The unfolding drama in the U.S. solar industry, as narrated by Clean Energy Associates (CEA), is poised to take a significant turn with the latest anti-dumping and countervailing duty (AD/CVD) petition. Filed at the beginning of the week by prominent solar manufacturers such as First Solar, Hanwha Qcells, Meyer Burger, and others under the American Alliance for Solar Manufacturing Trade Committee, the petition aims to address what it claims are circumvention tactics employed by predominantly Chinese-owned companies operating in Vietnam, Malaysia, Thailand, and Cambodia.
These companies are accused of exploiting production facilities in Southeast Asia to avoid U.S. tariffs imposed on Chinese imports, which has been a contentious issue for the domestic solar industry. The CEA's analysis suggests that there is a "high likelihood" that this AD/CVD petition will culminate in the imposition of duties, mirroring the outcomes seen in previous cases where 74% of petitions have led to the levying of tariffs, according to the Government Accountability Office's study from 2012 to 2021.
President Joe Biden's administration had previously offered a two-year waiver on these tariffs, intended to serve as a transitional "bridge" enabling the U.S. solar sector to adjust its supply chain infrastructure. This period was also granted to allow solar importers to reconfigure their supply chains in response to the Department of Commerce's findings in August 2023. That month, the DOC determined that five manufacturers—Trina Solar, Canadian Solar, BYD Hong Kong, New East Solar, and LONGi-owned Vina Solar—had evaded U.S. import tariffs by shifting portions of their operations to Southeast Asia for minor processing activities before shipping products to the U.S. market.
The strategic move by Canadian Solar to establish a 5GW n-type wafer factory in Thailand following the DOC ruling highlights the critical point at which the AD/CVD tariffs apply. These tariffs do not extend to earlier stages of production such as ingot pulling or polysilicon manufacturing, making the wafer production stage a pivotal juncture for potential tariff applications.
The CEA warns that the timing of the American Alliance for Solar Manufacturing Trade Committee's appeal will mean that any importers newly found guilty of tariff circumvention will not be able to benefit from President Biden's executive waiver. Consequently, this could lead to a significant contraction in the supply of photovoltaic (PV) modules serving the U.S. market, transforming an oversupply into an undersupply due to a potential bottleneck in duty-free cells.
The U.S. relies heavily on imports for its solar cell requirements. Mark Widmar, CEO of one of the petitioners, First Solar, emphasized in a statement that none of the crystalline silicon panels installed in 2023 were assembled with American-made solar cells. The majority of the world's solar cells are produced in China and Southeast Asia, regions subject to the AD/CVD regulations.
Furthermore, CEA notes that at the start of 2024, there was an estimated 18GW of crystalline silicon cell manufacturing capacity in countries not subject to AD/CVD tariffs. Even when considering an additional 17GW of thin film module capacity, the supply of crystalline silicon cells and thin film products from non-AD/CVD countries falls short of the projected U.S. demand for 2024.
If the DOC initiates investigations as anticipated, CEA predicts a substantial reduction in U.S. module and cell imports. This could introduce uncertainty into the financial models relied upon by various projects, potentially leading to delays, cancellations, or sales of projects—further disrupting the solar industry's growth and stability.