US weighs solar tariffs, unsettling industry

The US Department of Commerce has opened an investigation into solar modules imported from four countries in southeast Asia, a probe that solar advocates warn could cut supplies and stall efforts to address climate change.

The International Trade Administration, the Commerce agency responsible for protecting US businesses from unfair pricing by foreign companies, yesterday said it will investigate whether solar products completed in and exported from Cambodia, Malaysia, Thailand and Vietnam are circumventing US solar duties.

Those four countries account for over half of the non-Chinese solar cell imports into the US, according to engineering services group Clean Energy Associates (CEA). Because the investigation could result in retroactive tariffs on solar imports from those countries, the probe will slow solar industry growth even before the case is decided, industry groups said. Imposing tariffs also would undercut President Joe Biden's push to decarbonize the US grid, solar advocates warn.

"Without a reliable supply of solar modules while this investigation proceeds, project construction will grind to a halt, American workers risk being laid-off or furloughed, and we will miss our emissions targets," industry group American Clean Power Association chief executive Heather Zichal said.

Commerce's decision to open the case "chokes off up to 80pc of the solar panel supply to the US," Zichal said.

The investigation answers a petition filed on 8 February by California-based photovoltaic panel assembler Auxin Solar, alleging imports from Cambodia, Malaysia, Thailand and Vietnam are allowing Chinese solar components to avoid duties imposed by the agency in 2012.

The duties apply to crystalline silicon photovoltaic cells as well as modules, laminates and panels consisting of those cells.

Auxin Solar said that manufacturers in the four countries are using components that originated in China and should therefore be included in the scope of the 2012 orders, citing laws that give the agency authority to find that duties should apply to certain components even if outside "the order's literal scope."

Commerce secretary Gina Raimondo would be able to apply any duties retroactively, to as far back as November 2021, according CEA. Suppliers have indicated they may stop shipments from the countries in question until the agency issues its final ruling, expected in the first part of 2023.

Module suppliers in countries that were not named in the investigation will "likely" raise prices in response, CEA said. Some countries with established suppliers — including Canada, Germany, Mexico and South Korea — are geared to manufacture products for smaller, distributed solar projects, not utility-scale systems.

The Commerce decision "responds to the self-interests of one company," and will lead to increased market volatility and job losses in the US, Solar Energy Industries Association (SEIA) chief executive Abigail Ross Hopper said.

Before Commerce decided to open the latest investigation, SEIA reduced its forecast for solar capacity to be added to the US grid in 2021-22 by 11,000MW, or 19pc, compared to its expectation last September.

"The solar industry is still reeling from a similar tariff petition that surfaced last year," Hopper said, referring to a petition denied by Commerce in November. "The mere threat of tariffs altered the industry's growth trajectory and is one of the reasons why we are now expecting a 19pc decline in near-term solar forecasts."

Commerce will publish its preliminary determination 150 days after the official investigation notice is published in the Federal Register.

Auxin Solar did not immediately respond to a request for comment on concerns about its petition.

By Patrick Zemanek