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S&P Global — 14 June 2024

Daily Update: June 14, 2024

The Problem of Cheap Solar Energy

Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy

As solar panels decline in price, more people buy and install them. More reliance on solar energy reduces emissions from fossil fuels and provides energy security. However, the growing market for photovoltaic panels also presents challenges. 

In the US, domestic producers of solar panels struggle to compete with low-cost imports. The Inflation Reduction Act was established, in part, to create a domestic renewable energy industry. However, it was also created to increase the adoption of renewables. Low-priced imports of solar panels from Asian economies threaten the development of domestic industry. But lower prices also encourage adoption. For the Biden administration, cheap solar energy places two policy priorities in conflict: Should they protect domestic manufacturing or allow cheap imports to drive down prices?

The American Alliance for Solar Manufacturing Trade Committee (AASMTC), an industry trade organization, filed a petition with the US International Trade Commission to impose anti-dumping and countervailing duties on solar panel imports from Cambodia, Vietnam, Malaysia and Thailand. In that petition, the group claimed that manufacturers from these countries are dumping products below cost in the US market. In the context of trade, “dumping” means an exporting country sells a product in an importing country below the price in the country of origin or below the cost of production, essentially selling the product at a loss. Dumping makes economic sense if the exporting country wishes to stifle foreign competition or has excess production capacity that would lose money if it sat idle. 

US imports of solar panels have reached record levels, increasing 13.8% year over year. According to industry trade groups, these imports exceeded $12 billion in the past 12 months and have led to a 50% collapse in solar panel prices in the US. Of the solar panels imported in the first quarter of 2024, 87.5% came from four Asian countries — Vietnam, Thailand, Malaysia and Cambodia. However, the AASMTC petition suggests that Chinese manufacturers are behind this increase, having used a delay in the application of trade tariffs to rearrange their supply chains to include other Asian economies. Direct imports to the US from China are quite low at 0.2% of total imports.

Tariffs protect US manufacturers in several ways. One surprising benefit is that US companies can import unassembled panels and complete assembly in the US to avoid most tariffs. Unassembled panels comprised 67.9% of total photovoltaic imports in the first quarter of 2024, an increase of 252.7% year over year, while imports of fully assembled modules fell 12.4%.

Two questions arise for the US Commerce Department and the Biden administration: How to protect the development of a domestic solar panel manufacturing industry in a world where supply chains quickly flex to circumvent tariffs, and how to support the adoption of renewable energy despite the higher prices that come with effective tariffs.

Today is Friday, June 14, 2024, and here is today’s essential intelligence.

Netherlands Awards 4 GW Offshore Wind In Biggest Tender Amid 'Complicated Market Conditions'

The Netherlands' biggest offshore wind tender to date has awarded permits for two 2-GW projects in the Ijmuiden Ver zone to two international consortia, the Dutch energy ministry said late June 11. Zeevonk II, a joint venture of Swedish utility Vattenfall and Copenhagen Infrastructure Partners (CIP), is the winner of the Beta site with emphasis on system integration, including an electrolyzer plant at the Port of Rotterdam.

—Read the article from S&P Global Commodity Insights

Australian Universities: Would International Student Caps Spur A Course Correction?

A government proposal to cap foreign enrolments could hit Australian universities hard. This is because the country's university sector is among the most dependent in the world on international student revenue. The Australian government says the cap is needed to help tackle a domestic housing crisis and deliver more sustainable growth. If implemented in its proposed form, the plan would crimp universities' financial performance and autonomy, in S&P Global Ratings’ view. Lower fee revenue could mean less internal funding for research, halting Australian universities' recent ascent up the global rankings. And weaker financial profiles could translate into lower credit ratings.

—Read the article from S&P Global Ratings

Japan Regional Banks' Breezy Performance To Hit Capital Headwind

Rated Japanese regional banks maintained core business profits in fiscal 2023 and progressed rebuilding of their securities investment portfolios. Their earnings are likely to grow moderately as policy rates rise, and interest rate risk is likely to remain manageable. Capital ratios of regional banks with large capital buffers are particularly likely to face pressure as profitability improves and shareholder returns increase.

—Read the article from S&P Global Ratings

Azerbaijan Could Assign Disused Black Sea Pipeline To Kazakh Oil Exports: Source

Azerbaijan is unlikely to resume shipping its flagship crude grade Azeri Light via the disused Baku-Supsa pipeline to the Black Sea, and could assign the route for Kazakh crude, supporting a Kazakh push to diversify export routes, a senior industry source told S&P Global Commodity Insights. Speaking during Baku Energy Week in June, the source, familiar with the situation, said Azerbaijan saw no economic advantage in using the Baku-Supsa pipeline to Georgia's Black Sea coast for shipping Azeri Light, a light sweet grade produced in the Caspian Sea and favored for producing light products such as jet fuel and diesel.

—Read the article from S&P Global Commodity Insights

IEA Sees Major Oil Capacity Glut By 2030 As Demand Peaks

The world is facing a major oil capacity glut in the current decade that could trigger lower prices and test OPEC's market control as global oil demand peaks, the International Energy Agency said June 12. Global oil demand, including biofuels, will likely level off near 106 million b/d toward the end of this decade, up from just over 102 million b/d in 2023, due to the boom in electric vehicles, renewable energy and fuel efficiencies, the IEA said in its latest annual mid-term outlook, "Oil 2024."

—Read the article from S&P Global Commodity Insights

Listen: Next in Tech | Episode 171: Concerns About Fraud Drive AI Investment

Recent study results are identifying where AI is being put to work and how customers and end users are reacting to its use. Sheryl Kingstone, head of the experiences team, returns to look at the Voice of the Connected User Landscape: Connected Customer, Disruptive Experiences 2024 study with host Eric Hanselman. This longitudinal study tracks changes in attitude and use of AI. While there is significant use of AI, there are strong differences between generations across the study.

—Listen and subscribe to the podcast from S&P Global Market Intelligence


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