If you listened to groups like the Solar Energy Industries Association (SEIA), which was exposed for representing Chinese solar manufacturers that use slave labor, the Section 201 solar safeguard tariffs were supposed to ruin the solar business and completely stall deployment of solar on rooftops and vacant fields controlled by electric utility companies. But according to a U.S. government report, they did nothing of the sort.
The U.S. solar industry added 6.5 gigawatts (GW) of new electric generating capacity as of the third quarter 2023, a 35 percent year-over-year increase. Even the Solar Energy Industries Association, which mainly represents installation companies and importers and has opposed tariffs as solar killers, admitted in December that the U.S. would likely add a record 33 gigawatts of solar capacity for the full year of 2023. Growth is expected for “years to come”, they said.
Despite tariffs of 30 percent, which began in 2018 and will fall to 14.5 percent this year, the solar industry has survived.
“The safeguard measure has resulted in positive industry adjustments in terms of significant expansion and investment in domestic solar module manufacturing and announced plans to restart domestic solar cell manufacturing,” the International Trade Commission (ITC) concluded in a 408-page assessment covered by Bloomberg on Feb. 6. Solar industry jobs and manufacturing output primarily of solar panels have all increased under the tariffs, and some of this growth was prior to the enactment of the Inflation Reduction Act (IRA) in 2022 which provides for tax incentives to solar manufacturers. The IRA has led to more investments by solar companies, including the only U.S. solar company comprising the top 10 list of solar companies worldwide, First Solar of Ohio. At least 11 potential U.S. solar cell manufacturing plants have been announced or are under consideration. This is an important part of the solar supply chain, and is something the U.S. lost to China over a decade ago. The IRA was designed to entice companies to manufacture more of the solar supply chain at home, rather than only making solar panels composed of all Asian parts. There’s not enough domestic supply of solar cells to keep pace with domestic panel manufacturing.
The Bloomberg report warned that the industry “faces headwinds”. And highlighted that domestic manufacturers were operating at a loss between 2020 and 2022.
Safeguard Removal Would Flood U.S. with Asian Solar, Upending IRA Goals
According to Bloomberg, the White House is once again being pressured by manufacturers here to kill the Section 201 exemption on bifacial (two-sided) solar panels – something SEIA challenged and won in favor of importers almost immediately after the 201s were imposed in 2019. Solar manufacturers argue that the exclusion undermines the IRA incentives to produce solar domestically. The double sided panels are the ones purchased by utility companies.
But now those bifacial panels are being imported and used for residential projects, even though there’s no practical advantage in using them on rooftops because only one side is exposed to the sun. Bifacials have no tariffs. If other product lines were treated the same way, this would remove the incentive to produce panels domestically, giving Asian countries, led by Chinese multinationals, their ongoing status as the OPEC of renewable energy. No one comes close to China in terms of solar production and supply chain dominance.
In fact, despite the build-up of U.S. solar, and planned expansion in the works, Customs data shows that solar module imports in the first seven months of 2023 were up 179% over the same period last year. In January 2022 the U.S. imported $422 million worth of solar modules. By July 2023, imports came in at $1.7 billion, four times greater.
Most of those imports are coming in from Vietnam, Cambodia, and Malaysia. But the raw materials and the solar cells used in those panels come from China. China is driving the growth of the global industry. According to industry analysts Clean Energy Associates, China’s production capacity is expected to double this year to reach 866 GW by the end of this year, and increase further next year to over 1,000 GW or 1 terawatt (that’s one trillion watts of electric power). That’s more than double China’s capacity from just one year ago when the IRA was passed, CPA chief economist Jeff Ferry wrote in an article dated Sept. 25.
China is hitting the IRA with both barrels.
Europe’s Solar Industry, An Example Worth Unfollowing
One only has to look to Europe to see what is at stake. China solar companies have outwitted and outplayed the Europeans for years, as they have here. The Section 201 safeguards – along with some anti-dumping victories – have made American production of solar panels feasible.
European producers, small by comparison to their U.S. and Asian counterparts, are now worried about China imports. Their producers are unable to compete in a market flooded from overproduction and incomparable price points thanks to labor, subsidies, and non-existent environmental rules.
