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With new solar tariffs on hold, 6 solar developers lay out how the sector can seize the moment

How will the industry use the next 24 months to secure a domestic solar supply chain and separate itself from China? Can the solar industry seize this moment, or will it again find itself in a precarious trade dispute two years down the road?
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President Joe Biden gave the domestic U.S. solar industry a lifeline.

By pausing new tariffs on solar modules imported from Southeast Asia for two years and issuing an emergency declaration to use the Defense Production Act to boost domestic manufacturing, Biden's action means that stalled projects can resume with what is expected to be a renewed inflow of modules.

But the Department of Commerce investigation of the Auxin Solar tariff petition continues. At the end of the 24-month reprieve, the agency could implement tariffs of 50-200% if companies are found to be circumventing trade duties against China.

That means the clock is ticking.

How will the industry use the next 24 months to secure a domestic solar supply chain and potentially separate itself from China? Can the solar industry seize the moment, or will it again find itself in a nasty trade dispute two years down the road?

Renewable Energy World polled several leading solar developers -- Pine Gate Renewables, 8minute Solar Energy, Palladium Energy, Nexamp, Renewable Properties, and Standard Solar -- for their perspectives.

Subscribe today to the all-new Factor This! podcast from Renewable Energy World. This podcast is designed specifically for the solar industry and is available wherever you get your podcasts.

Listen to the most recent episode on building out the U.S. solar supply chain, featuring interviews with Rhone Resch, Martin Pochtaruk, and Michael Parr.

Each developer highlighed the urgency of Congress passing incentives for domestic solar module manufacturing either through the Solar Energy Manufacturing for America Act (SEMA) or a broader budget reconciliation package, like the stalled Build Back Better Act.

"Together with the Defense Production Act, SEMA would create a carrot for domestic manufacturing and eliminates the need for a stick (i.e., tariffs)," said Nobel Chang, managing partner at Palladium Energy.

Chang added that state and local governments can encourage domestic manufacturing, too, through incentives, favorable terms on offtake contracts or permitting.

On top of building out a domestic supply chain, solar developers are keen to make sure future trade petitions don't single-handedly halt the industry.

Pine Gate Renewables CEO Ben Catt said current trade policy is "broken and out of touch" and noted that Congress is currently considering legislation that would "modernize the law relied on by Auxin" that effectively hobbled the industry.

"Specifically," he told Renewable Energy World, "Congress should require the Department of Commerce, in responding to anti-dumping and countervailing duty petitions, to consider the impact of requested tariffs on supply-chain availability, the broader economic interests of our country, and the relative competitiveness of the domestic industry manufacturing similar products." He said that procedural reforms are also needed to "mandate prior consultation with potentially affected industries and to prohibit imposition of duties prior to publication of a preliminary determination."

Here is what each developer had to say about making the most of the next 24 months.

Ben Catt, CEO, Pine Gate RenewablesBen Catt, Pine Gate Renewables

We’re grateful that the President has declared a pause on new tariffs and taken some important steps to bolster U.S. solar manufacturing. But there’s a lot more that’s needed to ensure we don’t face the same situation in 24 months. In the absence of affordable U.S.-made solar components, tariffs will increase energy costs for American consumers, cause a significant reduction in U.S. solar industry jobs, threaten grid reliability, and make it impossible to achieve critically important reductions in carbon emissions.  

So what needs to happen to avoid that outcome? First and foremost, Congress needs to act now to pass proposed new and expanded tax credits for solar manufacturing and development. That’s the only way to ensure that domestic solar manufacturing can be ramped up significantly without a material increase in energy costs.  

Second, those of us in the solar development and construction industry need to work with equipment suppliers to ensure that the necessary commercial relationships are in place to support a massive investment of private capital in domestic solar manufacturing. While 24 months may sound like a long time, getting the necessary infrastructure in place in that time frame will be challenging to say the least. This is a complicated process that needs to get started immediately. We at Pine Gate Renewables are up to the challenge and are committed to doing everything we can to help promote domestic solar manufacturing.

That said, U.S. trade policy is broken and out of touch with a world in which the global challenge of climate change is one of the top priorities for our country and the international community. The successive actions we have seen on solar tariffs have been highly disruptive to our industry and threaten more chaos, price increases, and job losses in the future. 

Congress is currently considering new trade legislation and should take the opportunity to modernize the law relied on by Auxin.  Specifically, Congress should require the Department of Commerce, in responding to anti-dumping and countervailing duty petitions, to consider the impact of requested tariffs on supply-chain availability, the broader economic interests of our country, and the relative competitiveness of the domestic industry manufacturing similar products.  Procedural reforms are also needed to mandate prior consultation with potentially affected industries and to prohibit imposition of duties prior to publication of a preliminary determination.

Dr. Tom Buttgenbach, CEO, 8Minute Solar

At 8minute, we take pride in sourcing domestic solar and energy storage components, in addition to employing high-skilled and well-paid labor. As we execute on one of the largest pipelines of smart power plants in the country, we are focusing our procurement efforts on products manufactured here in the U.S.

Moving forward, we need to pass SEMA as part of the reconciliation bill to establish a domestic manufacturing industry that will provide an alternative to imported panels. The President's Proclamation provides tariff certainty for two years, but the permanent solution is SEMA. 

