Solar Panel Prices to rise, China sets new tariffs

On Friday evening the U.S. Department of Commerce (DOC) announced its preliminary findings in the antidumping duty (AD) investigations of imports of some crystalline silicon PV products from China and Taiwan. Most solar products entering the U.S. market from China and Taiwan will now face import duties.

According to a fact sheet released by the DOC, the AD law “provides U.S. businesses and workers with a transparent and internationally accepted mechanism to seek relief from the market-distorting effects caused by injurious dumping of imports into the United States. The DOC believes that this creates “an opportunity [for U.S. businesses] to compete on a level playing field.”

The DOC has prelimarily determined that “certain crystalline silicon photovoltaic products from China and Taiwan have been sold in the United States at dumping margins ranging from 26.33 to 58.87 percent, and 27.59 to 44.18 percent, respectively and will be collecting tariffs on the following manufacturers in the following amounts. The tariffs will be collected immediately, although final determinations will not be made until December.

From China:

Trina Solar – 26.33 percent
Rensola and Jinko – 58.87 percent
Suntech – 42.33 percent
Another 42 unspecified manufactures – 42.33 percent
China-wide entity (those who didn’t respond to the DOC’s questionnaire) -165.04 percent
From Taiwan:

Gintech – 27.69 percent
Motech – 44.18 percent
All others 35.89 percent
Thin-film PV will not face tariffs. Also excluded are any products that are covered by the existing antidumping and countervailing duties as well as PV cells not exceeding 10,000 mm2 in surface area that are integrated into consumer goods who function to power that consumer good (like a solar-powered calculator).

The DOC estimates that in 2013, the value of solar PV products imported from China and Taiwan was $1.5 billion and $656 million, respectively.

U.S. Industry Reacts

SolarWorld, the solar petitioner in the case against China and Taiwan, commended the DOC’s determination.

“We and our workers are very gratified to hear that the U.S. government once again has moved to block foreign government interference in our economy and clear the way for the domestic production industry to be able to compete on a level playing field,” said Mukesh Dulani, president of SolarWorld Industries America Inc. “We should not have to compete with dumped imports or the Chinese government. Today’s actions should help the U.S. solar manufacturing industry to expand and innovate.”

Jigar Shah, president of the Coalition for Affordable Solar Energy (CASE) released a statement calling the determination “another unnecessary obstacle” that he said will “hinder the deployment of clean energy by raising the prices of solar products.”

He said: “Due to these tariffs, previously viable projects will go unbuilt, American workers will go unhired and consumers that could have saved money through solar energy may not be able to benefit.”

CASE maintains that America’s solar manufacturers are strong and are providing jobs for 29,000 U.S. workers. In addition almost 100,000 Americans are employed downstream in the system installation, sales, distribution and project development sectors.

The coalition collected the following statements from some of its members:

Ron Corio, President of Array Technologies, based in Albuquerque, NM and representing over 100 jobs said: “As a U.S. solar manufacturing company, we’re very disappointed in today’s anti-dumping determination. By increasing the price of solar power through tariffs, SolarWorld is shrinking the market for our products here in the United States and punishing successful U.S. solar businesses. Our company is proof that American solar manufacturing jobs will decrease under these special trade protections.”

John Morrison, COO of Strata Solar, based in Chapel Hill, NC and representing over 1,000 jobs said: “Due to their scale, the utility and large commercial solar sectors are particularly sensitive to the uncertainty and price increases caused by these tariffs. Until this dispute is resolved, our industry will build fewer projects and install less solar. It’s time to end the litigation, negotiate a solution and put more Americans back to work.”

Ocean Yuan, Founder and CEO of Grape Solar, based in Eugene, OR said: “My company assembles and sells complete solar energy kits directly to customers and in major retail stores across the country. The number one reason customers cite when switching to solar energy is cost savings, but these misguided tariffs are inflating prices. A negotiated solution to this dispute will ensure the continued growth of our industry and small businesses like mine.”

Chinese Industry Reacts

In an interview with Bloomberg news, Sebastian Liu, director of Investor Relations at Jinko Solar said that top Chinese manufacturers would elect to pay the 2012 duties without using cells from Taiwan or a third-country. Jennifer Liang, a Taipei-based analyst from KGI Securities Co told Bloomberg that the duties would hurt producers from Taiwan the most.

