The call for new tariffs on imported solar panels has the potential to upend the solar energy industry nationwide.
In late April, Georgia-based Suniva Inc. — which closed a panel manufacturing plant in Saginaw in March amid filing for bankruptcy protection —filed a petition with the International Trade Commission claiming that cheap solar panels made in China and elsewhere were negatively affecting U.S. manufacturers. The move came shortly after Michigan’s solar energy industry felt some relief from new state energy laws passed in December.
Suniva, which was joined by the U.S. division of SolarWorld AG in filing the petition, has said that since the U.S. enacted anti-dumping and countervailing duties in 2013, “additional new global overcapacity has continued to drive U.S. market prices to levels that challenge responsible economic operations for U.S. manufacturers.”
The companies are seeking a tariff on panels made overseas that would effectively double the price of imported panels. Critics say the proposal would have devastating effects on a sector that has seen strong growth recently and that employs more than 260,000 people nationwide. Some companies have reportedly begun stockpiling cheap panels while they can, and others say projects are being put on hold in light of the uncertainty.
An ITC recommendation is expected in September, and President Donald Trump has until November to make a final decision on the tariff.
While those opposed to the petition — including utilities, free-market economic groups and clean energy advocates — are hopeful Suniva’s request falls through, industry executives say anxiety and uncertainty is beginning to build.
Liesl Eichler Clark, president of the Michigan Energy Innovation Business Council, said there is “definitely a lot of interest” among the group’s members with the petition.
“A change in this tariff structure would significantly affect the overall economy,” Eichler Clark said.
Michigan’s solar workforce grew by 48 percent in 2016, mostly in project development jobs, according to the Solar Foundation. Most of the state’s 4,100 solar jobs are in contracting and installation. Suniva’s manufacturing presence in Saginaw was just a portion of overall solar jobs, which mirrors the employment picture nationally.
“There’s some (U.S.) manufacturers, but not a lot,” Eichler Clark said. “It’s not like there are a lot of those panels in the market that would then be installed.”
There’s also skepticism about Suniva’s motives in the case. Some wonder whether the company is hopeful that Trump — who has been vocal about unfair trade practices and bolstering U.S. manufacturing — would be sympathetic to their cause, while others questions why the company would put the entire solar sector at risk because of its own financial missteps.
“It’s hard to know what the future is going to look like on a day-to-day basis, but this extra layer of uncertainty is concerning for folks,” Eichler Clark said.
Suniva’s petition seeks a 40-cent-per-watt tariff and a 78-cent-per-watt price floor. The company is making its case under Section 201 of the Trade Act of 1974, and it is aimed at all overseas imports, not from just one country. Under the act, the International Trade Commission also doesn’t need to find an unfair trading practice like in anti-dumping or countervailing duty cases involving foreign subsidies.
In particular, China emerged as the global leader in solar panel manufacturing between 2008 and 2013. But while some U.S. companies struggled in the first quarter of 2017, the petition comes as the number of U.S. utility-scale and smaller-scale residential solar installations have steadily grown in the past two years. In 2016, the amount of electricity generated — 14,626 megawatts — nearly doubled its annual record, according to GTM Research and the Solar Energy Industries Association.
Non-manufacturing companies now dominate the U.S. sector, and domestic solar manufacturing was much stronger 15 years ago than it is now. However, even if Suniva’s petition is ultimately approved, many are skeptical it would lead to a spike in U.S. manufacturing.
“It would if businesses were really ready to step in and take off,” Eichler Clark said, noting that the proposal would “ratchet back down” after three to four years. “It’s pretty tough to get manufacturing in place and up to scale in the amount of time the tariff would potentially be in place.”
Allan O’Shea, president of CBS Solar in Copemish near Traverse City, agrees. Not only has there been a relative lack of solar cell manufacturing in the U.S., but the tariff also would drive down U.S. demand at the same time.
O’Shea filed comments with the ITC on June 27, saying, “unlike Suniva we did not over build, take federal and state money to leverage the solar industry in Michigan or for that fact the USA.”
“I have been very active in fighting this foolishness,” he said. “This appeal by Suniva, in my opinion, was nothing but sour grapes. They failed because they borrowed too much money and shouldn’t have moved to Michigan where they were just giving product away.”
CBS Solar has a partnership with India-based Sonali Solar to manufacture and test Sonali panels in Northern Michigan. CBS also designs and installs projects. O’Shea — who is also a Great Lakes Renewable Energy Association board member — said compared to other Michigan companies, Suniva didn’t have much of a public presence or involvement with trade groups. However, their efforts now could cause serious effects on others.
“I’m very concerned — and I think many of my colleagues are concerned — that this could set back the solar industry seven, eight years to a decade,” O’Shea said. “That’s how damaging it could be.”
Essentially, doubling the price of imported panels would no longer make solar projects competitive with utility rates, which O’Shea said would particularly affect the residential market. Prices homeowners pay now for systems — from $3 to $3.50 per watt — would “probably go to about $4.50,” he added.
“It would cause a great deal of frustration and a number of business failures,” he said.
Moreover, he believes the ITC’s consideration of the petition singles out the solar industry among other global technology sectors.
Ultimately, O’Shea and Eichler Clark remain hopeful that the Trump administration will weigh the interests of a few companies with those from a much broader and growing solar industry in the U.S. But given the president’s unpredictability, for now they will just wait and see.
“It’s a big question mark,” Eichler Clark said. “The administration really seems to be priding itself on jobs and job creation. The challenge with this is there’s two ways to interpret job creation. I’m not sure where (the administration) will come down.”