Solar lobby warns that US trade probe threatens half of planned installations

A trade investigation by the U.S. Commerce Department threatens nearly half of the solar capacity the U.S. was expected to install in 2022 and 2023, an industry lobbying group said April 27.

The Commerce Department probe into whether solar manufacturers have used factories in Southeast Asia to circumvent tariffs on Chinese imports is disrupting trade flows to the U.S. market, resulting in the delay or cancellation of nearly 51 GW of solar projects and almost 6 GWh of attached battery storage installations, according to the Solar Energy Industries Association, or SEIA.

The investigation, which could result in tariffs being applied retroactively to countries that supply more than 80% of U.S. solar panel imports, is undermining the Biden administration's efforts to cut carbon emissions and accelerate renewable energy deployment, SEIA President and CEO Abigail Ross Hopper said in a news release.

"This case is destroying clean energy and needlessly taking down American businesses and workers in its wake," Hopper said.

It is unclear what, if any, impact SEIA's assessment might have on the Commerce Department inquiry. Trade lawyers have said the department tries to remain apolitical. The Commerce Department announced the investigation in March despite a warning from SEIA that initiating the probe could jeopardize 14 GW of planned projects.

A Commerce Department spokesperson said in an email that "combatting climate change is a key priority" for the Biden administration. However, the trade laws the department is considering in the solar investigation "are completely removed from political considerations," the spokesperson added, and the department "is committed to holding foreign producers accountable to playing by the same rules as U.S. producers."

The investigation was requested by Auxin Solar Inc., a California manufacturer that accused Chinese producers of crystalline silicon solar cells and panels of assembling products in Malaysia, Thailand, Vietnam and Cambodia to avoid paying antidumping and countervailing duties on imports from China.

Before the Commerce Department announced its investigation, market participants said the threat of a probe was already having an impact on trade as foreign manufacturers sought to shield themselves from the risk of retroactive tariffs. U.S. solar panel imports were down 26% year over year in the first quarter of 2022.

S&P Global Market Intelligence reported in February nearly 40,000 MW of utility-scale solar projects in development, with target completion dates in 2022.

On April 21, NextEra Energy Inc., one of the world's largest renewable energy companies, warned that up to 2.8 GW of solar and energy storage projects it planned to build in 2022 could be delayed until 2023 because of the investigation.

NextEra CFO Kirk Crews said on an earnings call that adding tariffs to the bulk of U.S. solar panel imports would go against longstanding trade practice because the Commerce Department has ruled that the process performed in Southeast Asian factories of turning Chinese-made silicon wafers into cells is "technologically sophisticated and the most capital-intensive part of the solar panel manufacturing."

Taxing solar shipments from Southeast Asia would likely lead the U.S. industry to source products from China, NextEra President and CEO John Ketchum told analysts, because there is typically a delay between when the Commerce Department announces tariffs and sets the duty rate.

"And so what the industry would be forced to do perversely is actually go back and buy panels from China because the tariffs in China are known," Ketchum said. "And China is the only country in the world that would have panels available to sell."

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