U.S. Solar Trade Investigation Raises Specter of Major Solar Energy Downturn

The Commerce Department April 1 moved to open an investigation of the merits of a trade complaint filed by a California solar installer. In response, California and national solar advocates say that the problem threatens to further slow the move to solar energy.

The complaint by Auxin Solar claims that Chinese solar companies are making solar equipment in Cambodia, Malaysia, Thailand, and Vietnam, using parts and components from the People’s Republic of China in order to circumvent U.S. antidumping and countervailing duty orders on solar cells and modules from China.

The Commerce Department's agreement to investigate the matter will result in warehoused products being taken off the market, at least temporarily. Depending upon the outcome of the inquiry, the Commerce Department could impose new trade tariffs on the solar products of up to 250% of their declared value, according to the law firm Sidley Austin .

Bernadette Del Chiaro, California Solar and Storage Association executive director, said that raising the cost of panels makes it more difficult to meet our clean energy goals. “And there are multiple headwinds at play right now pushing the cost of solar for consumers in the wrong direction,” she added.

NextEra, which has renewable projects in California, warned the federal investigation will push back the online dates of 2.8 GW of its solar and storage projects from this year to next year. Kurt Crews, company Chief Financial Officer, said during an April 21 earnings call that the investigation is creating a “perverse incentive,” forcing the industry “to go back and buy panels from China.” He added that solar panel assemblers in the U.S. are mostly “sold out of solar panels through 2024 and, even at full capacity, are only capable of serving 10 to 20% of the U.S. solar panel demand.”

The penalties would come on top of an 18% increase in solar equipment last year, Solar Energy Industry Association data show. In addition, 80% of U.S. solar companies say that they will experience “severe or devastating impacts” this year as a result of the investigation, which already is curtailing the availability of solar modules in the U.S., according to a SEIA survey earlier this month.

The Commerce Department is expected to take almost a year to complete its investigation but plans to issue preliminary findings in late August.

In a statement upon learning of the investigation, Auxin Solar said that “for years, Chinese solar producers have refused to fairly price their products in the U.S. and have gone to significant lengths to continue undercutting American manufacturers and workers by establishing circumventing operations in countries not covered by those duties.”

However, SEIA President Abigail Ross Hopper responded that “taking up this case" will likely contribute to a 19% decline in solar system sales nationwide. She said that the decision to pursue the investigation is “contrary to the Biden Administration’s goal of growing clean energy in the U.S.”