Taiwanese solar stocks including Motech, Gintech, E-Ton Solar and Neo Solar dropped in reaction to the news, said Bloomberg.

Organizations Urge a Settlement

CASE’s Shah believes that SolarWorld should work with the U.S. solar industry to end litigation “in favor of a win-win solution like the Solar Energy Industries Association (SEIA) settlement proposal.”

He said that CASE members represent the industry majority and that they “demand a solution that ends uncertainty in the marketplace by preventing further trade litigation and that allows solar power to compete cost-effectively with traditional energy sources, thus enabling the market’s further growth.”

Rhone Resch, president and CEO of SEIA echoed Shah. “Enough is enough. The Department of Commerce continues to rely on an overly broad scope definition for subject imports from China, adversely impacting both American consumers and the vast majority of the U.S. solar industry,” Resch said. “We strongly urge the U.S. and Chinese governments to ‘freeze the playing field’ and focus all efforts on finding a negotiated solution. This continued, unnecessary litigation has already done serious damage, with even more likely to result as the investigations proceed.”

Resch believes that a “win-win” solution is still achievable. “As the old saying goes, ‘where there’s a will, there’s a way.’ Today, the parties are finally engaged and all sides seem committed to finding a negotiated solution. I am encouraging my U.S. and Chinese industry colleagues to roll-up our sleeves, work together, and find a deal that’s good for everyone,” he said.

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Germany’s lessons on Renewable Energy Subsidies

Currently, Germany is in the process of backtracking from overly generous subsidies for renewables because they’ve resulted in skyrocketing electricity prices and increased carbon emissions. These unintended consequences should serve as a cautionary tale to U.S. policymakers as to the harm that outsized government handouts for renewables can have. Thankfully, there’s time to prevent anything like this from happening in the U.S., so long as we draw upon lessons learned from Germany and quickly act to end egregious subsidies like the wind Production Tax Credit (PTC).

The policy, which is being considered by the Senate as a part of its extenders package at a cost of $13 billion to taxpayers, should be allowed to permanently expire. We need look no further than Germany to understand why.

In 2000, Germany embarked on an “energy transformation” to have the bulk of its energy supplied by renewable power sources by 2050. As part of this, Germans invested heavily in wind and solar power, encouraged by a generous “feed-in tariff” that guaranteed prices and access for any renewable energy fed into the nation’s power grid. In effect, this guaranteed renewable energy producers a selling price for their power, often at above-market rates.

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Rather than an energy transformation, these factors have created an energy disaster. First, these subsidies have led to an increase in residential electricity prices, which have more than doubled between 2000 and 2013 (from 18 cents to 37 cents per kilowatt-hour). In fact, electricity prices in Germany are the second-highest in the European Union, according to Eurostat. This has led to as many as 800,000 Germans having their power cut off because of an inability to pay for rising energy costs.

Germany’s government-forced promotion of renewable energy, as well as its decision to phase out nuclear power, has also led to increased emissions due to an increase reliance on coal and natural gas to keep the lights on. Germany emitted 951 million metric tons of carbon dioxide last year, compared to 913 million metric tons of carbon dioxide in 2009, despite spending about $138 billion to go green in the last decade.

Accordingly – and this is where U.S. policymakers should take heed – officials in Germany are changing course, with the government announcing just last month that state support for wind and solar will be reduced because of the strains these policies have caused on Germany’s consumers, economy and industry.  In fact, in reference to the scaling back of renewable subsidies, Economy Minister Sigmar Gabriel said it was necessary because rising prices due to excessive tax handouts “have become the [country’s] biggest problem by straining our economy and industry.”

While the way subsidies for renewables work – and the reasons for their implementation – are different in the U.S., Germany’s experience should serve as a cautionary tale of the unintended consequences they can bring, in the form of higher energy prices and increased carbon emissions. America has its own version of costly and wasteful subsidies for green energy; one of them is the PTC.

Authored by 

Don Nickles

Chairman and CEO, Nickles Group