SNEC: 30+ percent tariffs lead to unintended consequences

While the announcement of hefty tariffs on Chinese photovoltaic manufacturers, imposed by the U.S. Department of Commerce at the behest of some U.S. manufacturers including SolarWorld, took many by surprise at the SNEC trade show, it was not sufficient to dampen the mood. While some major manufacturers have announced that they will take some time to formulate their response, others have reported brisk business at the trade show, buoyed by growth in markets outside of the U.S. – including China itself.

Small percentage of trade

Reacting to the news of the tariffs, Canadian Solar told pv magazine that exports to the U.S. make up only 10 percent of its global trade and, as such, won’t hit the manufacturer too severely. Director of Global Marketing, Zhang Hanbing continued that the company is in a unique situation in that it can ramp-up its operations in Ontario to supply the U.S. market – and avoid the tariffs. At present, Canadian Solar’s Canadian operations capacity stands at 300 megawatts (MW) and can be ramped up by another 300 MW, elaborated Zhang.

William Shen, from tier two manufacturer Lightway Green Energy, said that great interest had been generated at the SNEC trade show in the company’s products. Chan said that much of the interest was from Chinese clients, working in the emerging domestic market. He continued that Chinese manufactures would collaborate in how to best respond to the U.S. tariffs in the coming days. Chan set out that one response will be for manufacturers to focus on markets outside of the U.S., including the Asia-Pacific region.

Dennis She, CEO of ET Solar, reported that it is investigating opening a new production facility in Malaysia with a capacity of up to 400 MW as reaction to the U.S. tarrifs. Other module manufacturers as Lightway Green Energy want to increase their OEM sourcing of cells in Taiwan, as Lightway Vice President William Shen said.

German equipment manufacturer Kuka also reported an unexpected consequence of the tariffs. The company anticipates increased orders for businesses looking to establish or ramp-up operations outside of China. To enhance performance, Kuka hopes manufacturers doing so will look to better-automated fabs.

Government action

There was some consensus amongst trade show attendees that the Chinese government will likely take action to compensate for a drop off in demand, resultant from the tariffs. The government may consider enhancing or increasing FITs or other methods to stimulate domestic photovoltaic applications.

Lightway Green Energy indicated that newly installed capacity in China for 2012 could exceed five gigawatts (GW).

Contrary to interests

Even some U.S. companies at the SNEC trade show reacted negatively to the tariffs, which were higher than many expected. Equipment supplier, GT Advanced Technologies indicated that the tariffs will harm the industry by making photovoltaics in the U.S. more expensive and less competitive. Company representatives summed up the situation by saying that it was "contradictory to the interests of the photovoltaic industry."

U.S.-based market analyst Paula Mints has also reacted negatively to the tariffs. She told pv magazine, "I’m glad that the Facebook IPO has taken the spotlight off of solar, even briefly, so that it can get back to its true purpose developing this amazing technology and installing high quality solar electric systems in the industrialized world, and life changing off-grid installations in the developing world."

The Chinese photovoltaic Industry will hold a press conference next Thursday 24 in Shanghai, to announce measures in reaction to the tariffs.