Saturday Jan 28, 2023

The long-awaited solar panel tariff decision is here – key points for industry stakeholders – Lexology

The Biden Administration has announced that it is extending for an additional four years the tariffs on imports of crystalline silicon photovoltaic (CSPV) cells and other products that were first imposed in 2018 pursuant to Section 201 of the Trade Act of 1974.[1] CSPV cells, used in solar panels and other CSPV products, are an important component of most solar energy projects. The tariffs had been set to expire on February 6, 2022; the Administration’s announcement came on February 4.

The Administration’s decision is set against the backdrop of its ambitious goals to reduce greenhouse gas emissions to 50 percent of 2005 levels by 2050. Expanding the deployment of renewable generation – including CSPV cell-based generation – in the US is seen as a key part of this effort. The US Department of Energy recently estimated that solar power could serve up to 40 percent of US electricity demand as part of the strategy to achieve the Administration’s goals.

The updated tariffs will apply to imports of covered CSPV products at an initial rate of 14.75 percent ad valorem, declining by 0.25 percentage points each year thereafter to 14 percent in the last year of the extension period. In addition, the tariffs apply to imports of CSPV cells not partially or fully assembled into other products that exceed an annual quota volume, which the Biden Administration doubled from the previous 2.5 gigawatts (GW) to 5 gigawatts per year.

Covered CSPV cell imports that fall within the quota volume are exempt from the tariffs. In addition, bifacial panels containing covered CSPV cells will continue to be excluded from the tariffs.

The Administration also authorized the US Trade Representative to negotiate for the exclusion of covered imports from Canada and Mexico. In 2024, the US International Trade Commission will reassess the impact of the extended tariffs, with the Biden Administration having a second opportunity to remove or modify the tariffs.

In deciding to extend the tariffs for an additional four years, the Biden Administration found “that the safeguard action on imports of CSPV cells, whether or not partially or fully assembled into other products, continues to be necessary to prevent or remedy the serious injury to the domestic industry, and that there is evidence that the domestic industry is making a positive adjustment to import competition.” Exclusions to the tariffs – such as for “bifacial panels” – were found to be critical because “[b]y excluding bifacial panels, we will ensure that solar deployment continues at the pace and scale needed to meet the president’s ambitious climate and clean energy targets and create good jobs at home.”

Market impact and industry reaction The looming deadline for a decision on whether to extend the tariffs had garnered strong reactions from different segments of the solar industry, with developers concerned about equipment prices and US manufacturers seeking to extend the tariffs to protect their share of the market. With the announcement that the tariffs will be extended for a further four years, some measure of market uncertainty has been removed. Notwithstanding the Section 201 tariffs, imports have continued to dominate the domestic CSPV cell market. Industry source IHA Markit reported in June 2021 that 8 of the top 10 panel suppliers are based in China. In 2020, 19.2 GWs of PV solar was installed in the US, with the vast majority of panels coming from sources in Asia. Globally, non-US suppliers also dominate. For example, the US Department of Energy (DOE) reported that of the 140 GWs of PV solar modules shipped worldwide in 2020, only 3 percent, or 4.4 GWs, were manufactured in the US.

At the same time, …….


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