On May 17, 2012, the U.S. Department of Commerce announced its affirmative preliminary determination, announcing duties (tariffs) for Chinese imports of crystalline silicon photovoltaic cells. Duties range from 31 to 249 percent. These duties apply retroactively, back to mid-February. Excluded are thin film photovoltaics and modules produced in the PRC from cells produced in another country other than China. Commerce is currently scheduled to make its final determination in early October 2012.
Expect third tier Chinese suppliers to move their product to other geographies. And the tariffs will temporarily push out the time to grid parity and stall solar adoption in the U.S., hurting consumers, installers, and large field operators.
President Obama meets China’s Vice President Xi Jinping today. A hot topic will be the alleged solar panel dumping by Chinese manufacturers, which has been hurting U.S. manufacturers. Is it dumping? Or competition?
Viewed from learning curve economics, two megatrends have changed the solar module landscape. First, five years of massive national subsidies in Europe and Japan have been slashed or eliminated. Second, the solar industry has matured to the level where it now has its own dedicated silicon cell supply, rather than taking the excess capacity of the semiconductor industry. These impacts mean the industry has reverted to its long term cost curve as the basis for pricing, rather than artificially high prices.
Viewed from the political lens, solar is a lightning rod for near term posturing. Obama’s administration needs recovery from the Solyndra debacle and show that it wants to create jobs. The U.S. industry has suffered, as unexpectedly quick price cuts have damaged bottom lines.
Expect strong language from both sides. But dont expect real sanctions anytime soon. For the plain truth is that its a new, tougher competitive environment for solar modules. Get used to it.