Saturday Feb 04, 2023

US Exempts Tariffs on Vietnamese Solar Panels for 2 Years: What to Expect – Vietnam Briefing

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The US government recently approved a 24-month tariff exemption for solar panels from four Southeast Asian countries: Vietnam, Cambodia, Malaysia, and Thailand to meet national renewable electricity demand. Vietnam Briefing looks at the opportunities and how Vietnam’s solar panel manufacturing is likely to benefit in the long term.

On June 6, 2022, the US announced a tariff exemption for solar panels from Vietnam along with Cambodia, Malaysia, and Thailand for up to 24 months to meet the skyrocketing solar energy demand in the US.

The transition to renewable energy is a priority for the US as it strives to transform its economy into a sustainable and green economy. However, the shortage of domestic manufacturing capacity has led the US to mass import solar panels from Vietnam – a trusted partner in trade.

While experts had anticipated that further tariff expansion on Asian countries would be the case after the US announced an extended tariff for China’s solar panels in 2011, the exemption of tariff for the four Southeast Asian countries was not expected.

Here, we examine the current situation of solar panel manufacturing in Vietnam and how it can serve the US electricity market.

Vietnam’s solar panel manufacturing industry

The solar panel manufacturing industry in Vietnam is growing for both foreign and domestic firms specializing in manufacturing photovoltaic cells and modules. The competition is especially fierce, given that there are mostly foreign-owned companies, including China and the US, with only one Vietnamese firm.

First Solar is a US-based firm and the leading performer of solar panel production in Vietnam, with an annual production capacity of up to 2.7 GW, far exceeding all other players. First Solar is committed to a long-term partnership with the Vietnamese industry, as it has invested a total capital investment of US$830 million out of the US$1.2 billion committed capital investment.

The majority of other firms are either owned or invested by prominent Chinese conglomerates. That is, both Trina Solar Vietnam and JA Solar receive 100 percent investment from China’s TrinaSolar group and JA Solar group, respectively. The two firms combined currently make up a large portion of Vietnam’s solar panel supply.

The only Vietnamese firm in the industry, IREX is a subsidiary of SolarBK. This is the only local firm known to manufacture solar panels, with a  market share of just 1 percent.

Vietnam is slowly positioning itself on the global market as a leading exporter of solar panels, exporting to 50+ countries worldwide and making up a considerable share of the world’s electricity supply pie. Vietnam’s current export of solar panels as of 2020 is as follows:

Country Export Value (in US$)
US 3.4 billion
Canada 91 million
The EU 57.8 million
Turkey 19.5 million
The UK 17.2 million
Japan 15.6 million
Australia 1.5 million

US electricity consumption and supply

Electricity consumption in the US has been at an all-time high for the past several years, ranging from 3,800 to 4000 terawatt-hours.

The US’ electricity needs has been met by a combination of different sources, including coal, natural gas, renewable sources, and nuclear power. The market share of the sources can be seen in the below infographic.

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Source: https://www.vietnam-briefing.com/news/us-exempts-tariffs-vietnamese-solar-panels-for-2-years-what-to-expect.html/

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