The U.S. imports most of its solar panels. A new ruling may make that more expensive
By Eric McDanielWorkers install solar panels on a rooftop at AltaSea's research and development facility at the Port of Los Angeles on April 21, 2023. Mario Tama/Getty Images hide caption
toggle caption Mario Tama/Getty Images Mario Tama/Getty ImagesThe Department of Commerce has determined that solar panel manufacturers in four Southeast Asian countries are evading U.S. trade rules by using Chinese-sourced materials subject to tariffs without paying applicable duties. Those countries — Vietnam, Malaysia, Thailand, and Cambodia — are responsible for of solar modules imported to the United States.
The ruling, unveiled Friday, means that new U.S. solar projects may soon be more expensive: manufacturers whose goods run afoul of Obama-era solar tariffs will be subject to additional import duties on their products.
Those duties, however, will not begin to be assessed until June 2024, when a waiver put in place by the Biden administration is set to expire.
.The world must limit average global warming to about 2.7 degrees Fahrenheit to avoid the most dire effects of climate change. It is not currently on track to achieve that goal.
Already in the United States, average summer temperatures have climbed since 1970 — and winter averages have warmed more than three degrees.
Solar panels in Detroit on Nov. 16, 2022. Paul Sancya/AP hide caption
toggle caption Paul Sancya/AP Paul Sancya/APThe investigation upended the solar industry, until Biden stepped in
The Commerce Department's investigation began in March 2022 in response to a complaint from a small U.S. manufacturer, Auxin Solar. It has been a major source of friction inside President Biden's administration.
The department's inquiry contributed to in solar installation forecasts, according to the Solar Energy Industries Association, as installers worried that their projects if the government imposed retroactive taxes or if the cost of future purchases increased.
"Worst-case scenario, you can think about retroactive tariffs of up to 240%," Leo Azevedo, a solar procurement manager, told NPR in May 2022. "There's just too much risk to order panels right now and that's just the end of it."
Energy Secretary Jennifer Granholm weighed in on the matter the same month.
"At stake is the complete smothering of the investment and the jobs and the independence that we would be seeking as a nation to get our fuel from our own generation sources," Granholm said. "I certainly am deeply concerned about being able to achieve the goal of getting to 100% clean electricity by 2035 if this is not resolved quickly."
Commerce Secretary Gina Raimondo speaks during an address at Brown University on March 15, 2022, in Providence, R.I. Charles Krupa/AP hide caption
toggle caption Charles Krupa/AP Charles Krupa/APCommerce Secretary Gina Raimondo insisted that her department was legally required to investigate. She said the process, conducted by career staff at the International Trade Administration, was entirely apolitical, despite its impact on the administration's energy agenda.
, but waived the possibility of trade duties on solar modules imported from Cambodia, Malaysia, Thailand and Vietnam until June 2024 — as it planned new projects while the inquiry was underway.The president also invoked the Defense Production Act to help expand American solar panel manufacturing and other clean energy technology, and directed the federal government to increase the amount of U.S.-made solar panels and clean technology products it buys.
The president's maneuver ultimately drew congressional backlash. A bipartisan majority passed a bill to strike the president's waiver in May of this year, worried about how the move would impact American manufacturers.
The president and it did not take effect.
President Biden arrives to speak about clean energy at Brayton Power Station on July 20, 2022, in Somerset, Mass. Evan Vucci/AP hide caption
toggle caption Evan Vucci/AP Evan Vucci/APThe investigation concludes
Friday's ruling from the Commerce Department did not come as a great surprise to the solar industry. Investigators had issued in December that found four of the eight suppliers under investigation were circumventing U.S. duties on Chinese-made solar cells. The final investigation revised that finding to five of the eight suppliers.
The ruling means that, in order to be exempt from U.S. duties, all solar providers in Vietnam, Malaysia, Thailand, and Cambodia — including companies not specifically investigated by the Commerce Department — must self-certify that they are complying with all trade rules. Those claims are subject to potential audit.
Mamun Rashid, chief executive of Auxin Solar — the company that launched the probe — celebrated the ruling.
"For years, the Chinese have flouted the U.S. trade remedy laws and today, with Commerce's affirmative country-wide circumvention decisions on Cambodia, Malaysia, Thailand, and Vietnam, we've successfully closed these loopholes," Rashid said in a statement, urging Biden to lift his waiver.
Domestic solar manufacturing is set to soar over the next seven years with investments from Biden's signature climate law, the Inflation Reduction Act. By 2030, the U.S. will of silicon-based solar panels from domestically-sourced parts, up from near-zero today.
But once Biden's tariff waiver expires in June 2024, costs could go up, stalling growth in the solar power industry.
The White House did not immediately reply to a request for comment on the Commerce Department's findings or whether the president would consider extending his solar tariff waiver beyond June 2024.