European manufacturers say hopes of a competitive local industry are dim, Asia Financial reported on Feb. 7. Europe is in a “price war” with China, Gunter Erfurt, CEO of Swiss panel maker Meyer Burger told Asia Financial. They reportedly have plans to close their German solar panel factory, citing an absence of supportive European policies like in the U.S. They are investing in Colorado, however. “We are already exploring opportunities to add further solar cell and module production capacity in the United States,” Erfurt said.
Earlier this month, the Coalition for a Prosperous America applauded a letter from Senators Jon Ossoff (D-GA), Sherrod Brown (D-OH), Marco Rubio (R-FL), and Reverend Raphael Warnock (D-GA) asking President Biden to increase tariffs on Chinese-made solar module, cell, and wafer imports.
According to a report by Wood Mackenzie published in December, the price of a solar panel manufactured in China dropped to 15 cents per watt, more than 60 percent below the price of a U.S.-made panel as China’s persistent overproduction of hotly traded global goods often drive prices into the ground more than advances in technology and productivity do. The Senators said China’s domestic solar policies hurt U.S. efforts to reshore domestic solar manufacturing — a key energy security goal.
China’s massive overproduction is creating an excessive global supply of solar panels, leading to rapid price-cutting. According to industry sources, utilities currently pay roughly 35 cents a watt for solar panels. However, they’re already placing orders for next year at price points falling to 25 cents/watt.
The 25 cents/watt figure was roughly half the price of solar panels when Congress passed the IRA in August 2022. But back then, the bill’s tax credit of seven cents/watt was considered generous. Now, the tax credit isn’t enough to meet falling prices. U.S. manufacturers will struggle to survive if prices in the market don’t cover costs, CPA’s chief economist wrote in October.
European leaders said that plans like the IRA would lead to solar price inflation, even though solar prices are falling thanks in part to new advances in technology and China oversupply. They also said tariffs would hurt installers, meaning Europe has thrown in the towel. Just as it has weaned itself of Russian natural gas import dependence, the EU has now become dependent on China for its solar energy replacement.
The same fate would immediately take hold in the U.S. if those safeguards were removed, unpending the intent of the IRA to rebuild the American solar industry.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Solar Tariffs Were Supposed to Ruin the Solar Business. They Didn’t, ITC Concludes.
If you listened to groups like the Solar Energy Industries Association (SEIA), which was exposed for representing Chinese solar manufacturers that use slave labor, the Section 201 solar safeguard tariffs were supposed to ruin the solar business and completely stall deployment of solar on rooftops and vacant fields controlled by electric utility companies. But according to a U.S. government report, they did nothing of the sort.
The U.S. solar industry added 6.5 gigawatts (GW) of new electric generating capacity as of the third quarter 2023, a 35 percent year-over-year increase. Even the Solar Energy Industries Association, which mainly represents installation companies and importers and has opposed tariffs as solar killers, admitted in December that the U.S. would likely add a record 33 gigawatts of solar capacity for the full year of 2023. Growth is expected for “years to come”, they said.
Despite tariffs of 30 percent, which began in 2018 and will fall to 14.5 percent this year, the solar industry has survived.
The Bloomberg report warned that the industry “faces headwinds”. And highlighted that domestic manufacturers were operating at a loss between 2020 and 2022.
Safeguard Removal Would Flood U.S. with Asian Solar, Upending IRA Goals
According to Bloomberg, the White House is once again being pressured by manufacturers here to kill the Section 201 exemption on bifacial (two-sided) solar panels – something SEIA challenged and won in favor of importers almost immediately after the 201s were imposed in 2019. Solar manufacturers argue that the exclusion undermines the IRA incentives to produce solar domestically. The double sided panels are the ones purchased by utility companies.
But now those bifacial panels are being imported and used for residential projects, even though there’s no practical advantage in using them on rooftops because only one side is exposed to the sun. Bifacials have no tariffs. If other product lines were treated the same way, this would remove the incentive to produce panels domestically, giving Asian countries, led by Chinese multinationals, their ongoing status as the OPEC of renewable energy. No one comes close to China in terms of solar production and supply chain dominance.
