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U.S. Renewables Faces ITC Challenge in Late 2017

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First Paris, Now This:  U.S. Renewables Faces ITC Challenge in Late 2017

Sometimes life just keeps throwing curveballs, and it’s up to you to make the proper adjustments to hit a home run. That has to be how anyone with a vested interest in U.S. renewables feels after a tumultuous couple of weeks at the hands of the U.S. government.

First, President Trump made a huge statement by pulling the U.S. out of the Paris climate accord.  Sure, the agreement was never ratified by Congress, and none of the goals were mandatory, making the departure more symbolic than anything. And, individual entities can simply adopt the standards whenever they like, making formal American participation unnecessary. Nevertheless, public support from the world’s third largest consumer of fossil fuels was considered to be automatic in the battle for a sustainable global energy policy and the withdrawal sent shockwaves throughout energy stakeholders everywhere.

But the real blow came from within the U.S. energy community itself. And, the repercussions could be catastrophic for the nearly 300,00 Americans who work in U.S. solar as well as reshaping energy policy for years to come.

It All Began with One U.S. Solar Panel Manufacturer Declaring Bankruptcy

The story begins with a single solar panel manufacturer, Suniva, based in Georgia. Suniva was once the third largest manufacturer of panels in America and 2016 decided to triple its output by investing more than 100 million dollars into its manufacturing facilities. To pay for this expansion, Suniva accepted a partnership with Shunfeng International Clean Energy, an industry giant out of Hong Kong, China. The deal made Shunfeng the majority owner of Suniva with a 63% stake. Financing for 51 million dollars was arranged through SQN Capital Management of New York.

Unfortunately, although solar energy continued to boom, most of the growth was fueled by cheaper panels from foreign manufacturers. Eventually, Suniva saw the writing on the wall and filed for bankruptcy in April 2017.

ITC Complaint Claims Unfair Foreign Competition for U.S. Renewables

Citing unfair competition from foreign manufacturers, Suniva then sought relief from the U.S. International Trade Commission. On May 25, the ITC announced its formal intention to investigate the matter.

The purpose of the inquiry is to “determine whether crystalline silicon photovoltaic (“CSPV”) cells (whether or not partially or fully assembled into other products) are being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industry producing an article like or directly competitive with the imported articles.” The entire investigative summary outlines the exact concerns of the trade commission and a timetable for resolution.

The ITC Has the Power to Recommend Steep Tariffs on Foreign Solar Panels

Of course, this announcement has thrown the renewable energy industry into an uproar, mainly because Suniva’s complaint seeks tariffs to be applied to foreign goods. And, they are steep. The initial complaint suggests $.40 per watt as a fair tariff and attempts to set a minimum imported panel price of $.78 per watt.

Pricing at this level would be a game changer for the solar industry which has relied on cheap imported panels for sustained growth for years. Most experts agree that a floor price over $.70 per watt will double the cost of solar panels in the U.S. and will endanger jobs in the manufacturing, design, and installation sectors of the industry. The increase in panel cost will directly result in more expensive solar power across residential and commercial applications alike.

A Resolution by the New Year is Likely

Now that the complaint has been formally accepted, the ITC will move quickly toward a resolution, at least by government standards. An injury hearing is scheduled for August 15, 2017, with the injury vote to be held on September 22. Once injuries have been specified, remedy hearings will commence with a final remedy vote on October 31, 2017.

The final remedy will then be delivered to President Trump who has 60 days to modify or implement the findings in their entirety. That’s right, the man who just pulled his country out of the most comprehensive sustainable energy program in history will most likely hold the fate of the American solar industry in his hands as early as December of this year.  And, his record on sustainable energy is not great.

President Trump Will Make the Final Decision

As expected, industry leaders are already circling the wagons and reaching out to the Trump administration to open a dialogue about the future of American energy. They will have five months to plead their case. If unsuccessful, it is possible that import duties and restrictions could be imposed as early as December 15, potentially making solar costs rise precipitously throughout 2018 and beyond.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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