US projects on hold as trade dispute ripples through industry

As has been the case in the solar industry for some years, talk of trade disputes and anti dumping has been a part of many discussions on trade show floors. This year’s Intersolar North America is no exception, with debates as to the impact of duties on the fast-growing North American PV market and the validity of anti dumping duties being particularly intense.

“In the first trade case [2011-2012] we heard the same criticisms as well, that this would drive up the cost of PV, this would cost thousands of jobs, but instead we saw the opposite – there just wasn’t that kind of impact,” said Tim Brightbill, a partner at the law firm Wiley Rein and SolarWorld’s legal council in the U.S. trade dispute.

Brightbill was made available to the press by SolarWorld’s communications team during Intersolar. He said that PV in Europe has faired well since the trade case and the negotiated outcome of the minimum price for Chinese modules was imposed. He also said in this environment, innovation has also flourished.

“The United States shouldn’t be forced into a situation, which we saw a couple of years ago, in which prices were being driven down 40%, 50% or 60% a year with no relation to cost of production or market forces,” said Brightbill.

Opposition to duties

On the other side of the debate, unsurprisingly Chinese suppliers spoke out in opposition to duties being imposed on Chinese-made PV cells and modules. Downstream U.S. developers also added their voice to the chorus opposing the trade dispute and countervailing measures.

“The U.S. market already tried to pick winners and losers in the past and really screwed it up,” said Dean Solon, President & CEO of Shoals Technologies Group. “It never works out for us to play these stupid trade war games, we are always the loser.”

Shoals’ Solon did however speak up in support of U.S. manufacturing, saying that for many PV system components the company manufacturers that the U.S. can compete on price and quality. He added though, that many solar projects are currently stranded, having signed PPAs but now face uncertainty about module supply and pricing.

“What has been delayed is the start dates of projects in the U.S.,” said Solon. “The EPCs can’t get the module prices and those extra pennies [on module supply] can’t be observed by BoS,” he said. “For the most part this is a luxury tax.”

Hope for negotiated solution

The industry body, the Solar Energy Industries Association (SEIA) John Smirnow said that it is working behind the scenes to bring about a negotiated solution.

“SEIA has reached out to both the U.S. and Chinese governments to get their support for the industry to work together to build a consensus position that can work as the basis for a solution,” said Smirnow. “Both sides are committed to a negotiated solution.”

Smirnow suggested a possible solution for a negotiated solution is that “a few cents” per watt be added to Chinese module imports, with the money raised being put towards a fund to support U.S. solar manufacturing. He noted that negotiations like this were difficult.

On the equipment side, Brian Ecus from IPEVA said that the trade dispute is proving counterproductive and that the banking sector is proving slow to lend to manufacturers interesting in establishing PV capacity in the U.S.

“We’re going with this into a senseless situation, where no one is going to win,” said Ecus. “It is not a cheap investment to invest in manufacturing and the banks are a little bit nervous about what happened to solar in the past. We need to make banks more comfortable and if they start to release the financing then we will have more global manufacturing.”

The President of SolarWorld Americas Mukish Dulani said he is an advocate of global manufacturing, but that innovation comes out of the places like the U.S.

“If we take manufacturing out of the US, innovation will also go out,” said Dulani, “and we haven’t seen a lot of innovation from our friends in Asia. Quality and reliability comes from innovation. SolarWorld wa the first one to give the 25-year warranty, we were the first one to innovate a 30 year warranty.”

Both the the U.S. Department of Commerce (DOC) and the U.S. Trade Commission are involved in investigations into Chinese and Taiwanese solar trade violations. A preliminary antidumping decision is expected from the DOC on July 25 with the U.S. Trade Commission expected to conclude its investigation in two to three months.

Korean and Japanese suppliers benefit

Clearly evident at Intersolar North America was the bounce Korean and Japanese module and system suppliers were having on the back of the trade dispute. Korean manufacturers had a strong presence on the trade room floors, with modules being labelled as "antidumping free" labeling.

Japanese thin film supplier Solar Frontier reported that it is, "coming back in the U.S. in a big was," after a number of years where its attention has been almost entirely focused on the Japanese market.

Charles Pimentel, Chief Operating Officer of Solar Frontier Americas said that the company is being contacted by EPCs and developers, looking for alternative supply options. As a result of this, Pimentel expects Solar Frontier’s North America business to grow from between 500 kW to 1 MW in 2013, to anywhere between 5 MW and 40 MW this year.

"The traffic we’ve been getting has increased exponentially because of so-called stranded projects," said Pimentel.

Solar Frontier is still on track to develop manufacturing operations in the U.S., after it signed an MOU to develop a facility in Buffalo, New York State. Under the MOU, Solar Frontier has committed to investing around $750 in manufacturing operations, however no timeline has yet been set for the development.

"We want to move as quickly as possible and hope to make the decision as to when we’ll act before the end of the year," said Pimentel. "The trade case has helped the decision."