From pv magazine USA.
Some time over the last 72 hours, the prediction made by Roth Capital came true. The Office of the U.S. Trade Representative (USTR) reversed its position and removed an exemption for bifacial modules from Section 201 import tariffs.
We’re not sure exactly when this happened, as there is no date on the document buried on the USTR website, and no press release. USTR filed the change in the Federal Register this morning at 8:45 AM EST, after the removal of the exemption was reported by multiple media outlets.
Regardless, the exemption will end on October 28 “effective with respect to articles entered for consumption or withdrawn from a warehouse for consumption”. Given the long lead times for ordering modules, that means few bifacial panels not already on container ships are likely to slip through tariff-free.
Bifacial “surge” predicted
The six-page note on the USTR site does shed some light on the thoughts behind the trade officials’ decision, with the office determining the exclusion would “likely result in significant increases in imports of bifacial solar panels”, and warning “such a surge is imminent”.
The USTR further noted “such panels will likely compete with domestically produced monofacial and bifacial solar crystalline silicon solar photovoltaic products in the U.S. market”.
Neither statement matches our understanding of the U.S. market, however. As noted by Roth Capital in its research note warning of the end of the Section 201 exemption, given the current boom in solar construction and backlog of module imports, removal of the exemption is unlikely to affect import volumes next year. Orders have already been placed through the end of 2020.
It is also a dubious claim that an exemption for bifacial threatens U.S. manufacturing. USTR reports that contract manufacturer Auxin Solar is dedicating a significant portion of its manufacturing capacity to bifacial products, but at last check Auxin had a total of only 100-120 MW of annual manufacturing capacity – less than 1% of the total demand in the U.S. market.
In the bigger picture and as per pv magazine’s calculation, even when the four large U.S. factories which arrived in the wake of the tariffs come online there will only be around 5 GW of U.S. solar module manufacturing capacity. That is not enough to meet half the demand expected this year, so multiple gigawatts of modules are likely to continue to be imported, and mostly from Asia – tariffs or no.
Given the uncertainty the Trump administration has introduced around trade, the reaction from the U.S. solar industry is often simply one of frustration. John Williamson, founder and CEO of engineering consulting and software company KiloNewton used his social media LinkedIn account to describe removal of the Section 201 exemption for bifacial as “a nonsense reaction to a nonsense exemption to a nonsense policy”.
Update: This article was changed/updated at 11:55 U.S. East Coast time on October 8 to feature a link to the unpublished entry by the U.S. Trade Representative in the Federal Register, and additionally to include USTR’s statements regarding Auxin Solar’s bifacial manufacturing and related analysis.