A vote by the International Trade Commission shook the U.S. solar industry on Friday, as companies braced themselves for possible tariffs on imported solar equipment.
Federal trade officials unanimously sided with petitioners Suniva and SolarWorld, which argued that cheap imports from Asia and elsewhere had caused “serious injury” to domestic manufacturers.
Reactions from the broader U.S. solar industry poured in today, with an estimated 88,000 installation, sales and construction jobs on the line, according to the Solar Energy Industries Association (SEIA).
“This is going to impact our business quite a bit, and I imagine it’s going to have the same impact on every other company in the United States,” said T.J. Kanczuzewski, president and CEO of Indiana-based Inovateus Solar. “Donald Trump said he’s going to be the greatest jobs president ever, [but] if a maximum tariff is decided upon, this could be a great jobs killer within the U.S. solar industry.”
“Over the next few months, our leadership team, along with our ownership, is going to have plan for the worst and hope for the best,” he said. “We’re having a problem getting enough supply to our current projects. It’s been a challenge over the last month.”
The pain is unlikely to subside for several months, regardless of the outcome. Developers GTM spoke to last week at Solar Power International said they’re already on the brink of losing projects that took years to arrange due to price spikes in anticipation of the ITC decision.
Solar companies aren’t the only ones dismayed by the ITC decision. Duke Energy and other utility members of the Electric Reliability Coordinating Council came out strongly against the trade case.
If imported solar modules are subject to an artificial floor price or significant import tariff, “we expect that the installed cost of solar projects will increase 30 percent or more and that demand for modules would contract precipitously,” said Diane Denton, managing director of federal policy for Duke Energy.
Instituting trade remedies would significantly disrupt utilities’ solar procurement plans across the country. In the Southeast alone, utilities are planning to add more than 4,000 megawatts of solar, which represents to more than $4 billion in investment, according to Stephen Smith, executive director of the Southern Alliance for Clean Energy.
“All those jobs, property values, and clean energy opportunities are now at serious risk given today's decision,” he said.
Abigail Ross Hopper, CEO of SEIA, told reporters that her organization is “disappointed” by the outcome today, but “certainly not deterred.” She and several other industry leaders stressed that their work is far from over.
Over the coming week, SEIA will be “deeply engaged in thinking about a remedy,” said Ross Hopper.
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. President Trump will then have 60 days to issue a final decision.
Trade-case opponents are hopeful their arguments will win support from the White House, despite Trump’s protectionist economic views.
Tony Clifford of Standard Solar said many in the solar industry had a sneaking suspicion the trade case would end up in Trump’s hands. After all, the injury determination follows precedent for past solar trade cases, as well as a previous Section 201 investigation on imported steel. But, fortunately, today’s decision does not mark the end of the story, he said.
The true impact of the trade case will be determined in the ITC’s remedy deliberations. “I hope the ITC will conclude that only minimal or no tariff increases are necessary,” said Clifford.
As for the White House: “I’d also remind President Trump that two-thirds of the solar jobs in America do not require any college education,” he said. “Losing 88,000 jobs, most of which are blue-collar, is a lot for the American economy -- and President Trump’s base in particular -- to absorb,” he said.
SunPower CEO Tom Werner issued a blunt statement today to the effect that if severe trade remedies are put in place, U.S. jobs will be permanently lost, prices for American-made solar products will rise, and there could be “alarming” knock-on effects for industries tied to solar -- including steel, glass and aluminum. The practical outcome of the case would be the exact opposite of what the Trump administration wants.
Werner said he’s optimistic the president will recognize the harmful effects of import tariffs, quotas or other global import restrictions, adding that he does not see Trump sacrificing American competitiveness for companies headquartered abroad. SolarWorld’s parent company is based in Germany, and Suniva’s parent company is based in China.
“Quite simply -- when the administration reviews all the facts, I think they will see that following the lead of a China-owned company puts American energy leadership into the hands of foreign competitors,” Werner said.
Industry-crippling trade remedies are not inevitable, he added.
“Applying tariffs unilaterally does not take into account variations in the technological advances by some in our industry; the investment in sophisticated supply chains, built within existing trade networks many have made; or the different production methods many in our industry use,” said Werner. “There’s a significant opportunity for the ITC to remain true to today’s decision, but also to develop a recommendation that is nuanced enough to work for the solar industry.”
Meanwhile, trade-case petitioners Suniva and SolarWorld say they’re hopeful the president will make a “strong proclamation” on the trade remedy.
“We brought this action because the U.S. solar manufacturing industry finds itself at the precipice of extinction at the hands of foreign market overcapacity,” according to a statement from Suniva. “President Trump can remedy this injury with relief that ensures U.S. energy dominance that includes a healthy U.S. solar ecosystem and prevents China and its proxies from owning the sun.”
As the focus shifts to Trump, both sides of this debate are expected to intensify the war of words over which segments of the American solar sector are worth saving.