US Solar Industry Remains Frustrated As ITC Recommends Tariffs

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The US International Trade Commission published on Tuesday recommendations for import tariffs on solar PV cells and modules as part of the Section 201 trade case which has been in motion much of this year, and though any tariffs are harmful, the proposals were not as bad as many within the solar industry were fearing.

Ever since US-based Chinese-owned solar manufacturer Suniva filed its complaint with the US International Trade Commission (ITC) in April (and was later joined by US-based German-owned SolarWorld Americas ) the US solar industry has been on tenterhooks awaiting word of whether the tariffs and price floor proposed would become a reality.

The proposals moved a big step closer toward reality on Tuesday, when the four ITC Commissioners published the recommendations they will subsequently send to US President Donald Trump, who will almost certainly rubber-stamp any tariffs recommended to him, consequences be damned.

However, the recommendations made on Tuesday are nowhere near as bad as many feared, though they still remain tariffs and therefore inherently harmful.

The Requests

Both Suniva and SolarWorld Americas submitted revised proposals to the ITC earlier last month in the wake of the ITC’s announced decision ruling in favor of the claimants. Originally, the two companies had posted filings with the ITC recommending the following tariffs be imposed:

• a $0.40/watt tariff for crystalline silicon photovoltaic (CSPV) cells
• a floor price of $0.78/watt on CSPV modules

Suniva’s modified proposals looked like this:

• a $0.25/watt tariff for CSPV cells (down from $0.40/watt)
• a $0.32/watt for CSPV modules (this is new)
• a floor price of $0.74/watt on CSPV modules (down from $0.78/watt)

Meanwhile, SolarWorld Americas agreed with Suniva on the tariffs for CSPV cells and modules but is looking for an import quota of at least 0.22 GW (gigawatts) for CSPV cells and 5.7 GW for CSPV modules.

The Recommendations

This week, however, the ITC Commissioners offered their recommendations, which look for all the world as if they made a concerted effort to find a middle-ground between the claimants and their few supporters, and the overwhelming majority of solar industry companies, experts, analysts, and American businesses and groups which came out against any sort of tariff on solar imports.

It can be a bit tricky to properly explain the way the ITC works, as each of the four Commissioners will file their own recommendations to President Donald Trump, rather than a communally agreed-upon compromise. Further, to make things even more difficult, Suniva and SolarWorld Americas made proposals in cents-per-watt while the Commissioners each made their proposals in percentages.

Nevertheless, the long and short of it all is that the proposals made by the Commissioners are significantly less restrictive than developers and the industry as a whole had feared. ITC Chairman Rhonda Schmidtlein proposed a tariff of 35% on CSPV modules to be incrementally reduced over a period of 4 years, and a tariff of 30% on imports of CSPV cells that exceed the 0.5 GW (gigawatt) volume level, and a tariff rate of 10% on imports within the import quota. Tariffs of this sort would likely increase the price of imports by around 10 to 11 cents, bringing costs back to levels developers were paying back in September of 2016.

Solar module prices have been falling dramatically over the past few years. GTM Research in March of 2016 reported that solar module prices were around 57 cents per watt, and Suniva’s original claim earlier this year was that prices of 35 cents per watt were too low for the company to legitimately compete in the market — blaming China and other Asian countries for flooding the US market with products under cost. Looking to affix tariffs of 25 cents per watt for CSPV cells and 32 cents per watt for CSPV modules would essentially double the price.

Hence, 35% tariffs will only tick the price up by around 10 cents per watt, or thereabouts.

Chairman Schmidtlein’s proposals were the most aggressive proposals made from all of the Commissioners. Commissioners David S. Johanson and Irving A. Williamson issued a joint proposal to the President of a 30% tariff on imported solar cells — exempting 1 GW of imports in 2018, and increasing that exemption by 200 MW per year for the four year injury period — as well as a 30% duty on modules.

Finally, Commissioner Meredith M. Broadbent recommended an import quota on cells and modules of 8.9 GW in the first year and increasing by 1.4 GW each subsequent year. While an import quota is generally held to be a dangerous proposition, setting the limit at 8.9 GW (and increasing it by such a margin each year) can be seen as taking seriously the potential harm to the US solar energy industry.

It is important also to note Broadbent’s subsequent comments regarding the potential imposition of “any tariff, tariff rate quota, or quantitative restriction that significantly limits global imports” in which she warns that such moves “would lead to a substantial increase in prices, suppressing demand for CSPV products in the Untied States” which would in turn “adversely affect the hundreds of thousands of US workers employed” in the US solar industry.

Broadbent also agreed with the American Solar Energy Industries Association (SEIA) and recommended administering the restrictions alongside “selling import licenses at public auction at a minimum price of one cent per watt” which would in turn generate $89 million in government revenue in 2018 if the full 8.9 GW worth of imported cells and modules were made.

The Response

Regardless of the middle-ground that I believe the ITC Commissioners have attempted to walk, the news that any tariffs will be applied has been met with disappointment — albeit with a tinge of relief.

“The commissioners clearly took a thoughtful approach to their recommendations and it’s worth noting that in no case did a commissioner recommend anything close to what the petitioners asked for,” said Abigail Ross Hopper, President and CEO of the Solar Energy Industries Association. “That being said, proposed tariffs would be intensely harmful to our industry. While we will have to spend more time evaluating the details of each recommendation, we are encouraged by three commissioners’ reference to alternative funding mechanisms, including our import license fee proposal.”

“It’s good that the trade commissioners’ recommendations aren’t as drastic as the petitioners sought in this case,” said John Rogers, senior energy analyst at the Union of Concerned Scientists. “Any remedy that involves major tariffs and quotas would fit right in with President Trump’s America-First-even-if-it’s-bad-policy approach. Limiting or slapping big tariffs on solar imports might marginally benefit U.S.-based solar manufacturers, but would hurt every other part of our homegrown solar industry: solar installers, salespeople, project developers, financiers, and even manufacturers of other solar system components.”

You can trace back the entire story as covered by my reporting using the Suniva tag, and starting with the story entitled ‘US Solar Industry Could Lose 88,000 Jobs If Government Rules In Suniva’s Favor’.