Section 201 Tariff’s Negative Impact on U.S. Soar Industry

Tariffs are the known foe of the free trade. However, their impact on the U.S. solar industry is even more severe.

It has been demonstrated that the growing adoption of solar energy in the U.S. hinges on the falling cost, due to the fact that the solar energy is in competition with other cheaper energy sources, such as wind and natural gas.

Solar energy’s original margin was already thin. Adding tariffs into the mix is a recipe for disaster for the industry.

The rise in the costs has led to loss in jobs and investment
as well as the opportunity to make the U.S. greener, according to SEIA.

What exactly have Section 201 Tariffs Cost the U.S. Solar Industry?

• Labor Market Impact:
  From 2017 to 2021, 62,000 jobs were lost in the solar industry.
• Environmental Impact:
  5 GW of PV installations was not deployed, which could have powered almost 2 million households and avoided 26 million metric tons of carbon dioxide emissions.
• Financial Impact:
  $19 billion worth of investment was lost.

Image from Solar Energy Industries Association

June 2019: The 1^st Exemption of Bifacial Cells and Modules

The office of the United States Trade Representative (USTR) has announced that the bifacial products would be exempted from Section 201 tariffs on June 12, 2019. The 25% tariff would no longer apply to them.

October 2019: Bifacial Exemption Was off the Table

In early October, there were rumors about the retraction of bifacial exemption.

Then a docket detailing the bifacial products’ return to the tariff list, buried deep in the website of the USTR, has been discovered.

The bifacial exemption was cancelled
because there were concerns
about the exemptions hurting the domestic manufacturers.

The document cited the possibilities of bifacial exemption undermining the objectives of the safeguard measure as the reason behind the retraction.

There was no date on the file. No press release was held to announce it. Therefore it was hard to determine when it was first released.

The USTR published the document under the Federal Register on October 9, which was after several media outlets have already reported about the reversal.

Dec 6, 2019: The Bifacial Exemption Is Back On

Invenergy Renewables LLC filed for a lawsuit on Oct. 22. According to the Chicago-based developer, some of its contracts were signed while the bifacial exemption was still effective. The unexpected cancellation of the said exemption has left Invenergy unprepared.  

The bifacial exemption is back
because the announcement of the cancellation
did not allow enough time for the interested parties to voice their concern.
Also, the cancellation was not based on any developed public record.

On 5 December, the U.S. Court of International Trade (CIT) has ruled against the U.S. Trade Representative (USTR) due to the unlawfulness of the USTR’s actions.

The USTR has announced the removal of the exemption only 19 days before the tariff was effective again, which did not allow the affected and/or interested parties to voice their concern.

Furthermore, USTR’s decision was not based on any developed public record, which was in violation of the Administrative Procedure Act.

What Does the Return of Bifacial Exemption Mean for the U.S. Solar Industry?

In short:

• For the consumers and solar developers: cheaper products
• For the bifacial product exporters: more markets, more sales
• For the S. domestic manufacturers: more competition
• For the S. industry: the supply shortage could be relieved

CIT's ruling is a victory for the U.S. consumers and solar developers, including the original plaintiff Invenergy. They believe that the tariffs increase the costs for the consumers and solar developers. And there is no need for the so-called “protection”, as the local manufacturers do not produce bifacial cells and modules.

It is also great news for the bifacial product exporters, such as Trina Solar, LONGi, LG and Yingli. With the return of bifacial exemption, a big market is again open to them, and their products more attractive.

Nonetheless, this is also a blow to domestic manufacturers. Some of their shares fell when the ruling was announced. They believe that consumers and solar developers could choose between locally produced monofacial products and imported bifacial products. That is why they need higher tariffs.

Abigail Ross Hopper, SEIA’s president and CEO, considered the latest development as “an important temporary reprieve for the bifacial module exclusion”. She went on and explained that the bifacial exclusion was reasonable, which could relieve the local supply shortage.

The bifacial exemption is essential for the U.S. solar industry,
where the local manufacturing capacity has not been able to satisfy the growing demand.

There is only about 1 GW of domestic crystalline silicon photovoltaic capacity to service nearly 10 GW of 2020 demand.

Consequently, severe solar tariffs will do more harm than good to the budding solar industry in the U.S.

Sources:

• Section 201 Solar Tariffs
• The Adverse Impact of Section 201 Tariffs
• Judge blocks higher White House tariffs on imported solar panels