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<\/a>Credit: Oregon Department of Transportation<\/a><\/p><\/div>\n Reporting from Wood Mackenzie suggests that just the Dept. of Commerce\u2019s investigation (not a final ruling) into alleged tariff circumvention by Southeast Asian solar panel manufacturers will eliminate 16 GW of solar panels from the U.S. supply chain \u2014 an amount equal to almost the entire volume of utility-scale solar installed across the country in 2021. Advocacy group SEIA is also estimating<\/a> that the solar industry will lose 70,000 of its 231,000 jobs because of the DOC investigation. Add in continued supply interruptions from a U.S. Customs withhold release order, COVID shutdowns and now a war in Ukraine, and optimism falls further into the background.<\/p>\n Or does it? Is the sky really falling? It depends on what market you\u2019re in and how well you\u2019ve planned for 2022, said the developers, installers and suppliers Solar Power World<\/em> spoke to. One thing is certain: the second half of this year is going to look a lot different than what everyone predicted.<\/p>\n The latest Chicken Little saga comes amid the DOC investigation<\/a>, as requested by California-based solar module assembler Auxin Solar. Auxin claims<\/a> that Chinese crystalline silicon solar panel makers have moved portions of their manufacturing operations to Southeast Asia to circumvent antidumping and countervailing duties (AD\/CVD) that have been in place since 2012<\/a>. Commerce is looking into solar panel operations in Cambodia, Malaysia, Thailand and Vietnam to see if Chinese wafers, aluminum frames, backsheets and more have been used<\/a> in exported cells and modules. If enough Chinese product is found in Southeast Asian module exports, DOC could extend the AD\/CVD to the mentioned countries.<\/p>\n Credit: Nexamp<\/p><\/div>\n Already, module supply from Southeast Asia \u2014 a region that supplied 80% of U.S. demand in previous years \u2014 has been limited or completely halted. A survey<\/a> to SEIA members found that 75% had solar panel deliveries canceled or delayed within a few days of the DOC starting its investigation at the end of March. Almost all those surveyed were predicting this investigation to have a severe or devastating impact on their businesses.<\/p>\n Commerce is expected to present preliminary findings of its investigation on August 30, 2022, along with a preliminary duty rate for all importers of the affected products, should the department find fault. A final decision would then be made on January 26, 2023. That timing of August to January is tricky for those purchasing large quantities of modules, as Q3 2022 is when most begin buying for 2023 projects. Will there be enough supply, and how much will it cost?<\/p>\n Trying to prepare for 2023 is where community solar developer Nexamp<\/a> is focused right now, said director of supply chain Bilal Ahmed.<\/p>\n \u201cWe\u2019re buying so far ahead of time, we\u2019re good almost halfway through 2023, which allows us a couple months of wiggle room,\u201d he said. \u201cBut to be able to stay on track, we need to get orders out in the next quarter. We can push the Q2 orders maybe to Q3, however the AD\/CVD preliminary decision on this case doesn\u2019t come until August. And even then, if it\u2019s anywhere remotely as vague as it is today or how things transpired in the previous AD\/CVD case<\/a>, if people held out until the very last minute because there was really no direction, we would be forced to make some hard decisions.\u201d<\/p>\n Utility-scale developer Silicon Ranch<\/a> just signed a 4-GW module supply agreement<\/a> with U.S. thin-film module manufacturer First Solar, which should ease supply worries through 2025. But CEO Reagan Farr acknowledged that not every major developer has that type of security.<\/p>\n \u201cI\u2019ve seen that 20 to 30% of projects last year didn\u2019t [reach commercial operation date] on time, and I\u2019ve heard that ratio may go up to above 50% this year,\u201d he said. \u201cI think you\u2019re going to see a lot of projects come offline or have to be renegotiated all the way through to the offtake agreement, and that\u2019s going to be impactful to the industry.\u201d<\/p>\n The main message behind Auxin\u2019s Commerce petition is that Asian solar panel makers are hurting domestic manufacturers. U.S. module companies cannot compete with cheap imports, no matter where they\u2019re from. But most of the industry says continued tariffs are not the solution to these domestic woes.<\/p>\n \u201cThese tariffs have been around for 10 years, and we haven\u2019t seen the increase in domestic manufacturing that\u2019s required to meet the demand in the United States,\u201d said Geoff Fallon, COO for utility-scale developer BayWa r.e. Solar Projects<\/a>. \u201cThis isn\u2019t the right mechanism to grow that base. The Dept. of Commerce taking up this investigation is just completely contradictory to the messages coming from the White House.\u201d<\/p>\n The Biden Administration has stated it wants solar to provide 45% of the country\u2019s electricity by 2050, something that is unattainable if domestic manufacturing and foreign solar panel imports are limited.<\/p>\n \u201cWe\u2019ve said that tariffs are not the right way to incentivize manufacturing, and that it is going to take time and policy commitment to move manufacturing into the United States at the scale that\u2019s needed,\u201d\u00a0said SEIA president and CEO Abigail Ross Hopper in a press release.<\/p>\n First Solar thin-film panel manufacturing in Ohio<\/p><\/div>\n Big module buyers like Silicon Ranch can help support domestic manufacturing in the meantime by investing in and showing public support for U.S. companies.<\/p>\n \u201cThe relationship we signed with First Solar, our focus was wanting increasing percentages of domestic supply. I wanted to incentivize them to continue to invest in U.S. manufacturing. I\u2019ve been doing that not just with my module manufacturer but all of our equipment suppliers where it makes sense,\u201d Farr said. \u201cThese dialogues didn\u2019t start yesterday. They started a year and a half ago. Why are we buying steel from Asia? Surely, we can make steel and do make steel in the U.S. Trying to lock down and create aligned incentives with our equipment suppliers is a meaningful thing the industry needs to do.\u201d<\/p>\n Nexamp is doing the same to secure some supply, albeit a smaller amount for the commercial developer averaging 100 MW of installations each year.<\/p>\n \u201cWe\u2019re able to get American supply, but it\u2019s a drop in the bucket for what the need is across the board,\u201d Ahmed said. \u201cWe have a couple local manufacturers we\u2019re working with. We\u2019re doing extensive master service agreements where we\u2019re investing, trying to help them out with where we can add value outside of a straight cash deal.\u201d<\/p>\n No matter the outcome of the Dept. of Commerce\u2019s decision, the rest of 2022 will be unpredictable for all markets, said David Dunlap, VP of operations for distributor BayWa r.e. Solar Systems<\/a>.<\/p>\n \u201cResidential will fare better than utility, but it will not be unscathed by a long shot,\u201d he said. \u201cFear and uncertainty is its own disrupter. Even if people can continue to get product, just acting from a place of reactive, fear-based decision making is never a good thing.\u201d<\/p>\n The residential market has another bump in the road, with popular solar panel brand LG exiting the market<\/a> this June.<\/p>\n \u201cThere\u2019s no doubt that there\u2019s a big gap in the residential market. And that gap isn\u2019t easily closed when you have these competing issues like WRO, AD\/CVD, rising prices, supply chain constraints,\u201d Dunlap said. \u201cI encourage people to assess their own business resilience and business agility. If they were heavily dependent on this high-risk-profile product, what could you do to change to a different opportunity?\u201d<\/p>\nFuture planning in limbo<\/strong><\/h4>\n
<\/a>Investing in domestic manufacturing<\/strong><\/h4>\n
<\/a>Shifting focus<\/strong><\/h4>\n