Senators, House Reps Convince Commerce To Move Ahead On China Solar Investigation

The Chinese-dominated solar industry has come under increased pressure lately, with tariffs raised on May 14, a two-year moratorium on dumping duties ending on Thursday, and the U.S. International Trade Commission voting 4-0 to initiate a new solar trade case on Friday.

Earlier this week, Senators from both parties had urged Commerce Secretary Gina Raimondo and David Johansen of the International Trade Commission to investigate China solar company operations in Southeast Asia. Now that the two-year moratorium on Chinese solar players in that part of the world has lifted, a new spotlight is shining on them yet again.

At the heart of the issue is trade enforcement of tariffs to counter China’s predatory trade activity and protecting the investments into solar factories here that have been launched because of the Inflation Reduction Act (IRA).

Massive overproduction by Chinese companies and exports of their solar cells and full solar panels from their operations in southeast Asia has decimated the U.S. solar market and is a headwind for the IRA if its goal is to build a domestic solar supply chain.

Jason Dymbort, executive vice president and general counsel for First Solar, one of the top 10 largest solar companies in the world (and the only American-owned one in the top 10) told an Ohio ABC News affiliate on Thursday that if China is allowed to dominate the solar energy industry, the U.S. will have to rely on them in the future.

China has subsidized the construction of manufacturing facilities in other countries, particularly those within their Belt and Road Initiative, such as Cambodia, Malaysia, Thailand, and Vietnam. These are Chinese-owned factories, operated by Chinese companies, making solar panels and cells with Chinese materials all with one goal: to circumvent U.S. trade law. By establishing facilities in third-party countries, Chinese companies can avoid targeted trade enforcement actions, which is why these petitions are so critical. Cambodia, Malaysia, Thailand and Vietnam accounted for 84 percent of solar panel imports in the fourth quarter of 2023. This is a continuation of long-standing practice, albeit with different tactics, as it was these same countries that were home to the last Chinese efforts to evade enforcement of American trade law. This case also has the potential to set an important precedent for addressing China’s anticompetitive practices across many industries.

– from a letter dated June 4, led by Sen. Sherrod Brown (D-OH) and signed by six other Democratic Senators and seven Democrats in the House.

Senator Sherrod Brown and Congresswoman Claudia Tenney (R-NY-24) led the two letters to Raimondo and Johansen, signed by numerous members of their own parties.

CPA’s CEO Michael Stumo commented on the letters in a statement this week.

In her letter, Tenney said that the recent surge in solar imports from Southeast Asia from Chinese companies “undermines the progress that has been made to establish a healthy domestic solar industry.”

The ITC Votes In Favor Of New Solar Investigation

A group of global solar companies dubbed the American Alliance for Solar Manufacturing Trade Committee, petitioned the ITC last month to investigate China solar company practices in Cambodia, Malaysia, Thailand, and Vietnam. The Alliance is comprised of Convalt Energy, First Solar, Hanwha-QCells, Meyer Burger, Mission Solar, REC Silicon, and Swift Solar.

Q Cells is investing in new solar cell manufacturing in Georgia.

Another company, called Silfab Solar, which is not part of the trade case, once argued against anti-dumping tariffs for Trina Solar, one of the four solar companies that were granted a two-year moratorium by the Biden administration in his now-defunct “solar emergency declaration” of 2022. On May 20, Silfab said it received an award from the Department of Energy to invest in solar cells – something Silfab primarily imported from Chinese companies in Southeast Asia.

On Thursday, the Solar Energy Industries Association (SEIA) didn’t even bother to lament the sunsetting of the Biden solar duties moratorium. Instead, they highlighted that American solar panel manufacturing capacity has increased by 71%. SEIA has spent much of the last several years in this fight arguing that tariffs would spell the end of the solar industry.

But while solar panel capacity is booming, it is the solar cells and other items needed to make those solar panels that are almost fully reliant on the Chinese multinationals that have largely set up shop in Southeast Asia to avoid mainland China tariffs. Because of that dominance, China tends to be the price setter on solar.

The U.S. has little chance of ever building a domestic solar cell industry without trade enforcement and limits to what can be imported.

In February, CPA chief economist Jeff Ferry warned that the dumping of solar goods caused by massive oversupply and the front-running of AD/CVD cases against Chinese companies would lead to a “solar apocalypse.” Companies here have been importing relentlessly to avoid future price changes due to AD/CVD cases.

Back then, the U.S. had an estimated 86 gigawatts of newly planned solar module (or solar panel) manufacturing capacity in the works but the roughly 30 gigawatts of imports threatened the need for all of that domestic output. The oversupply would lower prices further, which would thin or erase investment returns.

Ferry said the steady flow this year of imported solar cells and full panels “will force many U.S. producers out of business,” which would put the Chinese-owned U.S. facilities in the strongest position among the companies manufacturing here.

Of all the countries that have invested in the U.S. since the IRA passed, China stands out with the most solar companies. At least four solar companies have announced plans to invest in factories in the U.S., including market leaders JA Solar in Arizona and Longi in Ohio.