Northern California solar industry cautious on letting in more Chinese panels under tariff pause
A move by President Biden to pause tariffs on imported Chinese-made solar panels for two years, even as the Commerce Department investigates the Asian powerhouse for possible trade agreement violations, isn’t sitting well with several solar company executives and the state of California.
They said removing protective tariffs now comes as U.S. solar companies struggle to find labor to install panels and face adverse changes in tax regulations.
Administration officials said allowing more Chinese-made solar components will help the domestic industry by increasing supplies of key parts needed for solar installations. The Commerce Department investigation, they added, is rooted in protecting the domestic industry.
But California Gov. Gavin Newsom recently sent a letter to Commerce Secretary Gina Raimondo, warning that the investigation is jeopardizing a state plan to quickly install new solar to power 2.5 million homes, the Washington Post reported.
S&P Global Market Intelligence said Congress is also considering tax credits for the domestic solar industry — because “today, the U.S. has no active ingot, wafer, or cell capacity and little panel assembly despite surging demand.”
In the Bay Area, Mamun Rashid, founder of Auxim Solar, a small solar-panel manufacturer in San Jose, petitioned Commerce to launch the investigation in a complaint filed earlier this year. Since then, he has become the target of negative reaction from green energy and environmental advocates. He said the outpouring of solar industry responses supports his case that Chinese products are being illegally dumped in the U.S. market.
“There’s absolutely no reason to stop product shipments, or to stop or delay projects, if there is no cheating going on. I did not expect to hear about projects being delayed, and I did not expect to see all this vitriol,” Rashid stated.
Rashid told the Business Standard, “President Biden is significantly interfering in Commerce’s quasi-judicial process… By taking this unprecedented and potentially illegal action (Biden) has opened the door wide for Chinese-funded special interests to defeat the fair application of US trade law.”
A majority of U.S. solar firms have cautioned that if the investigation turns up dumping by the Chinese, the U.S. could impose retroactive tariffs of up to 240%. Tariffs under consideration by Commerce could exceed 50% of the price of solar panels.
Such a dramatic leap in levies would drive up panel prices and imperil half of planned solar projects planned for completion in the U.S. this year, based on an industry survey, and could also result in thousands of layoffs, according to the Associated Press.
Part of reason for expanding the investigation to Southeast Asia is China has moved some solar manufacturing processes to Thailand, Vietnam, Malaysia and Cambodia, according to Timothy Brighton, an attorney for U.S. solar manufacturers. manufacturing. He claims that’s to skirt strict anti-dumping rules that limit imports from China.
Energy Secretary Jennifer Granholm testified that the time to take action is now.
“At stake is the complete smothering of investment in (domestic solar) jobs and the independence we would be seeking as a nation to get our fuel from our own generation sources,” Granholm said before the Senate Energy and Natural Resources Committee. “I am deeply concerned about being able to get to the goal of 100 percent clean electricity by 2035 if this is not resolved quickly.”
State and utility actions could bite more than tariffs
“One way to avoid Asian-related solar provisioning and supply issues is to buy American, source solar products from Canada -- or as we have done – obtain products from a Norwegian firm distributed through Singapore,” said Matt Smith, a consultant with Solar Works. The Sebastopol company serves Sonoma, Napa and northern Marin counties.
“We don’t use solar components and parts from China, and do not anticipate seeing significant price changes or an impact on current work in the short term,” Smith said. “But the future is impossible to predict.”
Smith said currently, no tariff-related fallout is foreseen affecting the company’s workflow, but there could be higher costs associated with the availability of solar parts down the road.
He said that a potential California Public Utility Commission tax and pending Pacific Gas & Electric rate hikes could have a greater effect on demand for photovoltaic (PV) systems.
The PUC’s proposal, which was last revised in May, is to tax solar users about $300 to $600 a year to contribute toward maintaining the electrical grid.