GreenTech Media was the first to break the news on Tuesday that the U.S. Commerce Department has issued a split decision in the case charging China with unfairly subsidizing its solar manufacturers. Or at least, GTM’s email blast on the news was the first to reach me.
The story in a nutshell — The Commerce Department ruled that government-subsidized Chinese solar manufacturers have been dumping cheap panels in the U.S. market, putting American solar companies at a disadvantage. But, rather than slappingthe Chinese with substantial tariffs — 20 percent or more – Commerce is imposing small tariffs ranging from 2.9 percent to 4.73 percent.
Still, higher tariffs could be on the way, as Tuesday’s decision is apparently only the first part of the process, called the margin finding. Shayle Kann, GreenTech’s managing director of solar research, said, “There will ultimately be an additional finding in the anti-dumping case, and that margin (if found) will be stacked on top of the margin found today. So in the end, tariffs are likely to be higher than the relatively small numbers announced today.”
Those higher tariffs could be announced in May.
Eric Wesoff, GreenTech analyst, predicts the decision will help both smaller, marginal solar manufacturers in the U.S., as well as major players such as First Solar and SunPower. But he writes:
“The downstream solar ecosystem of installers and financiers like SolarCity, SunRun, Sungevity and Clean Power Finance will suffer with higher prices and a corresponding sag in demand.”
I talked with a handful of the Coachella Valley’s solar companies and most, but not all, agreed with Wesoff.
Vincent Battaglia, CEO of Renova Energy in Palm Desert, said as long as the tariff remains low, the impact should be minimal.
“The higher the tax would have been, the more it would have affected downstream integrators,” he said. “We’re the bottom of food chain. It would have hurt job creation. It would have had a very crippling effect.”
At HelioPower, also in Palm Desert, residential sales manager Matt McPherson said his company has tried to cushion itself from any tariffs by buying its panels from distributors rather than directly from Chinese manufacturers.
But whether that effort will work will depend on where the impact of the tariffs hits — at the distrubutor or the installer level — and who will pay the difference, he said.
Nate Otto at Hot Purple Energy in Palm Springs said the best protection for installers and customers is to buy American-made panels.
“We have American-made products that are near the price” of Chinese, he said. “The companies are getting very creative with their products. We’ve noticed a lot of people are very happy that we have a majority of American-made products.”
Otto’s concern was that a decision with high tariffs could have sparked a trade war, with the Chinese retaliating with high tariffs on the American-made silicon chips it buys to make its panels.
Jerry Gugino, founder of Potere Solar in Rancho Mirage, has a different take. He thinks the tariff will provide some much-needed leveling of the playing field for American manufacturers. Before opening Potere, Gugino had plans to open a factory to build solar panels in the Coachella Valley, with the goal of creating up to 125 jobs.
But he found that he couldn’t compete with the Chinese on labor costs, and he also ran into high start-up costs to get the panels UL-certified for sale in the U.S.
“We can make panels just as good as the Chinese,” he said. “The tariff may raise the price of panels a little bit, but the reward is that we’re bringing back jobs.”
In another piece, published Monday, Wesoff concluded that whatever the outcome of the case, it won’t matter. Chinese companies, expecting the tariffs, have already started reorganizing their businesses, working around the fees by setting up regional manufacturing facilities in other countries.
The U.S. might lose solar jobs, he said, but more from the expiration of the Treasury Department 1603 cash grant program than competition from cheap Chinese panels.