U.S. Solar Fends Off Importers; Hopes to Convince Biden to Stick With Them

It was 15 against three this week during a USTR hearing on the Section 201 solar safeguard tariffs. Three domestic manufacturers – Auxin Solar, Q Cells, and the still trying to revive itself, Suniva – took on trade diplomats from Canada, Mexico, and Vietnam, and numerous domestic companies that design and install solar projects, most of it for electric power producers.

The issue is over whether or not the White House will follow the advice of the International Trade Commission and extend the 18% tariffs on solar panels and solar cells; keep tariff quotas on 2.5GW of solar cells; and re-impose tariffs on two-sided solar panels used by utilities.

After listening to both sides, the ITC affirmed its view after the Thanksgiving holiday that safeguards should remain. They sent their opinion to the President on December 8. Biden will make his decision by February 6.

“There is no reason to believe that a four-year extension of the safeguard will have a negative effect on solar installation,” said Mamun Rashid, CEO of Auxin Solar. “During the first years of the safeguard, installations rose, prices fell, and employment rose. This sky is falling claim by the installers and importers is simply not true.”

Local manufacturers tried to get out in front of what they know will be used against them: Biden and his climate czar John Kerry’s sense of urgency on matters related to climate change.

Matt Card, President of Suniva, said, “With a dependence predominantly on China, you will have one of the dirtiest solar supply chains in the world.”

As CPA noted in September, those in favor of more imports from the mostly Chinese-owned manufacturers in Asia, will use inflation and climate change to convince the White House it’s time to let the safeguards end when they expire on February 7.

The opposition argued exactly what the manufacturers said they would argue.

“If the White House goes along with the ITC, it would be unprecedented,” said Matthew Nicely, a partner at Akin Gump in Washington. He said Biden siding with the ITC would make him like Trump, someone who “didn’t believe in climate change.”

“Solar deployment cannot increase without a massive supply and that increase cannot happen without significantly more imports. You cannot battle climate change without imports,” Nicely said.

Akim Gump, one of the biggest lobbying firms in the country, represents the Solar Energy Industries Association (SEIA). While SEIA’s senior executive, Abigail Ross Hopper was present at the hearing, not one of the solar manufacturing members spoke on their panel. The only SEIA members to speak were construction firms that depend on Asian imports.

SEIA and Akin Gump have been battling these tariffs since they began in 2018. They sued the Trump administration over White House Proclamation No. 10101 that included the double-sided, bifacial solar panels in the safeguard measures. Their lawsuit allowed bifacials to come in duty-free. The U.S. Court of International Trade ruled in their favor in November and now they want to make sure that the tariff does not return.

“If you have an exclusion, it is a loophole for circumventing and we have suffered for it here at Auxin,” said Rashid.

SEIA members bet that the safeguards would end. Their lawyers spent at least a year and a half trying to run out the clock on bifacial panels, putting the initial tariff in limbo and opening the gates to Asian imports.

In essence, only the solar panel market was protected. Solar cells are still a predominantly China market, as well as those items that go into making the solar cells – solar wafers, ingots, and polysilicon: almost all China sourced.

“Domestic modules cannot meet any of Biden’s climate change goals,” said Hopper about the Biden administration’s stated goal to make solar the lead source of electricity by 2035. “This is particularly true in the utility-scale segment which is about 75% of the market. No domestic supplier that is currently able to build 150MW of capacity to make bifacial solar panels would even be allowed to bid on a utility project,” she said, citing that it would be too risky for buyers to put in an order at a factory that would be maxed out to capacity if they were the supplier. China companies are just much bigger.

In a sense, SEIA is saying the U.S. solar industry is useless. Give them subsidies and tax credits and see if they can survive on that.

“We support Senator Jon Ossoff’s bill,” Hopper said about the Solar Energy Manufacturing for America Act that stuck inside the Build Back Better Act. “This is how you help domestic manufacturing,” she said. Then: “All the great news you hear about U.S. investment in solar is all because of the BBB Act.”

This cannot possibly be true, as most of the domestic industry’s investments in new solar capacity began in 2018 and 2019 when Biden was on no one’s mind, and Build Back Better was not yet a slogan.

Here are some of the exchanges, along with CPA commentary, from the roughly five-hour hearing on January 4.

Mamun Rashid, CEO, Auxin Solar:  “I was disappointed that none of your questions addressed the important topic of America’s solar energy independence…for the entire solar supply line.  This issue alone necessitates extending the safeguard.”

Rashid says he can make bifacial solar panels. He said none of the people at the hearing on Tuesday called to place an order. Auxin sold bifacial panels to Georgia Power’s Mercedes Benz Stadium in Atlanta in 2017 and to a JP Morgan office tower in Ohio, the largest commercial purchase of bifacial modules.

