Podcasts

A new solar tariff fight is here. It may be even worse than the last

A new solar tariff fight is here. It may be even worse than the last
(Source: Jiraroj Praditcharoenkul/iStock/Getty Images Plus via Getty Images)

Episode 78 of the Factor This! podcast features Christian Roselund, a senior policy analyst at Clean Energy Associates, who breaks down the impact of the newest attempt to tamp down China’s solar dominance. Subscribe wherever you get your podcasts.

Christian Roselund has a strategy for when a new solar tariff petition drops.

Turn off your phone. Then get to reading. Had he failed to follow these rules in April, Roselund, a senior policy analyst at Clean Energy Associates, would have gotten an ear full from developers fearful of yet another tariff fight.

U.S. solar manufacturing giants First Solar and Qcells, among others, are putting their weight behind the latest threat to an already fragile supply chain, and it could be much worse than the one that brought the industry to its knees just two years ago.

The claim follows the divisive Auxin Solar tariff petition, which led to a sky-is-falling response from the solar industry and a stern rebuke of President Joe Biden’s Commerce Department for taking up the case. Auxin alleged that solar manufacturers in Malaysia, Cambodia, Thailand, and Vietnam, which account for around 80% of U.S. module supply, were circumventing trade duties against China.

The backlash was so effective that Biden issued a 2-year moratorium on new tariffs against solar modules imported from Southeast Asia to lessen the expected blow. Months later, the Inflation Reduction Act became law, providing rich incentives for domestic solar manufacturing.

Ultimately, Commerce determined some circumvention was taking place. BYD, Trina Solar, Vina Solar, Canadian Solar, and New East Solar were found guilty. But exceptions in the eventual order for non-Chinese wafers somewhat muted the impact.

Watch the full episode on YouTube

First Solar was long-rumored to be the puppet master of the petition filed by Auxin Solar, a San Jose-based manufacturer with a fraction of their production capacity, a claim which Auxin’s chief executive denied on the Factor This! podcast.

Nevertheless, the largest solar manufacturer in the U.S. has attached its name to the latest trade allegation, which argues that solar manufacturers in those Southeast Asian countries are dumping and subsidizing solar cells. The assertion could be far more detrimental than Auxin’s because no cells are currently produced in the U.S.

Despite the gravity, industry outrage hasn’t risen to the level seen in the Auxin case. But the impacts are just as, if not more, severe.

“Let’s be clear: procurement is stalled,” Roselund said on the Factor This! podcast from Renewable Energy World. “Nobody’s signing contracts right now because they don’t know the duty levels.”

Anti-dumping and countervailing duties cases, like the ones submitted by Auxin Solar and then the consortium that includes First Solar, carry significant uncertainty for developers.

Unlike executive orders stipulating universal, static duties across all imports, AD/CVD rulings could result in changing and retroactive duties. If Commerce determines in its preliminary findings that dumping and circumvention are occurring, importers must pay a bond that can be tapped in the event of penalties imposed in the future. If Commerce finds “critical circumstances,” the bond requirements could be retroactive for 90 days from the determinations.

Commerce Sec. Gina Raimondo testifies before a Senate Committee on Appropriations subcommittee on May 11, 2022.

“It makes it very forbidding to import these goods because if you’re on the hook for duties, if you have a financial projection, you have one line that’s just unknowable,” Roselund said. “Good luck!”

Bipartisan hard lining against China is now commonplace in Washington, and the sentiment appears to have permeated into Southeast Asia, now a hotbed for electronics manufacturing.

Roselund fears nuance may have been lost in the U.S.’ transition from decades of market-driven globalism to an industrial renaissance. There’s obvious tension between Biden’s tough on China desires and the push for economy-wide decarbonization, but it’s unlikely that climate goals can be achieved with solely American-made products.

“I think it’s more that solar has been caught up in this massive ideological and political shift,” Roseland said.