Inverter supply chains join tariffs in casting cloud over Biden's solar aims

U.S. section 201 safeguarding import tariffs on solar panel imports rose to 18% on Feb. 7 compared to the 20% rate applying previously but above the 15% originally planned, Inside Trade reported. That was the result of a Trump administration ruling, discussed in Panjiva's Oct. 14, 2020, research, that has been left in place. 

Import duties on solar panels will increase the cost of meeting President Joe Biden's target of cutting U.S. power generation emissions by 50% by 2035 and may be an area for early action in rolling back the Trump administration's tariffs.

The net effect of the Trump administration's import duties on imports has been largely neutral, with imports in 2020 reaching $8.21 billion compared to $8.30 billion in 2016, Panjiva's data shows. There has nonetheless been something of a downturn more recently, with imports in the fourth quarter of 2020 down 18.3% year over year, with imports from China down by 90.0% and those from Malaysia having dipped 27.7%. 

There has been a continued rotation into supplies from Thailand and Vietnam, with shipments from Thailand rising by 6.0% year over year in the fourth quarter of 2020 while those from Vietnam only dipped 4.1%.

Tariffs are not the only complication facing renewable energy supply chains with Enphase Energy Inc. — a maker of micro-inverters used in solar panels — stating it "experienced constraints in the global semiconductor supply chain during the quarter and expedited products to meet customer demand." The expedited freight has likely led to higher logistics costs, a challenge that has faced most industrial sectors in the past three months and has continued into the new year. 

Panjiva's data shows that U.S. seaborne imports linked to Enphase surged 490% higher year over year in December 2020 and have climbed 900% higher in January to reach a record high. 

Total U.S. seaborne imports of electrical converters and parts climbed 18.5% higher year over year in the fourth quarter of 2020 before rising by 20.2% in January, bucking the downturn seen among the completed panel makers.

Among the solar specialists, SolarEdge Technologies Inc. shipments climbed 850% higher in the fourth quarter of 2020 before rising 1067% in January, while SMA Solar Technology AG experienced slower growth of 10.0% in the fourth quarter of 2020 and was unchanged in January. Shipments of converters linked to diversified electrical companies including Schneider Electric SE and General Electric Co. fell by 18.0% and 17.0%, respectively.

Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.