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How Trump could undermine the US solar boom

How Trump could undermine the US solar boom

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Tumbling prices for solar energy have helped stoke demand among U.S. homeowners, businesses and utilities for electricity powered by the sun. But that could soon change.

President Donald Trump – whose proposed 2018 budget would slash support for alternative energy – will soon get a new opportunity to undermine the solar power market by imposing duties that could increase the cost of solar power high enough to choke off the industry’s growth.

As scholars of how public policies affect, and are affected by, energy, we have been studying how the solar industry is increasingly global. We also research what this means for who wins and loses from the renewable energy revolution in the U.S. and Europe.

We believe that imposing steep new duties on imported solar equipment would hurt the overall U.S. solar industry. That in turn could discourage choices that slow the pace of climate change.

Trade complaints

A bankrupt manufacturer has petitioned the Trump administration to slap new duties on imported crystalline silicon photovoltaic cells, the basic electricity-producing components of solar panels – along with imported panels, also known as modules.

This case follows earlier and narrower complaints filed by SolarWorld, a German solar manufacturer with a factory in Oregon, that Chinese companies were getting an unfair edge as a result of subsidies and dumping.

Due to those cases, the U.S. has imposed duties on solar panels and their components imported from China and Taiwan. The punitive Chinese tariffs averaged 29.5 percent last year, according to the Greentech Media research firm.

Suniva, a U.S. company that – oddly enough – is majority-owned by a Chinese company, lodged this complaint in April under a rarely activated 1974 Trade Act provision called Section 201. SolarWorld Americas joined in a month later.

The key difference in this new case is that it will potentially lead to tariffs on all imported solar cells and panels, rather than specific kinds from particular countries.

Suniva’s petition calls on the Trump administration to set a 40-cent-per-watt duty on cells and a minimum 78-cent-watt price for panels.

Prior to the complaint, global prices for solar panels had fallen to 34 cents a watt.

Enormous progress

This big increase in import duties could undermine the enormous progress the industry has made in cutting the cost of solar-generated electricity. The National Renewable Energy Laboratory finds that tumbling solar module prices contributed a lot to the 61 percent reduction in the cost of U.S. household solar power systems – typically located on rooftops – between 2010 and 2017.

The Solar Energy Industries Association, which represents the sector in the U.S., calculates a blended average price that takes residential, commercial and utility-scale systems into account. It finds prices fell more sharply, dropping by more than 73 percent during that period.

Likewise, the Energy Department’s SunShot Initiative declared in September that U.S. utility-scale solar systems were already generating electricity at the competitive rate of 6 cents per kilowatt-hour – three years ahead of the program’s ambitious target for 2020. Falling costs for solar panels played a big part in helping the industry hit this milestone ahead of time.

The International Trade Commission issued a preliminary finding on Sept. 22 that imported cells and panels are “substantial cause of serious injury, or threat of serious injury” to domestic manufacturers. The independent, bipartisan U.S. agency will hold a hearing on Oct. 3 to explore ways to respond.

Regardless of what remedies the commission recommends, the White House would get broad powers to increase the cost of imported solar cells and panels to at least theoretically protect Suniva.

Jeopardizing jobs

Imposing duties on imported solar equipment will not help the U.S. industry as a whole. Like most experts, we believe that the remedy sought in this case will make solar power more expensive for businesses and consumers, which will reduce its competitiveness against other sources of energy.

Imposing new import duties also ignores the fact that the U.S. solar industry employs an estimated 260,000 people in installation, manufacturing, sales and other related activities, according to the Solar Foundation, but only a small fraction of these workers are involved in cell production.

Protecting certain manufacturers would thus come at the costs of harming other parts of the industry. The Solar Energy Industries Association, which opposes Suniva’s petition, estimates that 88,000 jobs may be at risk. Steep duties could thus undermine the contribution solar power makes to the U.S. economy.

Solar globalization

Along with ignoring the effects on jobs across the entire industry, the petition misses the bigger picture. Cell and panel manufacturing composes a small part of a much larger industry that takes advantage of the global manufacturing base.

The rise of China as a solar manufacturing hub is an integral part of what has helped drive costs down for installation companies and consumers around the world. Lowering the cost of solar power systems makes solar energy more competitive against more carbon-intensive sources of electricity, including coal-fired power plants.

The growth of solar energy is one factor helping many U.S. states reduce their energy-related greenhouse gas emissions.

Experts disagree about how much the Trump administration’s decision to withdraw from the Paris Agreement on climate change matters, particularly as states like California continue to work hard on reducing their carbon footprints.

But there is no debate over whether imposing duties on imported solar cells and panels would hinder the growth of renewable energy in the U.S. – reversing climate progress.

Timeline and punishment

Section 201 cases differ from more standard trade complaints because they do not require a determination of unfair trade practices. They also open the door to broader trade restrictions to remedy the perceived problem in a given industry.

