How Biden’s administration threatens to sink US solar

America’s biggest builder for solar farms has recently accused US President Joe Biden of doing more harm to the sustainability sector than the Trump administration, which has repeatedly been blamed for having a “dysfunctional” climate policy.

George Hershman, chief executive of Solv Energy, the top installer of large, or “utility-scale”, solar projects in the US, said: “The Biden administration, and particularly this commerce department’s decision, has done more damage to renewables than the previous administration […]. At least we knew where that administration stood. This administration every day says how much they are in support of renewables but then actively make decisions in opposition.”

The quarrel started after a probe was launched by the Biden administration into whether solar developers are dodging tariffs on part imports. The entire industry has expressed its major concerns about the devastating effect the investigation will have on the firms’ activity and the high probability of subsequent collapse in new installations.

On March 29, in response to a complaint by an American solar panel manufacturer, the Department of Commerce agreed to investigate whether solar parts manufacturers were circumventing tariffs on Chinese imports by shifting the final stages of the manufacturing process to south-east Asia before they are shipped to the US. The accusing party, California-based Auxin Solar, exhibited that Chinese suppliers were guilty of “pervasive backdoor dumping” which was actively harming American manufacturers. American solar developers, who were already under serious inflationary pressure, were up in arms, claiming that the investigation could cause huge increases in costs and a collapse in solar installations this year.

If the investigation finds the practices amount to circumvention, decade-old antidumping and countervailing tariffs on Chinese imports would be extended to Cambodia, Malaysia, Thailand and Vietnam. Costs would increase by between 50 and 250 per cent with huge consequences for the renewables market, as analysts estimate that about three-quarters of US solar product imports come from these four countries.

A final decision is expected early next year but the tariffs would apply retroactively from April, making manufacturers already reluctant to ship parts that might later be hit by tariffs.

“Taking up this case will have a chilling effect on the solar industry […]. This mis-step will have a devastating impact on the US solar market at a time when solar prices are climbing, and project delays and cancellations are adding up.” said Abigail Ross Hopper, chief executive of the Solar Energy Industries Association.

According to the American Clean Power Association, more than 80% of utility-scale projects due to be installed within the year are exposed to the tariff extension. This could lead to 14 gigawatts of solar deployment being scrapped, which is more than half of all domestic solar capacity installed last year.  Hopper said this move would actually crush many of the clean power jobs Biden has announced as a crucial point of his climate political agenda.

Many representatives of the solar industry support moving manufacturing on to American shores only provided that builders would recieve generous incentives, such as the manufacturing tax credits included in the stalled Build Back Better bill. Moreover, developing a domestic solar manufacturing hub that can compete with Asia’s would take time and a coordinated effort . The investor side is also pushing for a “balance between clean energy progress and trade concerns”.

Besides, this tension is rapidly extending to the whole renewables industry. Offshore wind developers are worrying that if the administration forces them to buy local, it would take  the newborn industry to the brink. 

Launching the solar investigation is only the starting point and developers alert they were already feeling the effect as suppliers fear a retrospective affect from a negative ruling.

Joe Biden has long insisted that the development of the domestic manufacturing industry and the related jobs must be functional for respecting the climate program. “When I think climate change, I think jobs,” goes a common saying by the US president. The  investigation, however, has brought into the spotlight a clash between the administration’s priorities for  the internal market versus a rapid growth of green energy infrastructure. Protectionist trade policies might be good for domestic manufacturers and employment, but renewables developers are warning they could devastate their businesses and derail the greening of the American economy.

Sources:

1. https://www.ft.com/content/cb81f579-29c1-4836-a047-6d78404dd66a

2.https://www.ft.com/content/cd913f13-27b3-45a4-aee8-62359b36d32c?shareType=nongift