IHS looks at effects US antidumping tariffs pose for North American solar market

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In IHS’s iSuppli PV Perspectives report, the company looks into how the US government’s antidumping penalties on imports of PV cells from China could affect the US solar market. IHS noted that the Department of Commerce’s May 17 preliminary ruling could suspend Chinese imports by nearly half this year, which would impact pricing, inventories and project timelines. IHS previously estimated that 2GW of solar modules were to be shipped to North America in 2012 from Chinese manufacturers, representing almost 60% of the market for North American use.

The report details how the high tariffs proposed by the Commerce Department will more than likely halt shipments to North America from China while companies look to modify business plans in order to account for the tariff. IHS estimates that this could represent the temporary removal of up to 1.5GW, or 45% of the total market in 2012.

“The Commerce Department action will have a major impact on the North American solar market, constraining supplies and driving up prices for modules and systems,” said Mike Sheppard, photovoltaics analyst with IHS. “Even when alternative supply lines are adopted, the penalties are likely to add as much as 12% to the cost of solar modules, lowering the average return on investment (ROI) for solar systems in the region by as much as 2.5%.”

The report notes that the Commerce Department stated mandatory respondents Suntech and Trina Solar to have unique tariff rates of 31.22% and 31.14%, respectively. All other companies singled out in the investigation received an average duty of 31.2% while Chinese companies not singled out will receive a 250% duty. The duties to be imposed are preliminary and need to be finalized by the Commerce Department and the International Trade Commission (ITC) on October 9 and November 23. The duties will, however, be enacted retroactively to February 2012.

The analytics provider advised that the cost of installation for ground solar systems holds potential to grow from US$2.56 per watt to US$2.65 per watt. This will then result, according to IHS in an ROI decline of 1.5% to 2.5%. “This reduced ROI means some investors may think twice when valuing other vehicles to put their money,” Sheppard said. “However, most investors will not be deterred.”

In terms of inventory, IHS advised that inventory levels in North America will drop considerably and do so quickly. Increased module prices will likely be found as well, since Chinese modules were competitively priced. Price increases will be passed on to the system level, notes IHS, negatively affecting ROI for projects installed this year.

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