The White House is about to announce a 24-month tariff exemption for solar modules made in Cambodia, Malaysia, Thailand and Vietnam, while invoking the Defense Production Act as a means to speed up U.S. manufacturing.
The Biden administration is preparing to announce a 24-month tariff exemption for solar modules made in Cambodia, Malaysia, Thailand and Vietnam, Reuters first reported publicly.
The move is a direct response to uncertainty across the industry. The uncertainty began when the U.S. Department of Commerce (DOC) announced on March 28 that it would file a petition by California-based solar module manufacturer Auxin Solar — which asked the DOC to review data from companies in Cambodia, Malaysia, Thailand and Vietnam. solar panels imported by operating Chinese companies - when action was taken and an anti-dumping investigation was announced against those companies.
While pausing new tariffs, President Biden will reportedly invoke the Defense Production Act as a means to accelerate U.S. manufacturing across the solar supply chain and reduce overall reliance on imported photovoltaic hardware and materials. Reports indicate that the goal of invoking the bill is to increase domestic solar manufacturing capacity to 22.5 GW by 2024.
The Defense Production Act of 1950 allows the president to direct private companies to prioritize orders from the federal government and allocate materials, services, and facilities for defense purposes. The order has been invoked twice since the beginning of 2020 in response to the Covid-19 pandemic, once by then-President Donald Trump and now again by Biden.
Invoking the act does not end the DOC's investigation, which is expected to continue, meaning tariffs could still be imposed after the moratorium, depending on the DOC's ruling. However, according to Reuters' unnamed sources, the impending action would eliminate possible retroactive tariff impositions that date back to the date Auxin Solar originally filed the petition
direct impact
In the months following announcing the survey, the Solar Energy Industries Association (SEIA) lowered its forecast for solar installations in 2022 and 2023 by 46%, a scenario that is expected to result in a 24 GW drop in planned solar capacity over the next two years, This figure exceeds the full-year 2021 installed solar capacity.
Developers across the U.S. are already feeling the sting of the investigation. The investigation froze the import of modules, leaving solar projects under development and construction in a dilemma, with some partially completed projects sitting idle waiting for modules.
As of April 26, the newly released SEIA Survey Impact Survey had received more than 700 responses, with 83% of respondents who purchased or used components reporting that their component supply agreements were cancelled or delayed. 100% of respondents in 13 states believe their module supply is experiencing delays or cancellations.
According to the voluntary report, respondents responded to SEIA that a total of 318 utility-scale projects with 51 GW of solar capacity and 6 GWh of additional battery storage are being cancelled or delayed. What's more, a significant portion of delayed projects may be about to be canceled, as developers don't know when they'll be able to get their components, and some delays could drag projects down.
According to respondent data from 39 states, all but two states reported cancellations and delays for utility-scale projects with a capacity greater than 100 MW. It's also possible that the figures represent only a small fraction of the true impact of the investigation, SEIA said. Across the U.S., 42% of known utility-scale solar development pipelines have been disrupted. Indiana and Idaho both reported 100 percent disruptions to their known pipelines.
As a result of this type of capacity loss, the U.S. will emit an additional 364 million tons of carbon by 2035, missing the opportunity to effectively take 78 million internal combustion engine vehicles off the road, according to SEIA estimates.
These projections are premised on the assumption of a positive decision on the investigation, imposing tariffs in the range of 50% to 250%; severe restrictions on the import supply of components from the countries surveyed, with manufacturers in unspecified countries taking time to pick up the slack; and impacting the research update results.
Currently, Cambodia, Malaysia, Thailand and Vietnam account for about 80% of U.S. component imports.
external pressure
Since announcing the investigation, the Biden administration has faced opposition to goals to fully decarbonize the U.S. power grid by 2035 and to reduce U.S. greenhouse gas emissions by 50 to 52 percent from 2005 levels by 2030 Existing political pressures on China's economic practices and product dependence.
Renewable energy advocates and politicians have petitioned the DOC and the Biden administration to drop the investigation. So far, 22 senators and 19 governors have formally called on the DOC to issue a preliminary veto as soon as possible.
On the other hand, on May 26, U.S. Senators Sherrod Brown (D-OH) and Bob Casey (D-PA) and U.S. Representative Marcy Kaptur (D-OH-9) sent a letter to President Biden expressing support for the continued investigation.
SEIA President and CEO Abigail Ross Hopper (Abigail Ross Hopper) said the investigation is also expected to lead to the loss of 100,000 jobs across the solar industry. An important point to clarify is that the 100,000 jobs also include new jobs that have not been added, although SEIA claims the vast majority will be layoffs of existing workers. Between 16,000 and 18,000 solar manufacturing jobs will not be created between 2022 and 2023 due to tariffs, most of which will be layoffs. For context, the most recent 2020 annual survey data shows that about 31,000 people are employed in solar manufacturing.