US President Joe Biden has decided to extend Section 201 that targets tariffs on solar cells and panels for another four years, with a mitigated requirement on capacity from 2.5GW to 5GW, and bifacial solar panels will still receive tariff exemption. Despite being bad news to solar operators, the US solar industry should be happy to know that California has decided to extend the net metering 3.0 reform scheme.
Section 201 was announced by former US President Donald Trump in January 2018, where imported solar products of 2.5GW are imposed with a 30% tariff for the first year, followed by a 5% reduction in each of the four subsequent years. Section 201 was expired on February 6th 2022, and has been extended for another four years, with the capacity now rising to 5GW.
The Solar Energy Industries Association (SEIA) is rather disappointed at the government’s decision, though it is pleased to see that a compromise is established. SEIA CEO Abigail Ross Hopper commented the government has managed to find a balance between protecting bifacial solar panels and enhancing the quota of solar cell capacity.
The American Clean Power Association, on the other hand, not only approves of the government’s exclusion of bifacial solar panels from the tariffs, but also supports the extension of imported solar tariffs. Its CEO Heather Zichal believes that Biden’s decision pertaining to the extension of tariffs on solar cells and modules has granted four additional years for the local solar industry to adapt to overseas competitions.
The United States International Trade Commission (USITC) had actually suggested the prolongation of solar tariffs back in November last year, and believed that the particular implementation would prevent or compensate losses for the domestic solar industry. Evidence shows that the US solar industry is currently aggressively adjusting in accordance with import competitions, though some experts believe that there is no substantial effectiveness to the tariffs. The energy research company Rystad Energy believes that the tariff policy is a complete failure, and First Solar CEO Mark Widmar also commented on his disappointment towards the government’s extension of Section 201.
Another factor impacting the US solar industry in the future is the net metering system. California had previously decided to launch NEM 3.0 that consists of bargains on electricity bills, as well as US$8/kW of grid maintenance cost each month, which yields an additional electricity cost of US$50-80 for users each month. According to studies, the payback period will increase from 5-6 to 14-15 years as a result.
The implementation has obviously drawn objections from solar installation companies such as Sunrun, Tesla, and SunPower. Energy research firm Wood Mackenzie pointed out that solar modules planned for solar projects in the US are 55% more expensive to that of Europe due to the levels of tariffs, whereas the addition of risen raw material cost, as well as supply chain issues, and political uncertainties, are seriously impacting solar-related share prices.
Californian officials commented last week that additional time is required to consider on passing the indefinite extension for the controversial 3.0 reform, since the implementation, as previously forecasted by Wood Mackenzie, may cut the domestic solar market of the state by half. Alice Reynolds, President of the California Public Utilities Commission (CPUC), plans to convene a debate shortly after.
(Cover photo source: Flickr/U.S. Department of Agriculture CC BY 2.0)
