Solar projects are on hold as U.S. investigates whether China is skirting trade rules

 

Solar projects are on hold as the U.S. investigates whether China is skirting trade rules

Hundreds of large-scale solar power projects are on hold in the U.S. as the industry awaits the outcome of a federal investigation into potential trade violations involving solar panels bought from Asian suppliers.

Department of Commerce investigators hope to determine whether Chinese manufacturers are skirting longstanding U.S. duty rules on solar imports from China by funneling components through affiliates in four nearby countries — Malaysia, Thailand, Cambodia and Vietnam — where panels are assembled for export to the U.S.

The four countries at the heart of the investigation account for more than 80% of solar panel imports, according to the American Clean Power Association.

The Solar Energy Industries Association (SEIA), a Washington, D.C.-based trade group that opposes the investigation, said solar installation forecasts for 2022 and 2023 are down by 46% attributable to concerns about the inquiry — though other pressures including pandemic supply chain issues could play a role.

The group estimates a reduction of 24 gigawatts in planned solar capacity in the next two years — more than the industry installed in all of 2021.

State solar industries are in limbo

In Maine, recent state climate policies and incentives have fueled a boom in solar development. In just two years, dozens of the state's gently rolling hills have sprouted long rows of solar arrays.

Now, some developers say they have to push the pause button on new construction.

On a visit to one 35-acre site outside the state capital of Augusta, Leo Azevedo, procurement manager for an Ireland-based company called BNRG, showed off a newly energized 9-megawatt array that can power more than 1,500 homes. Thanks in part to low-cost solar modules sourced from Southeast Asia, that electricity will cost Mainers less than half the going rate most of them are paying for electricity that's largely produced by fossil fuels.

But just across a long fence, there's a bigger project that would deliver electricity to Maine consumers at a price that's better still.

"Right now most of the panel manufacturers aren't actually taking orders," Azevedo says.

If the Department of Commerce finds violations in its investigation, Azevedo says, it has wide latitude to assess duties retroactive to the investigation's start in April — leaving the importers with much bigger bills than they anticipated when they placed their orders.

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The inquiry is a quasi-judicial process intended to "ensure a level playing field for U.S. businesses and workers," said Rafael Benavides, a Commerce press secretary. Investigators will assess whether the South Asian manufacturers are subject to existing import taxes based on their relationship with Chinese suppliers and, if so, the rate at which each manufacturer's products should be taxed.

"Worst-case scenario, you can think about retroactive tariffs of up to 240%," Azevedo said. "But we really don't know what it is. So there's just too much risk to order panels right now, and that's just the end of it."

In a recent industry survey, most large-scale U.S. solar developers said uncertainty was causing delays and cancellations, putting billions of dollars' worth of carbon-free energy capacity at risk.

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