The latest round of trade tariffs could create a module supply crunch and clog up the US PV project pipeline, according to SunEdison founder Jigar Shah.
Shah, who is also the President of the Coalition for Affordable Solar Energy (CASE), has warned that panel prices will rise from next year. This could in turn make some projects uneconomical, while in the future module supply itself could become a challenge.
“The 2012 tariffs will come into [full] force at the end of this year. All of the appeals and so on are exhausted. If the manufacturers have to pay for those tariffs module prices in the US will immediately go up,” Shah told PV Tech.
“This new case will have an influence on the old one because any modules with Taiwanese cells will be subject to the new tariffs. In 2012 SolarWorld wasn’t smart enough to include the Taiwanese cells. The Department of Commerce has used unprecedented power, to our knowledge, to actually widen the scope of the trade case beyond what SolarWorld asked for. So starting 1 January next year we will have unprecedented increases in modules prices,” he said.
Shah predicts increases of around five cents per watt resulting in some utility-scale projects no longer being viable.
With the US set for a spike in demand in 2016 ahead of the Investment Tax Credit falling from 30% to 10%, Shah is concerned that US will not be first choice for manufacturers that are able to pick and choose where they export to.
“That’s the amazing thing, solar is becoming the largest business in the electrical generating sector and the US, which is manufacturing a shortage of panels, is going to become the least friendly market to export panels too,” Shah said.
Shayle Kann, senior VP at GTM Research, predicted smaller panel increases but a similar end result.
“We are looking at likely flat to slightly increased pricing in the US while the rest of the world sees price declines,” Kann told PV Tech. “And flat pricing alone is enough to render uneconomic a number of utility-scale projects in the US, many of which are operating under razor-thin margins.
“With regard to a 2016 module shortage, it depends how demand shakes out in the rest of the world. 2016 will certainly be a boom year for US solar demand ahead of potential ITC [Investment Tax Credit] expiration, so there will be a huge need for module capacity to serve demand. And while there will certainly be more than enough technical capacity to serve that demand, it is true that other markets, such as Japan, could be preferential for suppliers if they are strong enough to enable full supplier utilisation.
“So regardless of whether a shortage does occur, the price of available supply will be just as important and will certainly be impacted by the new round of tariffs,” Kann concluded.
This impact could mean a weakening of US firms' bargaining position when negotiating pricing and reduced choice as some firms able to sell their full output opt for tariff-free export markets.
The additional costs will not be passed on to investors who Shah says will expect to continue to be offered quoted prices. That leaves the industry to absorb the costs.
A frustrated Shah expressed concern that this could create uncertainty come 1 January while attempts, if any, are made to find a settlement. This process would likely take four to six months.
“That’s unacceptable – 150,000 people, many of whom are blue collar workers will not know whether they have a job that day. That is ridiculous,” said Shah.
So who does benefit from the decision?
“Nobody. There’s not single person who will win out of this. This is just going to leave a bad taste in everyone’s mouth. The only person this is good news for is Frank Asbeck but I don’t think it is good news for his shareholders,” said Shah.