The U.S. International Trade Commission (ITC) will hold a virtual hearing this Wednesday on whether the Section 201 tariff on imported crystalline silicon photovoltaic (CSPV) cells and modules should be extended. Here’s everything you need to know before things kick off Wednesday.
Section 201 solar tariffs history
In 2017, U.S. solar cell manufacturer Suniva and module maker SolarWorld (both of whom eventually filed bankruptcy) asked for a Section 201 of the 1974 Trade Act investigation by the ITC to determine if cheaper imports of solar cells and panels were hurting the U.S. solar manufacturing market. The ITC did find that imported solar products were harming domestic manufacturing, and the Trump Administration placed tariffs on CSPV cells and modules in 2018. The original tariffs were on a four-year step-down schedule: 30% tariff in 2018, 25% in 2019, 20% in 2020 and 15% in 2021. The first 2.5 GW of imported solar cells would be tariff-free each of the four years.
Solar panel imports from countries that did not constitute 3% of U.S. supply were excluded from the tariffs. Notable countries that could export solar products to the United States without any safeguard tariffs included Brazil, Cambodia, India, Indonesia, South Africa and Turkey. Also excluded from the tariffs were various nontraditional solar panel sizes, modules using interdigitated back contact technology and, for a short time, bifacial modules.
Bifacial modules were initially excluded from the tariff because there was no significant domestic manufacturing capacity of the specialty product. As bifacial modules grew in popularity globally for the utility-scale market, domestic panel manufacturers claimed that their exemption from the tariff was undermining the objectives of the original safeguard measure (which was to prop up U.S. solar manufacturing). The Trump Administration removed bifacial’s exemption in 2020, and increased the overall tariff drop-down rate for 2021 to 18%.
The Section 201 tariffs are scheduled to end in February 2022.
In August 2021, two separate petitions were filed with the ITC to extend the tariffs for four additional years: Auxin Solar and Suniva filed first with the request, and Hanwha Q CELLS, LG Electronics and Mission Solar jointly filed later the same week. The companies have requested tariffs extended at the following rates: 17% in 2022, 16% in 2023, 15% in 2024 and 14% in 2025. (Separately, Suniva is suggesting 17.8% in 2022, 17.5% in 2023, 17.2% in 2024, 17% in 2025.)
After hearing statements during this week’s meeting, the ITC has until early December 2021 to present its suggestion on whether to extend the tariff to President Joe Biden. The president will then have final say.
The U.S. solar manufacturing market today
While new module manufacturing facilities did open in the United States after the tariffs were put in place, the country’s demand far exceeds domestic supply, and a significant amount of solar panels are still being imported. (See our list of U.S. module manufacturers here.) And with no domestic solar cell manufacturers, all U.S. module makers must import solar cells.
According to data provided by Customs and Border Protection, U.S. solar module assemblers have not met the 2.5-GW tariff-rate quota (TRQ) for solar cells any of the tariff years it’s been enforced.
2019: 706.980 MW in cell imports
2020: 2,311.154 MW
2021: 2,098.333 MW
It’s somewhat difficult to get a full feel for the domestic manufacturing market, especially with unavoidable circumstances affecting output. Early shutdowns related to the COVID-19 pandemic limited production in 2020, and supply chain issues this year have prevented U.S. manufacturers from hitting their full production capacities. Still, U.S. demand continues to increase, with the country on track to install 30 GW of solar in 2022 and 32 GW in 2023. If working at full capacity, domestic panel manufacturers (including thin-film) can only supply less than 8 GW.
Preview of expected testimonies
In preparation for this week’s hearing, represented companies were required to submit prehearing briefs. Solar Power World looked through the submissions and has summarized the expected statements.
Companies requesting to present during the hearing:
Hanwha Q CELLS (along with Georgia state supporters), LG Electronics USA, Mission Solar Energy
Heliene, Silfab Solar, Canadian Solar (collectively referred to as “Canadian Industry”)
SEIA with its members SOLV Energy, EDF Renewables Distributed Solutions, Borrego
American Clean Power Association with its members Clearway Energy Group, Invenergy Renewables
China Chamber of Commerce for Import and Export of Machinery and Electronic Products with member companies LONGi Solar, Risen Energy, GCL
Separately, the governments of Indonesia, Malaysia and Vietnam
Auxin Solar: Pro-extension
The California module assembler says an extension on the tariff would allow it to bring CSPV wafer and cell production to the United States, something the country desperately needs.
“Without an extension of the safeguard and concomitant onshoring of domestic wafer production, domestic CSPV module producers will be unable to keep pace with the necessary technological and product developments given China’s control over the vast majority of wafer production,” Auxin states.
With the largest solar wafer and cell producers in the world (mainly in China) transitioning to the largest wafer sizes available (M10/182-mm and G12/210-mm), Auxin said U.S. manufacturers are spending money on equipment upgrades to accommodate the larger cells, which is preventing money being spent on U.S. capacity expansions.
“A change in form factor does not constitute new technology, efficacy or efficiency of the solar cell; rather, it simply reflects a shift in cell size. Of the available form factors, seven U.S. producers reported actual production using M2 size cells, six reported using G1 cells, and five reported using M6 cells. No U.S. producer reported actual production using cells larger than M6,” Auxin states.
