US Solar Developers Warn Of Threat to Solar From Import Duties

A strong pushback has started in the US, on the threat of import duties from countries in South East Asia, especially Malaysia, Vietnam and Thailand. A letter on behalf of 190 companies, primarily developers, contractors and financiers warns that punitive duties, if applied, would risk jeopardising almost 18 GW of Solar projects in the US, and risk the jobs of 2,30,000 workers. These firms are mostly part of the Solar Energy Industries Association. (SEIA)

The key bone of contention is a request to initiate circumvention investigations that has been filed by an anonymous group calling itself the American Solar Manufacturers Against Chinese Circumvention, or A-SMACC. The group, acting on behalf of unnamed organisations as yet in the US, has requested for the launch of investigations into many solar manufacturers in these countries on the charge of circumventing import duties and countervailing duties, that have already been applied to Chinese imports.

For the SEIA, action by the US department of commerce (DOC) could potentially lead to 50-250% duties on imports PV modules and cells from the three targeted countries. It is worth noting that after the tariffs on imports from China were started in 2018, sourcing has shifted massively towards these countries, which account for close to 80% imports now, according to the SEIA. That is one reason that the scenario of job losses painted by the SEIA at that time never really worked out.

In a politically charged environment that the US has become now, it is not too difficult to see the issue being used to score points, especially with the high Chinese ownership of many of the firms based in the South East Asian countries. But with domestic production not even close to meeting demand, a serious setback to capacity addition or increase in costs looms, if any action does get initiated. The issue will sound familiar to Indian readers, but India seems to have a better chance of establishing a manufacturing base for solar equipment right now, as compared to the US.  At the moment fresh capacity of 12-14 GW seems to be a fair bet considering the response received on the PLI tender. With at least 2 or even more manufacturers possibly going with backward integration right down to the the ingot levels in India.