US solar industry split on potential impacts of AD/CVD ruling

Five solar companies have been found circumventing US import tariffs and numerous others are assumed to be circumventing through lack of disclosure, Commerce said. Image: Port Houston.

The US Department of Commerce has found that five solar PV manufacturers have been circumventing its import tariffs by relocating minor portions of their supply chains to Southeast Asia.

Responses from the US solar industry on how the ruling will affect shipments and deployments once it comes into force have been mixed.

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In its final determination on the anti-dumping and countervailing duty (AD/CVD) tariffs, Commerce found that Trina Solar, Canadian Solar, BYD Hong Kong, New East Solar and LONGi-owned Vina solar had been shipping some of their products through Thailand, Cambodia and Vietnam for “minor processing” before shipping them to the US.

The companies were therefore “attempting to avoid the payment of US duties”, Commerce said.

However, the tariffs are still suspended until July 2024 under Joe Biden’s two-year waiver, until which date the findings will not take effect. Commerce added that if companies can certify that they are not circumventing AD/CVD tariffs in the interim then the findings will not apply.

Of the eight companies investigated, three were found not to be circumventing tariffs: Hanwha Qcells and Jinko Solar (both operational in Malaysia) and Boviet Solar in Vietnam.

There is little change from the preliminary findings of December 2022, which accused non-specified companies of importing solar cells and modules to the US that circumvented the tariffs. At the time, 80% of US solar supply came from the four countries in question. One major alteration is the newly-accused New East Solar, which was initially found to be innocent in the preliminary determination.

In addition to the five accused companies, Commerce said that companies operating in Malaysia, Thailand and Vietnam which had refused to respond to its request for information were found to be circumventing the tariffs. Commerce sees each of the four countries as single entities and “designates each country as one through which solar cells and modules are being circumvented from China”; the companies therein are assumed to be circumventing until they can prove their compliance.

‘Expected and positive outcome’

Canadian Solar – one of the companies found to be circumventing the tariffs – spoke to PV Tech following the ruling. Thomas Koerner, senior VP of global sales at Canadian Solar said: “The final determination is an expected and positive outcome for Canadian Solar and the industry. Although Canadian Solar does not agree with the final determination of the DOC that it has been found circumventing, Canadian Solar is able to manage the adjusted scope of the 2012 and 2014 AD/CVD case in this final ruling where the p/n junction of a cell no longer is the defining process step of a country-of-origin definition.”

In analysis of the ruling, Clean Energy Associates said: “We expect no significant impact on solar PV import volumes and prices as a result of the Final Determination. However, certain suppliers will not be able to avoid paying duties and are unlikely to continue to export directly to the US market after June 6, 2024.”

This, it said, was due to the “availability of multiple pathways to avoid paying duties”. Specifically, CEA said that pathways to avoid duties for modules shipped from Southeast Asia should be achievable for most manufacturers by changing some of their supply to meet requirements.

Cells are more complicated: cells shipped straight to the US from Southeast Asia must use a non-Chinese wafer or prove compliance with AD/CVD to avoid tariffs. They can also be shipped for module assembly in a third country, as per Commerce’ clarification from December.

“Most companies that do not have captive wafer factories in the named countries are unlikely to be able to export cells duty-free to the United States,” CEA said.

SEIA voices concerns

President and CEO of the Solar Energy Industries Association (SEIA) Abigail Ross Hopper, had more pronounced concerns about the ruling: “The US Department of Commerce is out of step with the administration’s clean energy goals, and we fundamentally disagree with their decision. Auxin Solar’s allegations of circumvention were meritless from the beginning and the inquiries have caused uncertainty in the US market at a time when solar energy is on the rise.”

The ruling is the latest instalment of a long-running saga that began in February 2022 with a petition from a small American module manufacturer, Auxin Solar, after Commerce had rejected a number of previous petitions on account of the petitioners’ anonymity.

In an attempt to mitigate the effects of an investigation on US solar deployments, President Biden announced an executive two-year waiver on the AD/CVD tariffs to run until June 2024. Until then, no tariffs will be applied to imports from Southeast Asia. In May this year, Biden stepped in again to veto an attempt to overturn his waiver after 400 solar companies sent a letter warning of US$1 billion in retroactive duties and GWs of cancelled or delayed solar projects if the duties came into force and were back-dated.

Koerner added: “We are also happy to note that Commerce’s findings do not impose any retroactive penalty or liability for imports of the past, since importers like CSI have complied with the – at that time – valid rules and laws.”

Even with Biden’s waiver in place, there is concern about supply shortages and the inadequate domestic supply to fulfil demand. In its press release following the final ruling, Commerce insisted that the waiver gave US solar importers “sufficient time to adjust supply chains”.

Industry bodies like SEIA and the American Council on Renewable Energy (ACORE) are less sure of the US’ ability to continue its solar rollout as normal following the end of Biden’s grace period. The fact remains that the global solar industry remains dependent on Chinese supply for the near future, duties or not. Upstream production in particular (from wafers up to silicon) is overwhelmingly based in China.

Gregory Wetstone, president and CEO of ACORE said: “Even as the Inflation Reduction Act (IRA) has launched a renaissance in American manufacturing, building a domestic solar manufacturing base at the scale necessary to protect our climate takes time. Like most sectors of the American economy, the solar industry has a global supply chain and needs continued access to imported components until US manufacturing capabilities are fully ramped up.”

The inquiry said that the impact of Chinese solar companies on the US market is unfair and undermines US companies’ ability to operate, hence the AD/CVD case. Its desire for energy security and sovereignty from China, offset against the effort to achieve an historic overhaul of its power supply with the most affordable equipment, is a tension at the centre of the US’ energy transition and continues to cause problems and supply issues for solar products.

Wetstone continued: “While ACORE will continue working with its members and sector allies to build a domestic solar manufacturing base that supports high-quality jobs, the policy whiplash now being inflicted on the US solar industry is incredibly disruptive and will only delay our nation’s clean energy progress.”

Hopper echoed this: “It will take at least 3-5 years to ramp-up domestic solar manufacturing capacity and the global supply chain will be vital in the short-term. This case will just make it harder for American businesses to keep deploying, financing, and installing solar power.”

This story and its headline have been amended from their original form for clarity and to emphasise that the tariffs’ impacts will not be immediate and could be subject to change. Comments from Canadian Solar and Clean Energy Associates were also incorporated.

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