In addition, the Commerce case continues, so we need to aggressively oppose the frivolous claims in the petition. 

Lastly, we support giving the Secretary of Commerce greater authority to conduct analysis that would avoid a similar situation to the fallout from the Auxin petition. Throughout all of this, we remain steadfast in our opposition to dumping, tariff circumvention, and the use of any products made with forced labor.

Nobel Chang, Managing Partner, Palladium Energy Nobel Chang, Palladium Energy

Palladium Energy applauds the Biden Administration for its swift action in declaring a two-year tariff exemption on solar panels from Southeast Asia and for invoking the Defense Production Act to embolden domestic manufacturing of solar panels and components. The tariff suspension will help alleviate certain pressures within the currently challenging solar supply chain and its impacts on project development and construction schedules. Enacting the Defense Production Act creates a bridge to help more American clean energy jobs across the board—from manufacturing to development to construction.

Today, solar developers and investors stand battered from the price hikes due to the supply and demand shift of the module market while domestic manufacturing is not properly incentivized to build competitively priced capacity. Two years passes by very quickly and the U.S. government, state governments, and the solar industry can certainly do more to bolster domestic manufacturing that will have a net positive impact on the clean energy transition as a whole.

Congress already has an arrow in its quiver with the Solar Energy Manufacturing for America (SEMA) Act. The bill creates a new tax credit for the production and sale of solar equipment in the United States. SEMA will boost manufacturing by incentivizing manufacturers in America across the supply chain. The U.S. House of Representatives already passed SEMA and the bill sits on the desk of the Senate. Together with the Defense Production Act, SEMA would create a carrot for domestic manufacturing and eliminates the need for a stick (i.e., tariffs).

The solution does not reside only at the federal level. States and local governments can help encourage domestic manufacturing by providing incentives for clean energy developers and investors to utilize domestic content. May it be more favorable terms on offtake contracts or the ability to obtain permits for projects, the possibilities are endless. For example, a North Carolina solar tax credit helped the Tar Heel state rank second in the U.S. in installed solar capacity in 2019 while attracting (and training) top-tier clean energy talent to the state. In this way both Federal and State policies are bolstering domestic manufacturing.

Finally, developers, financiers, and owner/operators of solar projects should foster strong relationships with U.S.-based manufacturers to encourage the long-term viability of made-in-America solar modules and components. The solar industry can collaborate closely with domestic manufacturers by giving a forward look at development pipelines and forming partnerships to facilitate long-term capacity. We need to see a dramatic decrease in the cost curve to continue to deploy solar with U.S.-made modules for domestic manufacturing to be sustainable.

We are on the precipice of the renewable energy transition and the first half of 2022 looked bleak. The 24-month shot clock has started and Palladium Energy is proud to be part of the renewable energy transition alongside domestic manufacturers.

 Scott Wiater, CEO, Standard Solar

The President’s two-year reprieve is vital as it frees up the supply chain and gives us room to keep our project pipelines moving.

However, the long-term growth of domestic manufacturing through incentives and otherwise remains a critical need if our industry is going to proceed unimpeded by future tariffs and other obstructionist policies.

In short, there is work still ahead of us.

James Rotchotte, Federal Policy Director, Nexamp 

The White House Executive Order (EO) was welcome news and provides much needed near-term certainty. And it couldn't have come soon enough. The industry as a whole saw its worst quarter since 2020, installing 24% less solar capacity than in Q1 2021.

While the EO solves a near-term problem, the solar industry needs long-term policy certainty that will come with passage of a reconciliation bill that includes significant incentives for clean energy deployment and domestic manufacturing.

The U.S. solar market installed a record 23 GW in 2021 but has only 7 GW of domestic manufacturing capacity. That's a significant delta. (The June 6) announcement and, hopefully, in tandem with passage of meaningful climate and industrial legislation, will put us on a path to bridging that gap over the next two to three years.

It's absolutely critical that all stakeholders—businesses, trade associations, environmental justice organizations—remain focused on delivering an ambitious climate and clean energy agenda. We all must work toward an economy that is more sustainable, just, equitable, and resilient to future shocks, no matter what form they take. That means reducing barriers to development of clean energy projects in communities across the country, and providing fertile policy and regulatory frameworks that accelerate the transition to a clean energy future.

Aaron Halimi, CEO, Renewable Properties

Going forward, we’d like to see advocates prioritize the ITC (investment tax credit) extension for solar and a separate ITC for standalone energy storage. There’s also a need for new solar access policies that enable low-to-medium-income (LMI) customers to go solar, including subscribing to community solar. More community solar will also allow renters, small business owners, and apartment residents to benefit from the clean energy transition.

The bi-partisan infrastructure law that passed will help build needed transmission lines, but we are still experiencing interconnection delays. Many markets throughout the US have a “traffic jam” of projects that want to connect to the grid, but are slowed down by interconnection queues and permitting timelines. National and local legislation that would streamline permitting and interconnection would help grow solar, wind, and energy storage projects.  

Finally, as more renewable energy legislation is passed, it will create an overwhelming need for more skilled solar workers who require training. So, we hope that Congress will also pass legislation that will support more job training and mentorship programs. These policies could directly help transition fossil fuel workers, but it should also be open to anyone who wants to build a new clean energy career.

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