SEIA says it’s too small.

Rashid: “China exporters are making one side of the two-sided panels suitable for residential rooftop use. It’s a tweak of the utility grade bifacial in order to avoid tariffs. And US importers are buying.  This is circumvention.”

The three solar companies were the first of the four panels to discuss the safeguards with the USTR’s Trade Policy Staff Committee, led by Chief Counsel, Will Martin.  All three of the domestic players predicted how the opposition would respond, and what they would say, often dulling their comments when it was their time to speak.

Matt Card, President, COO, Suniva: “Importers once said that bifacials used by utility companies was a small market. But now those same importers are telling the ITC that utilities are very important and becoming the mainstay of their business. Obviously, both of these claims cannot be true.”

Card said that the bifacial exclusion meant a flood of imports, not just from China, but mainly from Chinese firms in Southeast Asia. “They’re coming from all over now,” he said, naming Vietnam, Thailand, Cambodia, and Malaysia. “This just helps China further destroy the U.S. solar business.”

Hanwha Q Cells, a South Korean multinational, recently invested over $160 million in REC Silicon to restore its dormant polysilicon production to bring about a rebirth of the solar supply chain locally. Q Cells’ General Counsel, Andy Munro, told the USTR that they are actively looking for new factory sites and were looking at “billions of dollars of investments” and several thousand high-paying manufacturing jobs.

Andy Munro, General Counsel, Hanwha Q Cells: “We have momentum. But to protect it, a strong and smart 201 extension is necessary. The 201s have been impacted by Covid and by the bifacial exclusion – it lasted a year and a half and resulted in a massive amount of imports from China and SE Asia. (Roughly 10 GW imported in 2020, five times what Q Cells makes). Every day that goes by with that exclusion in place seriously harms U.S. manufacturing. It has to be withdrawn.”

If the bifacial solar panels are allowed into this country duty free – Asia will be the primary source of solar electricity generated by utility companies. That is a fact. Any country stating its willingness to be dependent on foreign sources of electric power is sticking the neck of its national energy security under a guillotine in order to see what happens next.

Members of the USTR Trade Committee asked Q Cells, others, if four years would be enough to get their investments to start producing more solar cells and bifacials the other side of the market wants so badly.

Rashid: “The safeguard is one component of an all of government approach to reshore the solar industry here, including taxes and looking at South East Asia, where China is circumventing. You will hear from panelists later today who enable those imports and hold back the growth of the solar industry in the U.S.”

The Commerce Department recently dropped a case against Southeast Asian-based Chinese multinationals for circumvention of China anti-dumping charges, along with new ones against companies in Vietnam, Malaysia and Thailand.

Scott Moscowitz, Director of Public Affairs, Market Intelligence, Q Cells: “Look, it’s not that if you take away the 201s you magically get more imports and we will be installing even more solar. We are installing more solar anyway. What it really means is that the market price would drop and it would make domestic manufacturing extremely difficult.”

USTR asked: Would a removal of the safeguards push a reliance on China?

Rashid: “If we are not in a position with the proper policies in place to get factories online…which takes years…if you are not doing that now, then yes, you essentially give up control of your solar energy grid.”

Will Martin of USTR confronted SEIA about their claims of job loss due to tariffs.

Martin: “What I see from the ITC report is that the number of jobs peaked in 2016, fell in 2017 and 2018, and then rose in 2019. How is that consistent with your assertion that the safeguard measures resulted in loss of employment?”

Abigail Ross Hopper, President, SEIA: “The loss of jobs were the jobs that were not created. It is our opinion and our economic analysis shows that the job loss has been greater because of the imposition of tariffs.”

Those “losses” were based on a forecast that didn’t come to fruition. Jobs remain steady and heading in the right direction. Installations are up, though this may not be the case across all segments of the market.

Martin: “If the President sides with the ITC, does SEIA have any impact studies you can share?”

Hopper referred to Nicely who didn’t know.

Nicely: “We don’t have any studies. Just cost to consumers, which are significant.”

That was SEIA’s chance to say once again in their closing remarks that utilities were not buyers, not starting new projects, because of concern that bifacials will be tariffed. They did not.

For big producers here like Q Cells, their capacity is currently 1.9GW and they are just now getting into the bifacial solar market. They start shipping next month after making investments in a facility in Dalton, Georgia.  Politico wrote about this on January 2.

Moscowitz: “Throughout the Section 201 tariffs, prices did not go up as the importers anticipated and installations continued to rise. Any argument that the 201s have or will reduce installations is all based on forecasts and not actual sales.”

See Part I of this two-part series here: Will U.S. Solar Be Totally Owned by China? We Will Know in February.