The International Trade Commission is expected to give the White House its recommendations by Nov. 13. Trump will probably respond within 60 days.

It took decades of research and investment to drive down the cost of solar power to the point where it is competitive with conventional sources of electricity. Should these latest trade woes increase the cost of going solar, it would be likely to kill domestic jobs and slow progress toward cutting greenhouse gas emissions across the nation.




Editor’s note: This is an updated version of an article originally published on Sept. 20, 2017.

Source: EcoWatch

Llewelyn Hughes
Associate Professor of Public Policy, Australian National University
Jonas Meckling
Assistant Professor of Energy and Environmental Policy, University of California, Berkeley



This article added at 20:50 on 25 September 2017

Solar Tariff Case Advances as ITC Finds ‘Injury’

Suniva, SolarWorld solar cell manufacturing and trade.

The threat of solar tariffs moved one step closer to reality on Friday when U.S. trade commissioners unanimously agreed that imported solar equipment has caused “serious injury” to domestic manufacturers.

The vote handed a victory to Suniva and SolarWorld, which filed a rare petition under Section 201 of the 1974 Trade Act, arguing that cheap solar imports have made it impossible for them to compete.

With the injury finding confirmed, the U.S. International Trade Commission will hold a hearing on October 3 in Washington, D.C. to consider possible trade remedies. The USITC will recommend tariffs to the president by November 13. The ultimate decision will be left up to President Trump, who has reportedly been pushing for more tariffs on imported goods.

“We’re hopeful that the president will make a strong proclamation on remedy, and we’re hopeful that the industry can move forward together to expand and strengthen solar manufacturing here in America,” SolarWorld’s attorney Timothy Brightbill told GTM.

Notably, the ITC determined that U.S. manufacturers have not sustained injury from solar cells and modules made in Singapore and Canada. Establishing the two countries as free trade zones could create a major opportunity for Singapore-based integrated solar equipment manufacturer REC. Canada currently has little to no cell manufacturing capacity, so the negative injury finding may have little impact.

UPDATE: The commissioners also found that imports of crystalline silicon photovoltaic cells from Australia, Colombia, Jordan, Panama, Peru and participants in the U.S.-Dominican Republic-Central America Free Trade Agreement (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic) are not a substantial cause of serious injury. None of these countries has a substantial cell manufacturing presence today, but could become attractive places to invest in future. Imports from Mexico and South Korea, meanwhile, were found be a substantial source of injury to the U.S. market and consequently subject to tariffs.

Brightbill said this element of the decision is “complicated” and petitioners are “looking at the implication of the votes with regard to the free trade countries.”

With respect to trade remedies, Suniva and SolarWorld are calling for duties of 40 cents per watt on imported cells and a floor price of 78 cents per watt on modules. If the commission approves the request, it could destroy 88,000 jobs in installation, sales and construction, according to estimates by the Solar Energy Industries Association (SEIA). Numbers from GTM Research are similarly bleak, showing that tens of gigawatts of solar installations could be wiped out compared to business as usual.

“If we’re talking about a 40 cent per watt increase…it would take out a lot of projects,” said Morten Lund, a solar industry attorney for Stoel Rives, which currently represents SolarWorld in matters unrelated to the trade case.

“I’m not worried about California. I’m not worried about the Northeast,” said Lund, noting that large solar projects will move forward in states with renewable energy mandates, regardless of price. But in states like Texas, tariffs could “completely obliterate the utility market.”

Suniva and SolarWorld have refuted SEIA’s job predictions, pointing to an economic analysis by the law firm Mayer Brown that found new tariffs on solar products would result in a net increase of at least 114,800 jobs across all segments of the U.S. solar industry.

The vast majority of the U.S. solar industry is opposed to the request for trade penalties. Dozens of industry executives and government officials spoke out against the petition during a 10-hour hearing at the ITC last month, saying Suniva and SolarWorld brought their financial troubles upon themselves. Presidents and CEOs took turns describing their dealings with the two companies, recounting late deliveries, subpar panel efficiency and recalls on faulty panels.

SEIA and its allies have launched an aggressive lobbying campaign against the import penalties. Earlier this week, the group filed a letter with the ITC criticizing Suniva and SolarWorld for not submitting a plan for how they’ll function as viable U.S. solar cell and panel manufacturers if they are granted trade relief.

With Friday’s vote, the commissioners denied requests from 27 solar equipment manufacturers, 16 senators and 53 members of the House of Representatives who sent letters asking for the petition to be thrown out.

Yesterday, the governors of Nevada, Colorado, Massachusetts and North Carolina also sent a letter voicing their opposition, saying tariffs “could inflict a devastating blow on our states’ solar industries and lead to unprecedented job loss, at steep cost to our states’ economies.”