Auxin also claims that more foreign solar panel manufacturers are setting up in Cambodia as a way to circumvent the tariffs, since Cambodia is currently on the list of countries excluded from the Section 201 tariffs.
Q CELLS, LG, Mission Solar: Pro-extension and increase TRQ
The three southern U.S. module manufacturers state that the last four years of safeguard tariffs have been positive for the domestic industry, but a further extension is needed to allow domestic manufacturers to scale capacity and invest in other parts of the solar supply chain.
“Notably, in the last year there has been increased interest in, and concrete steps toward, new investments in CSPV cell and module manufacturing and in other parts of the solar supply chain. Undoubtedly, this second wave of the CSPV industry’s recovery is more likely to materialize if the safeguard is extended,” the trio states.
The three manufacturers, who all rely on imported solar cells, are also requesting the TRQ for imported CSPV cells be increased since there is currently no U.S. cell production and they will soon need more cells as they ramp their capacities.
“Canadian Industry”: Wants Canadian exclusion if tariffs extended
The three solar module makers say that since the United States is importing so few Canadian solar panels, and specifically since Heliene and Silfab Solar have large U.S. manufacturing facilities, any future tariffs should not apply to Canadian imports. The group says that if the safeguard tariff is lifted on Canadian imports, the companies will be able to invest more in their U.S. operations.
“Small volume imports from Canada have never had — and still do not have — any negative impact on the U.S. industry; rather, they support the health and growth of the U.S. industry,” they stated.
Suniva: Pro-extension and keep 2.5-GW TRQ
“The safeguard relief that was imposed in 2018 provided a vital lifeline to the domestic industry, which was on the brink of extinction,” Suniva states, explaining that the tariffs allowed more domestic panel assemblers to open their doors. But the large 2.5-GW yearly quota on un-tariffed imported cells (which was never reached) did not allow Suniva the opportunity to restart its own cell operations.
Still, Suniva is requesting the tariffs be extended and the TRQ stay at 2.5 GW.
“The current TRQ of 2.5 GW will provide ample supply, and the application of tariffs to any imports that exceed that amount is essential to the revitalization of the domestic cell industry,” Suniva states.
NextEra: Anti-extension, or wants a bifacial exclusion if tariffs are extended
The multi-gigawatt utility-scale solar installer has long been against the tariffs. During the initial investigation four years ago, NextEra urged the ITC to not impose import restrictions because of the negative impact on the utility-scale market. The company says that since utility-scale demand far outweighs what U.S. producers can make, if the tariffs are ultimately extended, modules used in utility-scale projects, particularly bifacial modules, should be excluded from the tariffs.
“The domestic industry assembles – and expects to assemble – only minimal volumes (if any) of the bifacial modules that are required by the utility-scale segment. As a result, NextEra has no choice but to import CSPV modules or purchase nonsubject thin-film modules,” the company states.
SEIA states that at the country’s current installation rate, we will fall short of the capacity of solar needed to combat climate change. A further tax on imported solar panels will only contribute to fewer projects being installed, the group states.
“Various tariff measures on imported CSPV cells and modules have stunted the deployment of solar power and threaten to undermine the ability of the United States to execute this necessary shift to clean energy,” SEIA states.
Although a handful of new module assemblers entered the U.S. market between 2018 and 2019, there have been no significant new capacity additions since, SEIA said. Therefore, the safeguard measures failed to prop up the domestic manufacturing market.
SEIA also explains that First Solar, a solar panel manufacturer unaffected by the solar panel tariffs since it makes CdTe thin-film modules, has shown “remarkably profitable and sustained growth” during the last four years, indicating that safeguard relief in the utility-scale segment is counter-productive.
SEIA concludes that if Section 201 tariffs are extended, utility-scale modules/bifacial modules should be excluded, since they do not injure the domestic CSPV industry, as most domestic manufacturers make modules for the distributed generation market.
American Clean Power Association: Anti-extension
ACP and its utility-scale solar installer members Clearway and Invenergy echoed SEIA’s request, further clarifying the differences they see between the DG and utility-scale solar markets. The group is requesting tariffs not continue since they are only hurting the utility-scale market.
“Yet after almost four years of protection afforded by the safeguard measures, these data show that the domestic industry made no effort, even with the benefit of safeguard protections, to supply the growing domestic utility market. ‘Tariffs for tariffs’ sake’ should not be the Commission’s answer, and this approach threatens to push utility companies toward dirtier alternatives and further imperil our environment. The Commission should no longer recommend the application of tariffs to merchandise destined for the utility segment if no adjustment is being attempted by the domestic industry,” ACP states.
China Chamber of Commerce: Anti-extension
The group of Chinese solar cell manufacturers says it is time for the tariffs to end on their cells since they do not supply many cells to the United States. Most of their cell production is consumed within China. And since Chinese producers have developed alternative markets for CSPV modules, imports of Chinese modules into the United States are unlikely to increase with the absence of a tariff.
“The safeguard measures are no longer necessary to prevent or remedy serious injury. There is no indication that imports of CSPV cells or modules from China will be a substantial cause of serious injury in the imminent future, even if the safeguard measures expire,” the China Chamber of Commerce states.