential Upsides

On the bright side, these tariffs could give a boost to homegrown solar manufacturing. By hiking up the price of imported solar panels, our homegrown solar makers might get a competitive edge. The latest figures from Wood Mackenzie already show a positive trend—US domestic production capacity jumped from 15.6 GW in the last quarter of 2023 to 26.6 GW in the first quarter of 2024. With a little more backing, the industry could blossom even more, creating new jobs and sparking innovation.

And, of course, encouraging local production can help the U.S. solar industry to reduce its dependence on imports. This approach would make it less vulnerable to sudden shifts in global supply and prices. By spurring investment in homegrown manufacturing, the U.S. could build a self-reliant and long-lasting solar market. This perfectly matches the wider goals of self-sufficient energy and national security.

Latest Developments in 2024

The complaint filed on August 15, 2024, highlights a 39% increase in imports from Vietnam and a 17% increase from Thailand between April and June 2024, compared to the first quarter of the year.

This surge followed the AASMTC's initial anti-dumping and countervailing duty petitions filed in April 2024. The import levels during this period exceeded average levels recorded in the previous six months, with imports from Vietnam reaching an unprecedented 2.5 GW in June 2024.

In response to this import surge, the AASMTC has filed "critical circumstances allegations" with the Department of Commerce.

If successful, this could lead to the imposition of retroactive duties on imports that arrived in the U.S. within 90 days before June 7, 2024, when a preliminary determination was reached on the original AD/CVD petition.

The Department of Commerce is expected to make preliminary determinations on countervailing duties by late September 2024 and anti-dumping duties by late November 2024, with final determinations likely in spring 2025.

Bottom Line

The recent uptick in solar panel imports from Vietnam and Thailand has once again sparked worries about fair trade and the fate of U.S. solar industry. The resolution rests heavily on the government's action, which will define the future path for the industry.

American manufacturers are in a high stakes situation. If we don't act fast, the wave of foreign solar equipment could hurt our businesses and make us even more import-hungry. However, finding the right solution isn't simple. The government needs to strike the right balance - promote fair trade while also ensuring solar market growth and stable solar panel pricing for consumers.

Sources:

https://www.usitc.gov/press_room/news_release/2024/er0607_65269.htm