The Biden administration temporarily halted a ban on solar panel component imports from four Asian countries that had sent that energy market's construction into a nosedive after a domestic manufacturer called for an investigation into whether materials suspected of being made in China but shipped from Cambodia, Malaysia, Thailand and Vietnam were circumventing tariffs.
Under a June 5 directive, President Joe Biden said solar modules and cells can be imported from those countries for 24 months and he authorizes use of the federal Defense Production Act to accelerate U.S. manufacture of the solar components, which currently is limited.
The directive does not halt a U.S. Commerce Dept. probe into the component imports, begun in March after a petition filed by U.S. manufacturer Auxin Solar. But it would also eliminate possible retroactive tariffs for U.S. developers dating to Auxin;s February petition filing if the firm's claims are proved valid.
While the federal Tariff Act allows for such emergency actions, the probe and its limit on imports was seen as an obstacle to the administration’s clean energy goals
Biden's invoking of the Defense Production Act to boost U.S. manufacturing is his second in two months, with the president using it in April to boost domestic battery component production for electric vehicles and clean energy. This time, the law also is set to provide incentives for building insulation, critical power grid infrastructure, equipment for making and using clean electricity generated fuel such as electrolyzers and fuel cells and related platinum group metals.
"We remain confident that a review of the facts will result in a negative determination,” Abigail Hopper, president and CEO of the Solar Energy Industries Association, said in a statement. The U.S. solar industry can return to rapid deployment during the reprieve from the “industry crushing probe,” she said.
Commerce will issue regulations to temporarily permit the duty-free access to the imported solar cells and modules, while the anti-circumvention proceeding continues uninterrupted, Lisa Wang, assistant secretary for enforcement and compliance said. While solar components from Cambodia, Malaysia, Thailand and Vietnam will not be subject to new antidumping or countervailing duties during the 24-month emergency period, duties on Chinese and Taiwanese imports will remain in effect, she said.
In a Power Engineering podcast earlier this month, Rhone Resch, CEO of the Solar Energy Industries Association from 2004 to 2016, noted a market change as China gained dominance in component production, aided by strong government financial support.
He said the shift grew as U.S. solar developers, anxious to win power purchase agreements, "became addicted to lower pricing, and we lost track of prioritizing domestic manufacturing."
According to the Ultra Low-Carbon Solar Alliance, manufacturers in China now account for 83% of global capacity for polysilicon production, 96% for wafers, 79% for cells and 70% for modules.
The 24-month moratorium will allow companies to move forward on stalled projects, said George Hershman, an association board member and CEO of SOLV Energy, a major solar construction firm formed last year from the merger of Swinerton Construction's renewables unit and SOLVE Inc.
“This announcement provides much needed clarity in the short-term on trade,” he said, noting that the lingering threat of tariffs remain from the ongoing circumvention case. “I strongly urge the Department of Commerce to work toward a swift end to this case and put the solar industry fully back to work.”
SOLV Energy was just selected as engineering, procurement, and construction (EPC) contractor for the first 400-MW phase of the $1.3-billion Mammoth solar project in northwest Indiana, set to generate a total of 1.3 GW of solar energy. The first phase would come on line in the next 15 to 18 months,
Israel-based Doral Renewable Energy Group, its developer, said Mammoth will be among the largest solar facilities in the U.S.
Large projects like these have been under threat for cancellation or delay this year, in the wake of the Commerce Dept. probe. Last month, utility Northern Indiana Public Service Co. said it would delay retiring its largest coal-fired power plant by two years because of the federal investigation.
In comments to pv magazine In February, Hershman said the potential 50-250% tariff that could be levied on solar imports would impose between $75 -$375 million in additional costs on a $300-million project.
Since the investigation was announced by Commerce, the solar sector trade group cut its forecast for deployment this year by 46%.
To boost domestic solar manufacturing, the administration directed the development of master supply agreements to “increase the speed and efficiency” of the sale of the products to the U.S. government. It also established “super preferences” to apply domestic content standards for federal procurement of solar energy systems.
The administration will “strongly encourage” the use of project labor agreements and community benefits agreements that offer wages at or above the prevailing rate and include local hire provisions.
The efforts are expected to triple solar manufacturing capacity by 2024.
Shares of solar manufacturing companies soared on the news, according to CNBC. Array Technologies was up 18% and Sunrun rose 11% on June 5.
Increasing the production of electrolyzers, fuel cells and platinum group metals using the Defense Production Act is meant to increase the domestic production of clean hydrogen, which the U.S. Dept. of Energy said is projected to contribute significantly to reaching U.S. decarbonization goals.
Increased production of power grid components is needed to support growth in renewable energy, DOE said, but current supply chain issues are causing up to two years delay in expanding the grid in parts of the U.S.