Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Economy

American Solar Is in a Trade War With Itself

Manufacturers and installers have different opinions on tariffs.

A solar panel worker.
Heatmap Illustration/Getty Images

The American solar industry is in a tizzy over tariffs. On one side are the companies that develop, finance, and install solar systems. On the other, the American (or American-located) companies that manufacture them.

China’s solar panel industry has been a combination of boon and bugaboo for American renewable energy efforts for years. On the one hand, the solar development sector has benefitted from the cheap panels they have happily put up on roofs and in fields across the country, underpinning the massive growth of solar power in the past decade.

And then on the other there’s the still-nascent American solar manufacturing industry (and a South Korean company with a substantial facility in Georgia), which joined together to file petitions with the Department of Commerce and the U.S. International Trade Commission Wednesday, beseeching them to investigate what it argues are violations of trade laws by Chinese-owned solar panel manufacturers in Southeast Asia.

The group claims that China’s 80% market share in solar products is a “near monopoly” underpinned by “unfair trade practices,” including subsidies and selling at below-cost. About two-thirds of installed solar panels come from overseas, the group claims, “with the majority arriving without safeguard measures or tariffs from China via Malaysia, Vietnam, Cambodia, and Thailand.” The Southeast Asian imports the petition targets are worth some $12 billion annually.

“America’s solar manufacturing industry is on the cusp of tremendous growth that will create jobs and change the trajectory of our clean energy transition for decades to come,” Tim Brightbill, a lawyer representing the group, said in a release. “However, this manufacturing renaissance is being threatened by China’s industrial policy, which has led to massive subsidization in China and Southeast Asia.”

The solar manufacturers’ petition comes as a two-year moratorium on tariffs against Chinese solar panels is due to expire next month. Solar developers had been lobbying the White House to boost other kinds of support for American solar manufacturing, hoping to head off any push for new tariffs, Bloomberg reported. But according to Reuters, the administration is inclined to take the protectionist side.

“Reducing reliance on Chinese clean energy imports, such as solar panels, is among the most bipartisan issues within clean energy,” Morningstar analyst Brett Castelli wrote in a note. For Republicans, China‘s solar dominance represents yet another strategic asset controlled by an adversary state. For Democrats, they are choking off a burgeoning American manufacturing sector.

And yet the question is not as simple as support U.S. solar or don’t. The likely “tightening of solar panel imports into the U.S. would benefit First Solar,” an American solar manufacturer that’s part of the petitioning group, Castelli wrote, “while being a net negative for the rest of our solar sector coverage.”

The Biden administration has long put itself squarely behind American solar. The Inflation Reduction Act’s advanced manufacturing production credit subsidizes domestic renewable energy manufacturing in the United States, while Treasury Secretary Janet Yellen has criticized Chinese “overcapacity” in renewable energy technology. On the installer side, there are tax credits and subsidy programs to make solar more affordable to individuals.

While the solar manufacturers certainly are not unhappy with their tax credits, they see action on trade as an existential issue.

“Everyone knows these Chinese-headquartered companies in Southeast Asia are benefiting from subsidies and exporting below-cost solar into the U.S. market, harming American solar manufacturers and their workers,” Mike Carr, the executive director of the Solar Energy Manufacturers for America Coalition, said in a statement. “Conditions are untenable for American solar manufacturers.”

Other renewable energy trade groups — The American Council on Renewable Energy, the American Clean Power Association, and Advanced Energy United — call tariffs a threat to clean energy deployment. The manufacturers’ petition “creates market uncertainty in the U.S. solar industry and poses a potential threat to the build-out of a domestic solar supply chain,” the groups said in a statement, which also noting that they support a “strong domestic solar supply chain,” and specifically the tax credits that encourage onshore production of solar panels.

But while trade groups lament the stoking of trade war to anyone who will listen, companies — or at least one very big company — is telling its investors that things are going to be OK.

NextEra, one of the country’s largest renewable energy developers and operators, has been telling investors and analysts that the petitions and potential tariffs would not be a big deal.

