The Biden Administration Screwed Over the Solar-Panel Industry

Solar Panel Industry

President Joe Biden, who this month used his pen to try to stabilize a domestic solar power industry that's been truly going through it. But the most important part concerns the solar panel sector. Spurred by a February petition from a small California-based manufacturer of solar modules, Auxin Solar Inc., the DOC is investigating whether Chinese companies are routing solar panel parts through those countries to evade existing U.S. tariffs on Chinese-made equipment. Auxin CEO Mamun Rashid told me in an interview that his tariffs request is intended to “level the playing field” against Chinese global dominance of solar: “Our goal is to create an environment to find the right policies to bring back that solar supply chain to the U.S.”

This has been intensely controversial in the industry, with one American solar CEO saying Auxin's case is “meritless” and arguing that the nations that should be considered “countries of origin” for solar products are the ones that make complete solar parts—not the ones that provide panel materials. In addition, according to Solar Power World, the Department of Commerce “has previously determined that solar cells manufactured in third countries using Chinese polysilicon were not subject” to tariffs on Chinese parts.

But solar companies subsequently paused hundreds of in-development power projects, the New York Times reported in April, leading states like Indiana—facing rising energy costs because of inflation and the war in Ukraine—to kickstart coal plants that were to be phased out in favor of renewable energy. Well, the four countries under investigation collectively provide up to 82 percent of the U.S.'s most-utilized solar tech: crystalline silicon modules, which are highly efficient at converting sunlight into electricity and have long lifetimes. The U.S. is dependent on these nations because its manufacturing sector for solar parts is limp.

Solar Panel IndustryBrian Grenko, vice president of the energy consultancy VDE Americas, told me that many solar projects are “developed under power purchasing agreements based on an assumption of what market pricing could be.” Since solar takes a long time to develop, much less install, even the threat of future cost increases can throw current financial projections into doubt. On June 7, a report released by the Solar Energy Industries Association stated that the solar industry had this year seen its worst quarter since the onset of the pandemic. It will be impossible for American producers to do this if undervalued Chinese products are dumped onto the American market.”) When I asked Grenko why he thought the Ohio senators would support Auxin's petition, he pointed out to me that First Solar, “the country's largest manufacturer of solar panels,” is “based in Perrysburg, Ohio.”

California's governor wrote a letter warning the DOC that the probe could stunt the state's clean-energy efforts, as major solar and energy-storage projects have already stalled, delaying the eventual deployment of thousands of megawatts of renewable energy capacity. And 22 U.S. senators sent a letter to Joe Biden on May 1, stating that the probe is causing “massive disruption in the solar industry.” The spotlight remains on Raimondo because even with the temporary tariff pause, the DOC's decision could still have repercussions for the international trade of solar technology down the line.

Still, Biden's solar order has come as a “great sigh of relief” that could “put some positive momentum back into the industry,” as Jeff Cramer, president, and CEO of the Coalition for Community Solar Access told me. The executive announcement outlines plans to address holdups in U.S. solar supplies, including having the federal government serve as a guaranteed customer for solar equipment and contracts and expanding domestic production of important solar panel parts like photovoltaic modules and module components. The order also notes ongoing initiatives by the administration to accelerate and cheapen solar installment on public lands, ease the process by which individual neighborhoods can participate in community solar projects, advance “resilient” solar installations in Puerto Rico, and outline training materials and guidelines for solar workers.

Most essential, however, is the measure “temporarily facilitating U.S. solar deployers' ability to source solar modules and cells from Cambodia, Malaysia, Thailand, and Vietnam by providing that those components can be imported free of certain duties for 24 months.” This pointed directive waives all possible tariffs on solar imports from those countries for at least two years. Yeah, good, OK.)

The freeze of “certain” tariffs for the four countries under investigation has already been helpful to solar companies, to hear them tell it. Jeff Cramer told me that the freeze “clears the way for halted solar projects to get back on pace”—although that will take a while, so there will still be costs to the industry as it makes up for delays and deals with still-sputtering supply chains. (Incidentally, the U.S. Army did just deploy a floating solar plant on a lake near Fort Bragg to reduce military emissions.)

Even if Congress bolstered the fund through defense spending, that money would not be available before the end of the year, and those funds would still need to make it through Pentagon-approved appropriations, a process, some lawmakers find frustratingly opaque. A few solar panel makers have referred to the potential DPA funding as a “pittance” compared with what's needed, and industry representatives brought those concerns to the president in a White House meeting last week. That legislation, long-stalled within Congress, could increase federal investment tax credits for both residential and commercial solar adopters, and also implement tax credits for solar manufacturing, enshrine labor protections for workers, and incentivize the buildout of energy storage.

All without tariffs that could keep imported panel costs high, and that haven't seemed to help U.S. solar all that much. Meanwhile, it's unclear whether other measures to bolster the solar industry would pass unless they're shoehorned into unrelated bills. Auxin, along with some other domestic solar manufacturers, is considering legal action against the administration. Richard Keiser, founder, and CEO of the community solar provider Common Energy, also told me that the tariff-probe scare set us up for a rough summer, thanks to the halting of various low-cost solar projects and the delays they will have before they go online.

A long-standing congressional order instructs the executive branch to prioritize renewable energy development over fossil fuels when it comes to DPA-backed energy measures, and Biden could make the argument for aiding the solar industry is heightened thanks to the energy shocks deepened by the Russia-Ukraine war. Congress could also help with legislation designating DPA funds for the solar industry. But if neither option comes to fruition, the U.S. solar industry faces a road to recovery that, as ever, is filled with uncertainty.



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About the Author: John Ravenporton

John Ravenporton is a writer for many popular online publications. John is now our chief editor at DailyTechFeed. John specializes in Crypto, Software, Computer and Tech related articles.