Colorado’s solar industry leaders say a U.S. Commerce Department threat of tariffs on some imported panels should not further disrupt their expanding market, and they add that new federal subsidies for American panel makers will ease shortages down the road.
The Commerce Department’s finding early in December that a few Southeast Asian panel makers are dumping subsidized Chinese parts here is on hold for now, and the preliminary ruling will not further cut into panel supplies, officials from Namaste Solar, SunShare and a trade association said. In the spring, Colorado solar installers said worldwide shipping of panels had virtually ceased as Commerce officials threatened massive tariffs on panels in transit, and even retroactively on delivered panels. Colorado solar companies delayed projects and prepared for mass layoffs.
But the White House over the summer put any new tariffs on hold until 2024 after an outcry from U.S. solar installers, who said new import restrictions would harm the transition to clean energy. Meanwhile, Colorado solar leaders say, new subsidies for U.S. manufacturing plants from the Inflation Reduction Act will make them price competitive with Asian imports and bolster overall supplies.
Cooler heads prevailed after the early 2022 tariff scare, and import challenges will not “stop the transition to renewable energy in the United States,” said David Amster-Olszewski, founder of community solar garden developer SunShare. “I think it’s just complication. What you want is companies like ours not spending time working on all of these nuances of import-export trade issues.”
The Commerce Department warned that four Southeast Asian companies appeared to be largely reselling Chinese-made panels in order to avoid heavy tariffs on Chinese imports. But the assessment won’t be final until May 2023, and is negated anyway by the Biden Administration’s imposition of a ban on new tariffs into 2024, Amster-Olszewski said.
Federal regulators found that four other Southeast Asian companies had in fact changed their practices and were truly manufacturing panels themselves, and could avoid the super tariffs that can triple the U.S. price of panels.
The fact that Commerce put four international importers on notice for 2023 “ puts more stress in the process and more hurdles, but all of this is not final,” he said.
“Not good, but certainly not the end of the world,” said Mike Kruger, president of the Colorado Solar and Storage Association trade group.
Like other solar CEOs, Amster-Olszewski said in a market where 80% of panels are currently made overseas, he prefers the carrots of boosting U.S. panel makers to the sticks of new import tariffs. The Inflation Reduction Act provides lucrative tax credits to domestic panel manufacturers, and handfuls of other credits to projects that use U.S. parts.
U.S. industry leader First Solar immediately announced a billion-dollar new plant in Alabama, attributing growth to the opportunities expected from the new tax credits.
“Use a carrot approach, and industry will follow, and sure enough, that’s exactly what they did,” Amster-Olszewski said.
The Inflation Reduction Act “provides our domestic manufacturing industry with market stability, manufacturing support, incentives for projects to use domestic content,” said developer and installer Namaste Solar’s business development director Eliot Abel. “Carrots, right? Whereas the proverbial stick, the tariffs, weren’t ever going to do enough to create meaningful change” for U.S.-based production.
Panel supplies are still tight and raising project prices in Colorado, industry officials say, from utility-scale developments meant to replace coal-fired power plants to 10-megawatt community solar gardens or individual home installations. The lockdown on the entire industry executives warned of in the early 2022 tariffs debate, however, has eased. Developers are refocused on working out supply chain kinks and finding affordable panels wherever they can.
“It’s not the same as it was when nobody was shipping anything because of the threat of retroactivity” of tariffs, Abel said, “and not knowing who was going to be implicated. That was a complete freeze. Shipping is happening. More of the impact is that there’s still not enough supply for demand and the prices are still high, and I don’t there’s a line of sight to that coming down.”
SunShare is paying about 35% more for solar panel units than two years ago. While developers all welcome the federal subsidy act, they are realistic about when new U.S. production will have an impact.
“The sheer amount of time it takes to get things up and running, to invest, to build out a plan, to hire the people, to have all the machinery in place and to start actually producing the levels they want to be producing, it’s not going to be here in a year and a half,” Namaste’s Abel said. So the 2024 reckoning lingers for final decisions on import tariffs.
“Having a looming risk of trade wars out there is not good,” he said.