“We expect that any trade actions that would occur this time around will be very manageable,” NextEra CEO John Ketchum said on the company’s quarterly earnings call Tuesday. The company didn’t expect any potential trade restriction “to result in delivery stoppages,” he added, and since NextEra orders panels well before actual construction on a project commences, that “gives us a lot of time and opportunity to be able to troubleshoot any issues should they arise,” Ketchum said.

Finally, even if there were new tariffs, the gap in cost between domestic and overseas panels – the exact thing that the solar manufacturers and the Biden administration lament — is so large that “there’s a lot of economic reasons for deliveries to continue to occur.” Even a 15% tariff on Chinese solar panels, Ketchum said, would be “quite manageable.”

While everyone says they want an American solar manufacturing industry to succeed, trade protection and tax credits can only go so far.

You’re out of free articles.

Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Electric Vehicles

AM Briefing: Sean Duffy Wastes No Time

On the new Transportation secretary, California’s fires, and energy storage

Sean Duffy Targets Biden’s Fuel Economy Standards
Heatmap Illustration/Getty Images

Current conditions: Storm Herminia moved over Europe, bringing severe flooding to Spain and France • The air quality is low in Mumbai, where a panel is considering banning vehicles powered by gas or diesel • It’s chilly but sunny in Washington, D.C., where Robert F. Kennedy Jr. will face the Senate Finance Committee in his confirmation hearings to lead the Department of Health and Human Services.

THE TOP FIVE

1. Judge halts Trump’s funding pause

A lot happened in Washington yesterday. Chaos erupted after the Office of Management and Budget dropped a two-page memo ordering a pause on federal grant programs that “advance[s] Marxist equity, transgenderism, and green new deal social engineering policies.” According to Heatmap’s Jael Holzman, the freeze targets programs including vast swathes of the federal government most relevant to the energy sector, from major Energy Department cleantech research offices and labs to all implementations of energy tax credits, including those in the Inflation Reduction Act. It also includes essentially all work at the National Oceanic and Atmospheric Administration, a Commerce Department subagency that produces climate science and weather forecasting. The order was set to take effect at 5 p.m. but a federal judge temporarily halted enforcement of it until a hearing on February 3.

Keep reading...Show less
Yellow
Offshore wind question marks.
Heatmap Illustration/Getty Images

Among the many, many, many actions President Donald Trump took in his first week to curtail clean energy and climate policy in the U.S., he issued an order freezing all wind farm approvals. It’s anyone’s guess what happens next. On the one hand, we know the president hates wind energy — as he reiterated during his first post-inauguration interview on Fox News last week: “We don’t want windmills in this country.” But the posture is also at odds with Trump’s declaration of a national energy emergency and vision for “energy dominance.” Plus, it’s Trump. There’s a non-zero chance he’ll change his mind.

But let’s assume the wind leasing and permitting freeze stays in place for the next four years. Trump also plans to “conduct a comprehensive review of the ecological, economic, and environmental necessity of terminating or amending” existing leases, which could upheave projects already under construction or built. How do we make sense of what this all means for climate change?

Keep reading...Show less
Blue
Podcast

The Trump Policy That Would Be Really Bad for Oil Companies

Jesse and Heatmap deputy editor Jillian Goodman talk Canadian tariffs with Rory Johnston.

Canadian oil production.
Heatmap Illustration/Getty Images

On February 1 — that is, three days from now — President Donald Trump has promised to apply a tariff of 25% to all U.S. imports from Canada and Mexico, crude oil very much not excepted. Canada has been the largest source of American crude imports for more than 20 years. More than that, the U.S. oil industry has come to depend on Canada’s thick, sulfurous oil to blend with America’s light, sweet domestic product to suit its highly specialized refineries. If that heavy, gunky stuff suddenly becomes a lot more expensive, so will U.S. oil refining.

Rory Johnston is an oil markets analyst in Toronto. He writes the Commodity Context newsletter, a data-driven look at oil markets and commodity flows. He’s also a lecturer at the University of Toronto’s Munk School of Global Affairs and Public Policy and a fellow with the Canadian Global Affairs Institute and the Payne Institute for Public Policy at the Colorado School of Mines. He previously led commodities market research at Scotiabank. (And he’s Canadian.)

Keep reading...Show less
Yellow