A federal investigation into whether China is getting around tariffs on solar panels has Colorado’s expanding solar energy industry warning of layoffs, soaring prices and lights out for new projects.
In January, industry representatives and the U.S. Energy Information Administration were predicting 2022 would be a busy year for new solar power generation. Now, the Department of Commerce is looking into claims China is routing its panels through other countries to circumvent U.S. tariffs, which, if confirmed, could result in huge tariffs that might be retroactive to November 2021.
Four Southeast Asian countries being scrutinized account for more than 80% of the U.S. imports of solar panels, and tariffs on the products could ultimately jump by 50% to 250%. The situation threatens the U.S. solar industry and efforts in Colorado and nationally to cut greenhouse-gas emissions and boost the use of renewable energy, said Mike Kruger,president and CEO of the trade group Colorado Solar and Storage Association.
“We’re probably going to see job losses over the summer at a time when we shouldn’t because customer demand continues to be through the roof,” Kruger said.
At least 70% of Colorado solar companies have said they could face laying off or furloughing employees, Kruger added.
The solar association has filed a notice with the Colorado Public Utilities Commission that the investigation is causing “severe uncertainty” for the industry, which might have to delay and cancel projects or renegotiate deals.
“We have pulled everything from our pipeline that we were going to build for this year except for one project,” said David Amster-Olszewski, founder and CEO of SunShare, a leading community solar company based in Colorado.
About 70% of the respondents to a survey by the Solar Energy Industries Association said at least half their workforce and $52 billion of investments in large-scale projects across 39 states are at risk. In Colorado, 75% of businesses reported delays in getting supplies or cancellations of orders and threats to $870 million worth of projects.
The Commerce Department started an investigation April 1 into claims by Auxin Solar, a California solar panel manufacturer, that China is evading tariffs by funneling its products through Cambodia, Malaysia, Thailand and Vietnam. The tariffs imposed during the Obama administration are intended to prevent government-subsidized solar panels made in China from unfairly competing with U.S.-made panels.
A problem, Kruger said, is that U.S. solar panel production is small and doesn’t generate “anything near enough to meet the demand.”
“Even the (production) done domestically uses Asian inputs, whether cells or modules,” Kruger said.
And the chance of any big tariff increases being retroactive to November, when an initial complaint was made, has frozen the flow of most parts coming to the U.S., Kruger said.
A preliminary determination is expected in August.
Colorado Sens. Mike Bennet and John Hickenlooper joined a bipartisan group of their colleagues in asking President Joe Biden to expedite the investigation and take the possibility of retroactive charges off the table. Their May 1 letter to Biden said higher tariffs will harm the country’s solar industry and raise customer’s utility rates.
Gov. Jared Polis sent a letter Tuesday asking Commerce Secretary Gina Raimondo to quickly conclude the investigation and not impose tariffs.
“Commerce should promote, not deter, growth in the American solar industry,” Polis said. “The Colorado solar and storage industry employs over 9,400 hardworking people across the state and has been one of the quickest industries to recover and grow through the pandemic.”
There are roughly 350 solar companies in Colorado.
The investigation does nothing to spur the U.S. solar manufacturing industry, but will interfere with Colorado’s goals of reducing greenhouse-gas emissions and addressing climate change, Polis said.
Mamun Rashid, CEO of Auxin Solar, which filed the petition with the Commerce Department, said in an email that the investigation will strengthen the U.S. solar industry and reduce dependence on other countries. The Commerce secretary has explained the law requires fact-finding and reasoned decision-making, he said.
“Until the investigation is complete, any predictions are pure speculation,” Rashid said.
The Trump administration levied tariffs on solar panels and cells from other countries. The duties dropped from 30% to 15% over four years. The Biden administration has kept the 15% tariff, but excluded some equipment and increased the volume of solar cells that can be imported duty-free.
Boulder-based Namaste Solar has pushed back schedules on projects because of the sudden halt to the import of most of the solar cells and modules that U.S. companies use. Depending on what happens with the investigation, the company might end up having to cancel projects and could face significant price increases, said Eliot Abel, co-owner and director of commercial project development.
“All of that is on top of the fact that we still have not recovered from the pandemic,” Abel said.
Like many businesses, Namaste and other solar companies have dealt with supply-chain disruptions that erupted during the coronavirus pandemic. Inflation and labor shortages are other challenges.
Abel said the investigation and the uncertainty about tariffs have stalled business at a time when demand is rising and solar companies are trying to take advantage of the federal tax credits.
The 26% credit on commercial solar installations is set to drop to 22% next year. Biden’s Build Back Better, which is held up in Congress, proposes increasing the credits and extending them for 10 years.
Abel said he understands the push for more U.S. solar-panel manufacturing.
“We’re local. We’re employee-owned. We’re as local as it gets. We would love to see more domestic manufacturing as well,” Abel said. “We’d like to see a policy environment that encourages private investment in domestic manufacturing. Retroactive tariffs are not the way to get there.”
Source: Read Full Article