China imports put US solar makers in the shade

14 Mar China imports put US solar makers in the shade

Posted at 02:54h in Financial Times by
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 Overview 
  • A flood of Chinese-pro­duced solar pan­els is driv­ing prices to record lows in the US, a boon for renew­able energy developers but a threat to solar man­u­fac­tur­ers try­ing to cre­ate a domestic sup­ply chain for the coun­try’s fast­est-grow­ing source of elec­tri­city gen­er­a­tion.

 

 Oversupply 
  • China, the dom­in­ant solar equip­ment sup­plier, doubled pro­duc­tion capa­city last year
    • to more than 1tn watts
    • and now pro­duces nearly three times more pan­els than global demand
  • Global prices for pan­els have fallen 50 per cent in the past year
    • to as low as 10 cents a watt.
  • The sup­ply glut has enticed US power com­pan­ies to favour imports
    • over more expens­ive domestic pan­els
      • as they build new solar gen­er­at­ing com­plexes.
  • In response, North Amer­ican man­u­fac­tur­ers say they are pulling back on expan­sion plans
    • des­pite luc­rat­ive incent­ives avail­able
      • under the Infla­tion Reduc­tion Act, the land­mark US cli­mate law.
    • Last month, CubicPV, a Bill Gates­backed man­u­fac­turer of wafers for solar pan­els,
      • scrapped plans to build a 10GW US fact­ory, cit­ing a “dra­matic col­lapse” in prices.
    • Mark Wid­mar, chief exec­ut­ive of First Solar,
      • the largest US solar man­u­fac­turer,
        • warned at a Sen­ate fin­ance com­mit­tee hear­ing on Tues­day
          • of the coun­try becom­ing a “de facto exten­sion of China’s Belt and Road Ini­ti­at­ive”.

 

 Current US Stance 
  • The US puts a 14 per cent tar­iff on solar com­pon­ent imports from most coun­tries.
  • A sep­ar­ate 25 per cent applies to goods made from China,
    • which Wash­ing­ton imposed cit­ing Beijing’s “dis­crim­in­at­ory” trade prac­tices,
      • along with anti-dump­ing and coun­ter­vail­ing duties on Chinese solar pan­els
        • that exceed 200 per cent.
  • Solar ship­ments from south-east Asia were also sub­ject to anti-dump­ing and coun­ter­vail­ing duties
    • after the US com­merce depart­ment last sum­mer found that five Chinese solar com­pan­ies
      • were set­ting up factor­ies in the region to cir­cum­vent US tar­iffs.
  • The US imports the bulk of its solar pan­els from south-east Asia,
    • whose exports remain far cheaper than USmade coun­ter­parts
      • even account­ing for tar­iffs and IRA sub­sidies
  • US impor­ted 50 gigawatts of pan­els between Janu­ary and Novem­ber 2023, a record high.

 

 Comptetition 
  • by the end of 2024, US-made solar cells and mod­ules will cost 18.5 cents a watt,
    • com­pared with 15.6 cents for a product made in south-east Asia.
  • “The IRA sub­sidies are hugely luc­rat­ive
    • but they’re still not enough to com­pete against cheap imports,
  • new pro­tec­tion­ist meas­ure” would be neces­sary
    • to make Amer­ican man­u­fac­tur­ing com­pet­it­ive.
  • Man­u­fac­tur­ers, includ­ing First Solar and Heliene, have called for stricter enforce­ment of tar­iffs,
    • includ­ing strik­ing an exemp­tion for the two-sided type of solar pan­els
      • that make up the bulk of imports.

 

 Upside 
  • Cheap panel prices have provided a tail­wind for US solar deploy­ment,
    • which in turn has boos­ted the zero-car­bon power source’s pres­ence on the elec­tri­city grid.
    • Expects 36GW in new solar this year,
      • the biggest source of capa­city growth on the grid.
  • Solar Energy Indus­tries Asso­ci­ation,
    • which rep­res­ents US solar developers and man­u­fac­tur­ers,
      • said the US would “always” source a mix of impor­ted and domest­ic­ally made pan­els.
        • The industry group does not sup­port an early expir­a­tion of the morator­ium nor the removal of the tar­iff exemp­tion for two-sided pan­els.

 

 Concerns with(in) China 
  • The con­cerns come as the Biden admin­is­tra­tion becomes increas­ingly wor­ried about
    • the pos­sib­il­ity of China dump­ing solar pan­els in the US
      • because of the indus­trial over­ca­pa­city prob­lem it faces in its domestic mar­ket.
  • a del­eg­a­tion had made clear to Chinese offi­cials dur­ing a visit to Beijing
    • that the US and its allies would take action if China dumped goods on inter­na­tional mar­kets.
      • One offi­cial said the US was most con­cerned about
        • solar pan­els, elec­tric vehicles and lith­ium-ion bat­ter­ies.
  • China pro­duces three-quar­ters of the world’s solar pan­els
    • and an even higher share of inputs,
      • includ­ing poly­sil­icon, cells and wafers.
        • Its grip on solar man­u­fac­tur­ing is expec­ted to remain largely unchal­lenged
          • until the end of the dec­ade.

 

 Political concerns 
  • Repub­lican threats to repeal or water down the IRA
    • have also cast uncer­tainty over US man­u­fac­tur­ing ambi­tions.
  • Former offi­cials from the Don­ald Trump admin­is­tra­tion
    • have said the expres­id­ent would gut the cli­mate law if he won the gen­eral elec­tion in Novem­ber.

 

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