Likely by now, you have heard about the decision from the Department of Commerce to investigate the solar panels that are imported from Southeast Asia. While this is a major blow to the Solar industry, here’s what happens now, and what we can hope for in the future.
Right Now – Things Aren’t Looking Good
Just a month after the current administration extended the tariffs on solar cells, the DOC announced that it would respond to a petition created by Auxin Solar to investigate the solar panels being imported from Malaysia, Cambodia, Vietnam, and Thailand. This is bad for the Solar industry for a number of reasons; The first is it will deeply disrupt the supply chain, as according to PV magazine, 80% of US crystalline-silicon modules are shipped from these countries. There is not enough domestic supply for existing projects and this will literally stop many projects in their tracks. Prices for compliant modules will increase due to limited supply. If the DOC determines that additional tariffs are warranted, tariffs of up to 250% can be assessed retroactively all the way back to products imported in November of 2011. Unfortunately, at this time there aren’t really any quick fixes to this situation, and it is absolutely devastating to everyone in the industry, it may take up to a year before the DOC makes a final determination.
What Could Happen
In the short term, the risk of retroactive tariffs of up to 250% will basically stop 80% of the modules from entering the market. Near-term projects that don’t already have modules on-site or in a warehouse will be pushed out indefinitely. Expect a much lower total install figure for 2022 and likely 2023 depending on how long it takes for a decision to be made. Companies like First Solar, Maxeon and Q-Cells are well-positioned and Jinko is already investing in factories and supply chains outside of the countries under investigation.
It is very likely that we will see more investment to create a fully integrated US supply chain for solar. Q-Cells is already investing with REC Silicon to refine silicon in Washington. This is good news, but will take time. Building a fully integrated US supply chain that can produce 20+ GW of PV products (Polysilicon, cells, wafers, and modules) will take several years and likely Billions of dollars in investment. It will require government support to get this done financially.
What is Auxin Solar?
That’s a name you’re going to be hearing a lot of in the Solar industry as this investigation moves forward. Auxin Solar is a very small Silicon Valley-based company that essentially contract manufactures solar modules for other companies. Their factory produces 100 MW of solar a year. We installed 25 GW of solar in 2021. Auxin produces less than ½ of 1% of the number of solar modules we need annually.
This petition is seen by many in the industry as an unfair way to better position themselves in the Solar industry against more competitive manufacturers at the cost of the industry itself.
We have very real issues with renewable energy when it comes to our supply chains. The human rights issues in certain regions of China are serious and in general, we should be manufacturing more of our solar products in the US. We need legislation and financial support from the federal government if we want to be a leader in clean energy manufacturing. This particular move by the Department of Commerce will do little to fix or create our US manufacturing issues. This is another desperate move by a tiny company that is going to create a tidal wave of issues for the solar industry. Auxin Solar is taking a huge gamble at the industries’ expense, and now everyone will play the waiting game to see just how bad the repercussions could be.