“As the remedy phase moves forward, I am determined to reach a conclusion that will protect the solar industry, our workers and the American public from what amounts to a shakedown by these two companies,” said Abigail Ross Hopper, SEIA’s president and CEO. “An improper remedy will devastate the burgeoning American solar economy and ultimately harm America’s manufacturers and 36,000 people currently engaged in solar manufacturing that don’t make cells and panels.”

SEIA is already ramping up advocacy efforts with the Trump administration.

During the remedy hearing the ITC will hear more testimony as it considers what trade penalties to recommend to the president. Under a Section 201 case, the commissioners can suggest tariffs, minimum prices or quotas on solar products from anywhere in the world.

“The range of remedies is as broad as you can imagine and includes doing nothing,” said Elliott Williams, trade adviser for Stoel Rives’ solar initiative. “You could have a remedy, like a tariff, in effect for a limited time…while you give producers breathing room to figure out where they’re going next.”

How the remedy is structured will have an enormous impact on solar companies, both within and outside of the U.S. Foreign solar panel makers are already weighing whether or not to open U.S. manufacturing facilities in the event of a severe outcome. High costs and time constraints make investing in the U.S. high-risk and potentially infeasible.

Thin film solar panel manufacturer First Solar, whose technology is exempt from tariffs, saw its stock price spike in response to the ITC news.

The October 3 remedy hearing now looms large. Pre-hearing briefs and appearance requests are due by September 27 and a pre-hearing conference with ITC staff is scheduled for September 28. Due to today’s unanimous decision, all four trade commissioners may vote on remedy recommendations, due November 13. The president will then have 60 days to issue his decision.

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Added 9/28/2017

Utilities: Solar Trade Protections Do More Harm Than Good

Photo Credit: Duke Energy

Over the past several years, utilities and public power producers have increasingly diversified their portfolios for a variety of strategic reasons in a dynamic that echoes the U.S. government’s own “all of the above” energy strategy. Diversity in generation sources can enhance energy security, reliability and consumer protection, and it can improve the environmental profile of the fleet.

As part of the effort to diversify, many power companies have developed solar projects or have purchased solar-generated power, or both. As a rule, power companies plan on a 20-year cycle and depend on predictable cost structures, particularly for their solar projects.

The strategic assessments of renewable projects are based, in part, on the continued viability of the US solar industry — a prospect that has looked increasingly sound over the past several years as U.S. solar has experienced tremendous growth. Solar today employs over 260,000 American workers, and was responsible for 1 out of every 50 new jobs created in the U.S. in 2016. Most importantly, solar is increasingly cost-competitive with wind and even natural gas. This achievement is not just good for solar; it’s a welcome development for our nation’s energy security as a whole.

Yet the imposition of trade remedies on solar technology sought by the two petitioners in this case, Suniva and SolarWorld, could fundamentally change those carefully calibrated assessments of grid stability — and do so without any consequent societal benefits.

Duke Energy commented before the International Trade Commission that if such a remedial floor price or tariff is imposed, it expects the installed cost of solar projects to increase 30 percent or more and that demand for modules would contract, perhaps even precipitously. “As solar energy is just approaching parity with the traditional grid resources in a number of states, a significant reduction in demand for new solar projects could deliver a serious blow to continuing development and evolution of this market,” Duke argued.

For utilities like Duke Energy, which must select cost-competitive resources (whether they be fuel-based or renewable) when selecting new generation resources to meet customer demand requirements, such cost increases may eliminate solar generation from its evaluation processes entirely.

Obviously, this cost spike in the price of key components in solar manufacturing would quickly ripple throughout the supply chain. As these price increases slash the growing demand for solar, they likewise disrupt the carefully planned investment decisions of this nation’s power providers. Conversely, the development of a reliable consumer base is critical for solar’s continued expansion in the years to come.

Determining that the solar company trade petitioners were harmed, and issuing protective remedies as a result, could lead to higher electricity prices and a disruption in the nation’s generation mix. Neither of these are acceptable outcomes for American electricity consumers. Modern electric markets work by combining a diverse array of generating resources, each with its own strength. Upsetting that balance through the imposition of unnecessary trade barriers not only puts the solar success story at risk, but also undercuts the strength of the entire electricity delivery system.

Appropriate planning and coordinating to maximize bulk reliability and resilience on the grid, all with an eye to dominance in energy production, consumer protection and security, are laudable goals. Ill-conceived energy protectionism in the guise of a trade remedy, on the other hand, will only do more harm than good. We would all do well to take heed of recent events and remember to prioritize the importance of maintaining a diverse and resilient electric grid. The government should say no to the Section 201 trade petition for solar.


Scott Segal is Director of the Electric Reliability Coordinating Council. ERCC is a coalition of utilities providing power to millions of consumers across the nation and is a part of the Energy Trade Action Council. ETAC comprises a group of utilities, retailers, cooperatives, manufacturers, developers, financial investors and free-trade proponents that oppose the Section 201 trade petition.

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