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U.S. May Impose China Solar Duty in Threat to Installers

The U.S. International Trade Commission is expected to rule today on a complaint that’s intended to protect the U.S. solar industry and may hinder more companies than it helps.

The commission is set to make a preliminary decision on whether solar products imported from Taiwan and China harmed U.S. producers, a protectionist strategy sought by a U.S. panel manufacturer that’s part of the industry’s slowest-growing segment.

Duties would help manufacturers including the U.S. unit of SolarWorld AG (SWVK), which competes with low-cost panels from Asia and filed a complaint on Dec. 31 with the U.S. Commerce Department and the Trade Commission. Trade barriers could raise prices on imported panels and hurt developers such as SolarCity Corp. (SCTY), which buy them to satisfy booming demand for rooftop photovoltaic systems.

“It’s infuriating what SolarWorld is trying to do,” said John Berger, chief executive officer of Sunnova Energy Corp., a Houston-based rooftop solar developer. “It’s a disservice to the industry. It will be negative for U.S. employment.”

SolarWorld is acting on behalf of 244 U.S. solar companies and disputes the notion that duties will boost prices.

“Anyone who claims prices will definitely go up is holding water for the Chinese manufacturers,” Ben Santarris, a spokesman for the company’s Hillsboro, Oregon-based U.S. unit, said in an interview Feb. 12. “We hope to restore true competition. We cannot compete with the Chinese government. We’re open to any solution that gets the central Chinese government out of our marketplace.”

Earlier Suit

This isn’t SolarWorld’s first trade suit. The Commerce Department imposed duties in May 2012 of as much as 250 percent on solar cells produced in China, in response to a complaint filed by its U.S. unit on behalf of U.S. solar manufacturers.

Chinese manufacturers responded by buying some solar cells from Taiwan, allowing them to avoid most of the duties. The current case would expand the protections by applying duties to products from Taiwan.

Solar imports from China were worth about $2.1 billion in 2012 and from Taiwan about $513 million, according to the Commerce Department.

“A loophole in the trade remedy in our U.S. cases enabled China to circumvent import duties,” Frank Asbeck, founder and chief executive officer of Bonn-based SolarWorld, said in a Feb. 5 open letter to President Barack Obama. “Some in the United States want only the cheapest solar panels they can find, without regard for issues of fairness -- or product quality.”

Solar Jobs

Out of almost 143,000 jobs in the U.S. solar industry last year, about 21 percent were manufacturing positions, according to a January report from the Solar Foundation. That figure increased by 0.4 percent from 2012, the slowest in the industry.

Project development jobs increased 52 percent, the fastest in the industry, and installers swelled 22 percent. The two segments made up 57 percent of U.S. solar jobs, and should comprise 59 percent this year, while manufacturing slips to 19 percent.

Both sides acknowledge the loss of solar manufacturing jobs to China and disagree over how to address the issue.

“If the U.S. wants to promote solar manufacturing this is the wrong prescription,” said Jigar Shah, president of the Coalition for Affordable Solar Energy, which represents developers that installed more than 200,000 photovoltaic systems over the past two years.

Installation Jobs

“You’ll be trading installation jobs that can’t be outsourced for jobs that companies like Apple ship to China all the time,” he said yesterday on a conference call.

Solar developers including SolarCity and Sunrun Inc. want the Trade Commission and the Commerce Department, which imposes duties, to reject the complaint. The Trade Commission is expected to rule tomorrow on anti-dumping issues, whether solar products from Taiwan and China are sold in the U.S. for less than their production cost, and on countervailing duties, for industries in other countries that receive unfair government subsidies.

If the commission determines that the imports “threaten material injury” to U.S. producers, the Commerce Department is expected to issue a preliminary determination on countervailing duties by March 28, and on anti-dumping by June 11.

“It’s going to be an uphill battle if the preliminary decisions favor SolarWorld,” Shah said. “If module prices go up, there will be job losses.”

Negotiated Settlement

The Solar Energy Industries Association, the industry’s trade group, opposes the suit, and instead favors a negotiated settlement between the U.S. and China, a tactic that helped avert a renewable-energy trade war between China and the European Union in July.

“We went down the litigation road before and it didn’t work,” said John Smirnow, vice president of trade and competitiveness at the Washington-based industry group. “There are better ways to address market unfairness.”

The case is likely to affect developers’ panel-purchasing decisions. During the last trade dispute, Sunnova briefly refused to buy SolarWorld modules for customers, a tactic that Berger may revive.

“They do make good panels,” he said. “But with this, I may have to blacklist them again.”

To contact the reporter on this story: Christopher Martin in New York at cmartin11@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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