As of yesterday- the company Suniva that is owned by Shunfeng a Chinese Corp with cell and module manufacturing in the US filed a complaint with the ITC.
As noted below, we expect that this will drive panel prices higher- by as much as 50%. We are urging our customers to lock down agreements now for allocation of panels for their projects. This could result in project cost increases of up to 50 cents/watt once implemented.
In the run up to the ITC ruling we expect that the manufacturers will rise prices as demand increases this year.
Please see this clip below from PV-Tech and UBS and Solarwakeup:
The Section 201 request, the first in the US for 16 years, asks the US International Trade Commission (US ITC) to consider whether imports have been the major factor in the US solar manufacturing industry’s woes. If it agrees, it will make a recommendation to the White House with any action ultimately the decision of President Trump.
The tariffs would be applied to any module not produced in the US unless catered for in the design of any trade remedies. According to the petition, seen by PV Tech, the floor price would fall to 72 cents in the second year, 69 cents in year three and 68 cents in year four.
A similarly structured price floor on cells would start at 40 cents per cell falling to 33 cents by year four.
Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA), said:
“While we have not had a chance to fully review Suniva’s petition to the International Trade Commission, we strongly urge the federal government to find a resolution that bolsters the competitiveness of American solar cell and panel manufacturing, which employs approximately 2,000 people in the US, without erecting new trade barriers. SEIA opposes any resolution that restricts fairly-traded imports of solar equipment through new tariffs or other barriers that endanger the livelihoods of the 260,000 American solar workers and their families living in every state in the Union.”
SolarWorld, the petitioner in the previous two US solar trade complaints against unfair Chinese trade practices, said it was yet to decide whether it backed Suniva’s case.
|Minimum module price per W (US cents)||Minimum price per CSPV cell (US cents)|
Never a Dull Day in Solar From UBS
Just when panel price declines seemed poised to make solar increasingly economic in the US (see our solar for fuel note here), recent developments concerning a bankrupt US solar manufacturer have thrown a wrench into the equation. After filing for Chapter 11 Bankruptcy protection on April 17, Suniva appears poised to file a little-used trade case mechanism – a 201 filing – to attempt to force tariffs on ALL (not just China) imports of solar panels (and presumably cells as well) as soon as April 26. We note the 201 filing is relatively uncommon per experts but was highlighted as a potential remedy in a recent Trump Administration report on trade. Contrary to previous trade cases, the 201 filing would subject all solar cell/panel imports regardless of country of origin to the tariff – additive to the existing AD/CVD tariffs on Chinese panels.
The key point to recognize here is that a 201 filing in this case has a strong potential to move forward (given large price declines in panels), after which point it would be solely the discretion of the current Trump administration to institute tariffs on all non-US solar imports with a great deal of latitude – we see tariffs in the realm of 30-100% per industry experts as quite plausible given Suniva’s high cost structure for Mono panels & rapid declines in the US.
What does it mean for US Solar companies?
As the vast majority of US solar jobs are non-manufacturing (installation, sales, technician) in nature, a substantial ramp in ASPs would threaten the economics of incremental installations (including developers with bids assuming cost declines) and adds risk to our input cost decline thesis for RUN and other resi/developer peers. While we emphasize that panels are currently no more than ~10% of the install cost for resi, 10-30/W cent increase in panel prices would prove quite disruptive and substantially problematic for the lower cost/w C&I and utility scale markets, particularly for development contracts without firm panel delivery.
Tariffs possible by the end of this year if filed
In contrast to the traditional anti-dumping and countervailing duties (AD / CVD), which required finding of an unfair trade practice backed up by substantial fact finding, analysis of imports and multiple decision points, the 201 filing would require simply a finding of ‘serious’ injury and increased imports being a ‘substantial cause’ of the issue for US manufacturers, with potential for substantial duties to be implemented within the year (~6 months). Specifically, the international trade commission (ITC) is required to provide effectively a yes/no answer within 120-150 days and send that to the President, who can choose to act on suggested relief recommendations (tariff increase, quantitative restrictions, or orderly marketing agreements) within 180 days of that or sooner. Suniva and SolarWorld are two of the last US manufacturers so Suniva could simply point to the recent 30%+ price declines last year to attempt a relatively credible proof that the ITC should rule in their favor.
Suniva made a bad business decision in opening a factory in Michigan at the wrong time. Keep in mind that Suniva has long been arguing that SolarWorld’s trade cases have impacted their module assembly in Asia. Now the company owned by Shunfeng, which also owns Suntech wants to destroy the US solar industry. In reality, Suniva just handed the Trump administration the perfect way to do just that. The Koch Brothers are popping champagne bottles right now, a ‘China is playing unfair’, talking point will be the populist agenda covering up the desire to hurt US energy consumers across the Country.