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Facing tariffs, Hanwha Q CELLS affiliate plans US solar panel factory

An affiliate of South Korean manufacturer Hanwha Q CELLS Co. Ltd. said it will begin assembling solar modules at a factory in Georgia in 2019 "in spite of" tariffs that President Donald Trump imposed on imported solar equipment earlier this year.

The plant that Hanwha Q CELLS Korea Corp. is building in Georgia's northwestern Whitfield County will have the capacity to produce more than 1,600 MW of solar panels annually, according to a May 30 news release. The factory will be used to supply Hanwha Q CELLS Co. Ltd., or Hanwha Q CELLS, which generated 40.5% of its net revenues, or $887.5 million, in the U.S. in 2017.

It is unclear to what degree the plant will allow Hanwha Q CELLS to avoid the latest round of U.S. solar tariffs. The duties, which are set to fall from 30% to 15% over four years, apply to all imported solar panels, but do not apply to the first 2,500 MW of solar cells that are imported annually. Credit Suisse in February identified 4,450 MW of demand for tariff-free cells in 2019, far in excess of the quota. Hanwha Q CELLS did not respond to messages seeking comment on May 30.

In March, Hanwha Q CELLS asked the Trump administration to exempt a "high efficiency and state of the art module" it makes for the utility-scale market. "[The] U.S. utility sector requires imports of solar modules because U.S. producers lack the capacity to meet the current and projected demand," the company wrote in its application, which remains under consideration. "With no additional capacity presently coming on line, domestic production will not be able to supply the market."

"The new manufacturing [facility] is [a] testament to Hanwha Q CELLS Korea's commitment to the U.S. market, in spite of the recently imposed trade barriers," the company said in the news release.

According to recent securities filings, Hanwha Q CELLS' top customers in 2017 included subsidiaries of the Florida utility NextEra Energy Inc. and JinkoSolar Holding Co. Ltd., a China-based manufacturer that is building a plant in Florida "in conjunction with" a large panel-supply agreement the company has with NextEra Energy.

JinkoSolar executives have said the company is moving ahead with the 400-MW factory in Florida whether or not its cells are exempt from tariffs. The plant was initially expected to have a capacity of 1,500 MW. JinkoSolar announced its move into the U.S., as well as its contract with NextEra Energy, a week after Trump approved the new import barriers.

Hanwha Q Cells Korea's new factory in Georgia will be geared toward the rooftop and ground-mounted markets, the company said.

This is not the first time manufacturers from Asia have tried setting up U.S. operations. "Within a year or two everything kind of fizzled out ... mainly because at the end of the day the economics didn't work," said Raj Prabhu, CEO of Mercom Capital Group LLC, a clean-tech communications and research firm. "The costs were falling fast enough that even with the tariff imposition, they were better off exporting from China."