A few months back, we published a post on All You Need to Know About the US-China Solar Trade Dispute and how it might affect solar installers and consumers if the case isn’t settled. Well, a preliminary decision is in.
The Department of Commerce (DOC) has made a preliminary determination on June 10th in favor of SolarWorld, the German/U.S. solar panel manufacturer who filed the suit. Before we get into the penalties being proposed and finalized, we should remind readers that there are two parts to this case:
Part 1: The DOC Decision
The first part, now in the preliminary determination stage, has to do with SolarWorld accusing China of illegally subsidizing its solar panel manufacturers with low interest loans and other cash-related subsidies that allowed Chinese manufacturers to manufacture solar panels and export them to the U.S. (and the rest of the world) at below their actual cost. The 2012 DOC decision determined that was the case and imposed over 23% to 254% in countervailing duties (CVD) on various solar cells made in China. However, Chinese manufacturers got around these tariffs by manufacturing their solar cells in Taiwan and other nearby countries, then assembling the rest of the panel in China.
Consequently, this new 2014 DOC preliminary determination now includes solar cells and other basic solar panel materials being made in Taiwan and shipped back to China for assembly and export.
So, how much in duties will be tacked on to the price of imported Chinese solar panels? The preliminary CVD varies and depends on the brand:
- For Suntech solar panels, the tariff is 35.21%.
- For Trina SolarEnergy, the tariff is 18.56%.
- For all other Chinese brands, the tariff is 26.89%.
That means that the wholesale price of all Chinese-made solar panels coming into the U.S. may be increased by as much as 35.21%, and at the very least, by 26.89%!
The DOC will make its final determination by August 18, 2014. But wait, there’s more:
Part II: The ITC Decision
Remember, we said that there were two parts. Now that the DOC has ruled, their evidence has been handed over to the International Trade Commission (ITC).
The ITC is deciding whether China is intentionally overproducing (“dumping”) their artificially inexpensive Chinese solar panels on the U.S. market in order to flood the U.S. solar market, forcing SolarWorld to lower their prices to compete. The ITC previously said this was the case in the earlier 2012 decision, so most industry analysts think they’ll do so again, but now include solar panels and cells from Taiwan.
Should the ITC rule in favor of SolarWorld again, then additional antidumping duties may be placed on top of the CVD penalties that are expected to be finalized in August. Consequently, the total duties imposed may be even higher than 26.89% for general Chinese brands. In the 2012 case, duties were as high as 254%!
What solar panels are subject to the CVDs?
Keep in mind that it’s the solar panel that is subject to these import duties, not the brand. For example, Canadian Solar produces panels and cells in both China and Canada, and so some of its panels may be subject to these extra tariffs.
So, how do you know which panels are affected by the CVD ruling? As of this writing, the DOC has not provided a certification system for importers, but they likely will in the near future. There are many nuances as to what “Chinese” components make a solar panel subject to the DOC tariffs.
The somewhat good news for installers is that importers and exporters will be the ones dealing with any tariff payments, so installers should not have to question whether their solar panels are subject to any extra duties. If they’re in the U.S., they should be good to go, and in the near future, they should also have a certification.
How solar installers may be affected by the U.S. Tariffs
Currently, there remains an oversupply of both Chinese and non-Chinese panels in the U.S., but that supply is now quickly being whittled down.
Without a new and inexpensive supply of Chinese solar panel imports, U.S. solar panel demand may exceed supply, causing all solar PV panel prices to rise, not just panels from China. How much U.S. solar panel prices rise, if any, remains to be seen. It may be a few cents/Watt or double digits.
Nevertheless, there are many non-Chinese solar panels manufactured in the U.S., Germany, Japan, Singapore, Norway, India, Canada, the Philippines, and other countries that will not have the extra tariffs. And don’t count out China. There are already reports about Chinese solar manufacturers planning to move their manufacturing facilities to perhaps the U.S., or Mexico or other countries, but that won’t happen for a couple of years.
For now, installers can expect higher wholesale solar module prices and a constrained supply that might affect installation schedules, especially for smaller installers that have less buying power than larger customers. A recent GTM Research report states that panel prices may go up 10 cents/Watt because of the imposed CVD.
On the good news side, it does not look as if the duties will be retroactive, so any affected solar panels that have already been purchased by installers or consumers will not be charged any extra duties.
How consumers and DIY solar installers may be affected
Naturally, if wholesale solar panel prices rise considerably, end-user prices will also likely go up … or installer profit margins may be significantly decreased, depending on the competition in your region. For consumers, now might be the best time to get a solar quote before solar panel prices go up, as expected.
Whatever happens, GoGreenSolar.com remains committed to sourcing quality solar products at competitive prices. So far, prices have remained relatively stable, but as the Chinese panel supply decreases and the existing U.S. supply is depleted, solar PV panel prices and individual cell prices may go up soon.
Check back with GoGreenSolar.com for further updates on the Chinese-SolarWord trade case.