CEA Sees Limited Market Impact From US Policy Decisions On Solar Imports

Highlights :

  • While impact is limited from most measures, a successful AD/CVD investigation into South East Asian countries could open up further opportunities for Indian solar exporters.
CEA Sees Limited Market Impact From US Policy Decisions On Solar Imports CEA analysis

US based clean energy advisory firm Clean Energy Associates (CEA) has come out with a report detailing the likely impact of US actions on imports of solar equipment from China. While highlighting the limited nature of impact from here on, CEA’s analysis does have some interesting pointers to the future.

CEA divided its assessment based on the four most recent policy initiatives.

Commerce initiates AD/CVD investigation against solar cells from Cambodia, Malaysia, Thailand, and Vietnam


On May 15, 2024, the U.S. Department of Commerce initiated anti-dumping and countervailing duty (AD/CVD) investigations against imports of solar cells (whether or not assembled into modules) from Cambodia, Malaysia, Thailand, and Vietnam.

As part of its initiation decision, Commerce determined that the petitioners (Hanwha Q Cells, First Solar, and Mission Solar) adequately represent the domestic industry. Commerce also declined a request by other parties to poll the domestic industry to determine the degree of support for this investigation.

The next step in this case will be the International Trade Commission’s (ITC) Preliminary Determination, due on June 10, 2024. In this decision, the ITC will determine whether domestic industry has suffered injury from imports. If the ITC does not find that there is sufficient evidence of injury or threat of injury, it will terminate the investigation

Projected market impact:

There is no direct market impact from this decision. However, even the threat of this AD/CVD investigation is causing prices to increase, contracts to be re-negotiated and is delaying procurement decisions. Project timelines are also being pushed back, particularly for projects with construction planned in 2025.

Treasury issues updated guidance for the Domestic Content Bonus


On May 16, 2024, the U.S. Treasury Department has issued updated guidance for project owners attempting to access the Domestic Content Bonus under Section 48/48E ITC and Section 45/45Y PTC.

The new guidance creates a new optional method for measuring the portion of domestic content in Manufactured Products to reach the minimum percentage required to access the bonus. The new method includes an exhaustive table of Manufactured Products and Manufactured Product Components, as well as relative values for each of these Manufactured Product Components and production labor.

This new method can be used in place of a detailed accounting of the direct cost to suppliers of Manufactured Products and Manufactured Product Components. However, project owners must commit either to using this new method and the associated exhaustive list of Manufactured Product Components in the table or to using the previous guidance based on direct costs; the two approaches cannot be combined.

The table provided for the new method features a list of Manufactured Product Components for trackers and inverters. This is the first time that Treasury has spelled out the Manufactured Product Components it expects to consider in these products. In doing so Treasury greatly simplifies the bill of materials for inverters by aggregating a potentially large number of individual inverter components in a Manufactured Product Component described as “Electrical parts”.

Projected market impact:

Many project owners who CEA has spoken with have had difficulty getting direct cost information from their suppliers. Because this new method allows project owners to access the Domestic Content Bonus without this information and provides clarity on which Manufactured Products and Manufactured Product Components can be considered, it makes the bonus easier to access.

However, even for those solar projects utilizing trackers with a high portion of domestic content, most projects will still need a domestic cell or a First Solar module to qualify, and these are in limited supply. Therefore, while CEA expects more projects to now qualify for the Domestic Content Bonus (particularly in 2026 and thereafter), the number of projects will still be limited.

Biden removes the bifacial exemption for Section 201 solar tariffs


On May 16, 2024, U.S. President Biden announced the removal of the exemption for bifacial products under the Section 201 global safeguard tariff on solar cells and modules. This means that most PV modules imported into the United States through February 2025 will be subject to a 14.25% tariff.
President Biden included an exemption for modules that are already under contract and will be imported in the next 90 days.

The Section 201 tariff declines to 14% in February 2025, and terminates in February 2026. It cannot be renewed in 2026; a new set of 201 tariffs would require a new investigation.

President Biden is also keeping the tariff-rate quota (TRQ) – the volume of solar cells that can be brought in without paying the 201 tariff each year – at 5 GW. However, he stated that if the volume of cell imports approaches 5 GW in any year, then the TRQ will be raised by 7.5 GW. That would mean that 12.5 GW of PV cells would be allowed entry into the United States without paying the Section 201 tariff.

Projected market impact:

Previously, CEA stated that we expected the removal of the bifacial exemption to have a limited impact on module prices, as it anticipated that around half the cost of the tariff would be absorbed by suppliers. However, for products from Southeast Asia the Section 201 tariffs will add to any duties applied through the solar AD/CVD investigations. The combination of Section 201 and AD/CVD could significantly disadvantage products from Southeast Asia in the U.S. market.

Changes to Section 301 tariffs on China


On May 14, 2024, U.S. President Biden and U.S. Trade Representative Katherine Tai announced changes to the Section 301 tariffs on Chinese products. The tariffs affect a range of clean energy imports including EVs, solar PV, battery energy storage, and inputs for these.

This briefing focuses on the tariffs affecting solar. Policy changes affecting the battery portion of the Section 301 tariffs are addressed in a separate briefing which can be accessed here.

President Biden increased the Section 301 tariffs on Chinese solar cells and modules from 25% to 50%. Additionally, he provided exemptions for a range of solar cell and module manufacturing equipment that was previously subject to 25% tariffs.

Projected market impact:

The tariffs on Chinese solar cells and modules are largely performative, as the United States imports around 1% of its solar cells and modules from China due to the 2012 and 2014 AD/CVD orders on Chinese solar cells and modules. However, this does further prevent Chinese products from re-entering the market.
The removal of tariffs on solar manufacturing equipment will reduce capital expenditure costs for U.S. cell and module factories, making it easier to set up these factories and making U.S. cell and module production marginally less expensive and more competitive with imports.

"Want to be featured here or have news to share? Write to info[at]saurenergy.com