On Friday September 22, the International Trade Commission (ITC) in a unanimous decision found injury to the domestic crystalline silicon solar cell industry based on a petition brought by Suniva and SolarWorld.
The verdict came as no surprise. At Solar Power International, most in the industry assumed that the case would move to the remedy phase. “Anyone closely involved with watching how this trade petition wended its way through the US International Trade Commission process always had a sneaking suspicion the final decision would end up with President Donald J. Trump,” said Tony Clifford, Chief Development Officer, Standard Solar.
The Commission determined that imports in increased quantities are a substantial cause of serious injury or threat of serious injury to the US industry. The Commission was required to make additional separate findings for certain countries with which the US has free trade agreements, and they concluded that imports from Canada and Mexico are not causing injury (along with Australia, Singapore, Jordan and other several South American countries that happen to have little or no solar manufacturing).
“The ITC decision to find injury is disappointing because the facts presented made it clear that the two companies who brought this trade case were injured by their own history of poor business decisions rather than global competition, and that the petition is an attempt to recover lost funds for their own financial gain at the expense of the rest of the solar industry,” said Energy Trade Action Coalition Spokesperson Paul Nathanson. For more on this, read the SEIA blog "Trade Case Petitioners Brought Collapse of Business on Themselves".
Moving to the remedy phase
The process now moves to the remedy phase, with a hearing scheduled on October 3, 2017. The ITC will vote on October 31 and shortly thereafter will send a specific recommendation to President Trump for import restrictions. The President has the option to reject, accept or change the proposal. Petitioners requested a 40% duty on imported cells, with a minimum price set at 78 cents per watt for up to four years. It could be that the recommendation is to impose a lower tariff/base price or to place tariffs on only certain types of cells or modules.
An upside may be found by thin-film manufacturers, such as First Solar, which surged to a 52-week high after the trade ruling.
Accepting the fact that the case is now moving toward a remedy decision, many in the industry are hoping for less than a 40-cent tariff. Module prices have been in the 36- to 38-cent range, and predications were that the price could drop into the high 20s in the next year.
“Now the ITC begins its deliberations about what remedies should be imposed on imports, and this will be where the real effects on the industry will be determined,” Standard Solar’s Clifford said. Like many in the industry, he is hoping for a minimal tariff and points to job loss as a potential consequence. “Otherwise, the US solar industry could lose 88,000 or more jobs. I’d also remind President Trump that two-thirds of the solar jobs in America do not require any college education. Losing 88,000 jobs, most of which are blue collar, is a lot for the American economy—and President Trump’s base in particular—to absorb.”
Potential market losses
The estimated 88,000 solar jobs that could be lost is one-third of the current American solar workforce. And this is in the industry that is adding jobs 17 times faster than the US economy. In 2017, the utility-scale sector has been the market driver, yet that market could suffer the greatest if high tariffs are imposed because with huge installations the cost per watt pricing is so critical. SEIA forecasts that jobs would shrink in that sector by 60%. Of course, an upside may be found by thin-film manufacturers, such as First Solar, which surged to a 52-week high after the trade ruling.
In the residential sector, the impact of a tariff won’t be felt as dramatically because the cost of the solar modules themselves are a small percentage of the total installation cost. However, solar installers will be hard pressed to get solar panels. Clifford noted that it will especially affect smaller installers who buy through distributors.
Andrea Luecke, President and Executive Director of The Solar Foundation, commented on the uncertainty that the decision brings to the industry. “The cause and effect impacts of major cost increases have been shown time and again, both in the energy industry and the economy as a whole. Our National Solar Jobs Census finds the dramatic growth in U.S. solar employment over the past several years was driven by the sharply reduced cost of installations. Any new tariffs are likely to increase costs and reduce demand for installations…”
Riding the solarcoaster
On November 13 the industry will learn what the Commission’s recommended remedy is. The President has until January 12, 2018 to decide whether to accept the recommendation, impose an alternative relief, or impose no tariffs at all. SEIA’s Hopper is optimistic, saying that, “The president wants to create jobs and increase energy security and economic prosperity, and that is the story of the solar industry. I think that is entirely resonant with his rhetoric and his concern.”
Speak up, get involved and join SEIA as the industry association continues to inform elected officials about the incredible strength of the US solar industry…
The ITC ruling brings much uncertainty to an industry that’s familiar with what’s been termed the “solarcoaster.” Various scenarios have been floated about with accompanying prognostications about the result. Standard Solar’s Clifford reminds us that there’s much more to come. “The ITC did its due diligence and, after much deliberation, decided these two foreign-owned module makers were indeed harmed by module imports from other countries—but fortunately, today’s decision is only the beginning, not the ending, of the story.” In the meantime, speak up, get involved and join SEIA as the industry association continues to inform elected officials about the incredible strength of the US solar industry and that it’s in our country’s best interest for it to be maintained.
Written by Anne Fischer, Managing Editor, Solar Novus Today