In fact, despite the build-up of U.S. solar, and planned expansion in the works, Customs data shows that solar module imports in the first seven months of 2023 were up 179% over the same period last year. In January 2022 the U.S. imported $422 million worth of solar modules. By July 2023, imports came in at $1.7 billion, four times greater.
Most of those imports are coming in from Vietnam, Cambodia, and Malaysia. But the raw materials and the solar cells used in those panels come from China. China is driving the growth of the global industry. According to industry analysts Clean Energy Associates, China’s production capacity is expected to double this year to reach 866 GW by the end of this year, and increase further next year to over 1,000 GW or 1 terawatt (that’s one trillion watts of electric power). That’s more than double China’s capacity from just one year ago when the IRA was passed, CPA chief economist Jeff Ferry wrote in an article dated Sept. 25.
China is hitting the IRA with both barrels.
Europe’s Solar Industry, An Example Worth Unfollowing
One only has to look to Europe to see what is at stake. China solar companies have outwitted and outplayed the Europeans for years, as they have here. The Section 201 safeguards – along with some anti-dumping victories – have made American production of solar panels feasible.
European producers, small by comparison to their U.S. and Asian counterparts, are now worried about China imports. Their producers are unable to compete in a market flooded from overproduction and incomparable price points thanks to labor, subsidies, and non-existent environmental rules.
The vast majority – as much as 95 percent – of solar panels and cells deployed in the EU are made in China, based on International Energy Agency data.
European manufacturers say hopes of a competitive local industry are dim, Asia Financial reported on Feb. 7. Europe is in a “price war” with China, Gunter Erfurt, CEO of Swiss panel maker Meyer Burger told Asia Financial. They reportedly have plans to close their German solar panel factory, citing an absence of supportive European policies like in the U.S. They are investing in Colorado, however. “We are already exploring opportunities to add further solar cell and module production capacity in the United States,” Erfurt said.
Earlier this month, the Coalition for a Prosperous America applauded a letter from Senators Jon Ossoff (D-GA), Sherrod Brown (D-OH), Marco Rubio (R-FL), and Reverend Raphael Warnock (D-GA) asking President Biden to increase tariffs on Chinese-made solar module, cell, and wafer imports.
China’s massive overproduction is creating an excessive global supply of solar panels, leading to rapid price-cutting. According to industry sources, utilities currently pay roughly 35 cents a watt for solar panels. However, they’re already placing orders for next year at price points falling to 25 cents/watt.
The 25 cents/watt figure was roughly half the price of solar panels when Congress passed the IRA in August 2022. But back then, the bill’s tax credit of seven cents/watt was considered generous. Now, the tax credit isn’t enough to meet falling prices. U.S. manufacturers will struggle to survive if prices in the market don’t cover costs, CPA’s chief economist wrote in October.
European leaders said that plans like the IRA would lead to solar price inflation, even though solar prices are falling thanks in part to new advances in technology and China oversupply. They also said tariffs would hurt installers, meaning Europe has thrown in the towel. Just as it has weaned itself of Russian natural gas import dependence, the EU has now become dependent on China for its solar energy replacement.
The same fate would immediately take hold in the U.S. if those safeguards were removed, unpending the intent of the IRA to rebuild the American solar industry.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
TRENDING
CPA: Liberty Steel Closures Highlight Urgent Need to Address Mexico’s Violations and Steel Import Surge
CPA Applauds Chairman Jason Smith’s Reappointment to Lead House Ways and Means Committee
Senator Blackburn and Ossoff’s De Minimis Bill is Seriously Flawed
JQI Dips Due to Declining Wages in Several Sectors as November Jobs Total Bounces Back from Low October Level
What Are Trump’s Plans For Solar in the Inflation Reduction Act?
The latest CPA news and updates, delivered every Friday.
WATCH: WE ARE CPA
Get the latest in CPA news, industry analysis, opinion, and updates from Team CPA.
CHECK OUT THE NEWSROOM ➔