US solar industry in 'existential crisis' from Commerce solar tariff investigation

The US Department of Commerce's decision to investigate circumvention tariffs on solar products from Cambodia, Malaysia, Thailand, and Vietnam has already caused the cancellation or delay of solar panel deliveries, according to 74% of the 200 companies the Solar Energy Industries Association surveyed.

The department initiated the investigation March 28, four months after the agency rejected a similar petition that increased solar prices and threatened the livelihoods of tens of thousands of workers, SEIA said. The move threatens the Biden Administration's climate goals.

Commerce "based its case on the industry-killing claims of a single company," SEIA President and CEO Abigail Ross Harper said during an April 5 webinar. "It happened eight days ago and we are already seeing significant impacts [of] this decision."

In two business days, SEIA received 200 responses to its market-impact survey, which shows how swiftly impacts are being felt from the Commerce decision, said Justin Baca, SEIA vice president of markets and research.

The April 5 webinar had over 800 registrants, the most of any SEIA webinar, said John Smirnow, SEIA general counsel and vice president of market strategy.

"This is the biggest threat I've seen in my 15 years in the solar industry," Smirnow said about why the case has garnered so much interest.

Survey results

Solar installment prices have already risen due to supply chain constraints stemming from the coronavirus pandemic. Year-on-year prices have risen across all market segments for three consecutive quarters, leaving utility-scale solar prices 18% higher than a year ago, Baca said.

"About three-fourths of survey respondents have already been told their shipments are delayed or canceled," Baca said, adding another 15% don't know the impact yet while 11% have not been notified. "Across all sectors we see major impacts being felt. Some of these look worse than the comments we got from COVID when projects were shut down. ... The levels of impacts here are still not visible to everyone downstream."

Half of the respondents reported that 80% or more of their current-year solar pipeline is at risk because of the investigation, according to survey results.

Companies expect damage across the value chain with all domestic manufacturers who responded to the survey saying they expect "severe" or "devastating" impacts, according to SEIA. In addition, since most energy storage projects are paired with solar, energy storage components are likely to become uneconomical without the solar components.

US manufacturing is not adequate

US domestic module supply is not adequate and it would take years to build the supply chain needed, Baca said. It takes up to a year or more for siting and permitting a US plant, and an additional one to three years for construction and production, he added.

"This sets us way back from where we need to be to achieve our climate goals," Baca said. "We're not going to replace our supply overnight."

Harsh tariffs lead to job loss, less solar deployment, and provide little benefits to US solar manufacturing, Ross Harper said, adding the "disastrous decision" is causing an "existential crisis" to the US solar industry.

"The damage is real and the damage is happening right now," Ross Harper said. "To us, Commerce actions simply do not make sense. We are calling on the Department of Commerce to immediately issue a negative determination, which essentially means to dismiss the case."

Axion case

Axion Solar, a solar module manufacturer based in California, filed a petition Feb. 8 asking Commerce to initiate an anti-dumping investigation into solar panel imports from Cambodia, Malaysia, Thailand, and Vietnam, which account for 84% of US solar module imports. Axion alleged the solar module parts used in manufacturing by the four countries come from Chinese companies to avoid anti-dumping tariffs.

"We believe the Department of Commerce has enough information to make a decision and make it quickly," Julia Eppard, SEIA counsel with Akin Gump Strauss Hauer & Feld, said about dismissing the case, which is similar to a case Commerce rejected a few months ago.

In a March 7 letter, SEIA requested the department reject the anti-circumventive petition as it "does not meet the minimum requirements for initiation." The investigation would unfairly hit crystalline silicon photovoltaic cells and modules from Cambodia, Malaysia, Thailand, and Vietnam with duties ranging from 50% to 250%, according to SEIA.

It is unlikely the US solar industry will hear anything about rates until the preliminary decision is expected Aug. 29, Eppard said.