US import duty on Chinese solar panels may increase the price of solar energy by up to 40 percent, making renewables even less competitive.
The U.S. solar energy market has been booming for several years, due to falling solar component prices and stable government incentives. In an effort to boost domestic manufacturing, the Commerce Department recently ruled in favor of the petitioner SolarWorld, the largest U.S. solar producer for 40 years, to impose a solar tariff for Chinese solar products that may boost overall solar installation costs by an estimated 10 percent.
The new solar tariff on China may slow the recent U.S. solar boom. A preliminary duty of 35 percent on imports of Suntech, 19 percent on imports of Trina Solar, and 27 percent for most other Chinese solar producers are effective immediately. The ruling closes what SolarWorld calls a loophole in the solar tariff, where Chinese solar manufacturers used Taiwanese solar cells in Chinese solar panels to circumvent the solar tariff.
“Chinese producers evaded the duties by commissioning manufacturers in other countries to partially or fully produce solar photovoltaic cells for assembly into solar panels back in China” SolarWorld said in a recent press release. “State-controlled Chinese media said at least 70 percent of U.S. imports from China contain Taiwanese cells.” SolarWorld’s petition states that Chinese solar manufacturers receive government assistance, including free land and utilities, cash grants, discounted loans and loan guarantees, and heavily discounted polysilicon, solar glass and aluminum.
Proponents of the tariff say that China is dumping solar components in the U.S., thus hurting U.S. manufacturing jobs in the process. The market will naturally favor low-cost manufacturing hubs, where wages and poor working conditions reduce costs. The tariff will level the solar manufacturing playing field.
Opponents fear the tariff will increase the price of solar panels by 20 to 40 percent, harming the solar industry that now employs 150,000 Americans. Brad Meikle believes the U.S. will never be a solar manufacturing hub, but that the economic opportunity lies in the installation, finance and distribution.
The recent solar boom, in fact, has been in large part due to a 70 percent drop in solar module cost. Boosting the module costs, either through a tariff on Chinese panels or encouraging more costly domestic panels is likely to decrease installations.
“The cost of solar energy has finally reached very attracted price levels of less than $3 watt installed,”said Kiril Lozanov, vice president of Capital City Renewables. “Increasing the price of the panels will not benefit the future growth of the industry.”
The American Solar Energy Association (SEIA) is even calling for a negotiated settlement and expresses concern about the recent ruling. “Today’s decision by the U.S. Department of Commerce to impose new tariffs on solar modules from China threatens to derail the rapid growth of the U.S. solar industry.”