One of the lead lawyers in the contentious solar trade case before the U.S. International Trade Commission acknowledged that he doesn't know how to fix the central problem facing his client: A global market that is awash in equipment. Suniva Inc. and SolarWorld Americas Inc. are asking for sweeping protection from foreign competition on the premise that the U.S. solar manufacturing sector has been jeopardized by a surge in cheap imports. The companies said four years of tariffs and minimum prices would give them the breathing room they need to become "fully competitive."
But Suniva and SolarWorld have not said what specific steps they would take to remain competitive once the protection is lifted.
"There is no short-term answer to that issue" of overcapacity, Tim Brightbill, SolarWorld's trade lawyer and a partner at Wiley Rein LLP, said Aug. 15 at a hearing before the ITC. The companies ultimately hope the Trump administration will negotiate a reduction in global capacity. In the meantime, "something" is needed to "preserve domestic manufacturing while we figure out what to do about the broader problem," Brightbill said in response to a question from Commissioner Meredith Broadbent.
Suniva said in a filing that "meaningful relief" would enable domestic firms to add new capacity, hire more workers, improve manufacturing efficiency and expand product offerings. Absent a dramatic increase in automation or direct government support for the sector, however, it is uncertain whether domestic firms making crystalline silicon solar cells and panels could ultimately compete with foreign rivals.
"I think that ship has already sailed," John Carroll, the former senior vice president of finance and legislative affairs at defunct solar panel-maker Silicon Energy, said in an interview before the hearing. "What's going to change at the end of that four years?"
Cost gap
The U.S. Department of Energy in 2016 said it is about 6 cents per watt cheaper to manufacture solar panels in China than in the U.S., primarily due to lower labor costs.
The case has triggered a fight inside the solar industry that grew bitter ahead of the Aug. 15 hearing. Suniva and SolarWorld's opponents say the companies are seeking protections that would derail the solar industry by driving up the cost of the technology, making it less competitive against other sources of energy. The Solar Energy Industries Association, or SEIA, a trade group, says tens of thousands of jobs are at stake.
Edward Fenster, executive chairman of residential solar project developer Sunrun Inc., said Suniva and SolarWorld are pushing a "disingenuous" narrative that the domestic solar manufacturing industry is on the verge of collapse. "It's completely false and based, in part, on how narrowly they're trying to define this market," Fenster told reporters on the sidelines of the hearing.
He pointed to First Solar Inc. and SunPower Corp. as sources of domestic manufacturing. SunPower, which is headquartered in California and has support offices in California and Texas, operates manufacturing and assembly plants overseas, according to its annual report for 2016. First Solar, whose thin-film technology is not subject to the trade case, has manufacturing facilities in Ohio and overseas.
Additionally, Tesla Inc. is opening a massive solar panel plant in Buffalo, N.Y.
Last hope
"It is just a total falsehood that the U.S. manufacturing industry is on the brink. It's just false," Fenster said.
Suniva argues that a string of bankruptcies and plant closures, as well as U.S. manufacturers' failure to capture a larger share of a growing domestic market, is evidence of the failure of existing duties on China and Taiwan.
Rather than invest in the U.S., companies circumvented the tariffs by shifting operations primarily to other Asian countries, grabbing market share while selling equipment at prices below where "any producers can recover their costs," Suniva's lawyers said in filings. The companies say blanket global safeguards, rather than tariffs targeted at specific countries, are the industry's only hope, given the speed with which foreign firms were able to relocate production.
Suniva and SolarWorld's opponents say imports aren't the primary cause of the industry's problems. SEIA said domestic manufacturers were unable to make enough of the panels used in the biggest segment of the U.S. market, allowing rising demand to pull in imports. Suniva and SolarWorld were also dogged by "complaints from a litany of dissatisfied customers over late shipments, damaged products and general product unreliability," SEIA said. The companies said those charges are untrue.