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For US President Joe Biden, it is Hobson’s choice over Chinese solar panel imports. His new move to withhold tariffs for two years on imported Chinese-made silicon solar panels was either praised or criticized.
The announcement was made amid an ongoing investigation by the US Department of Commerce. Possible trade agreement breaches are being discussed, which shocked many in the region.
Getting the US Solar Panel Market Back on Track
The US has been one of the slowest countries to have solar power. The latter is the fastest growing energy source in the US. Betting on it means a rapid reduction in demand for fossil fuels.
A US Department of Energy report recently reported that solar energy has the potential to meet 40% of America’s electricity needs by 2035.
President Biden, however, has a tough call to make. It may take them more years to incentivize local manufacturers. This hesitation would mean further delays in US solar projects. Another option would be to quickly adopt foreign manufacturers (read: largely Chinese). The maneuver will save time and establish the necessary infrastructure to move forward.
Impact of solar panel imports on US manufacturers
Former President Donald Trump imposed tariffs on imports of solar panels to curb the influx of cheap goods. As a result the development of the solar power sector was halted. There has been no follow-up, such as getting Congress to fund American manufacturers appropriately.
For example, President Biden has authorized the Defense Production Act (DPA) to accelerate domestic solar production. However, Congress has not explicitly appropriated the additional funding. As a result, the administration cannot use DPA for solar projects.
America needs a strong manufacturing capacity to meet its clean energy goals. This is not happening right now, say Biden supporters. The administration requires U.S. manufacturers to offer financial incentives to manufacture solar power panels and other components. This helps to offset higher domestic production costs, which are estimated to be about 40% higher than imports.
US silicon solar panel infrastructure needs stimulation
The US Congress is moving in this direction, but it will take time to implement it. For example, the House-Pass Build Back Better bill would extend the investment tax credit. Production tax credit will also encourage the production of solar panels. As a result, the cost on the total output will be reduced. Manufacturing efficiency will also increase.
But time is something that America can no longer spend on green energy resources. Time constraints prompted Biden’s move to temporarily allow imports.
However, US companies and pro-US advocates are not happy and are crying foul.
This report tells a cautionary tale to US solar companies. If the Commerce Department investigation rules that the Chinese dump cheap goods, the US could impose retroactive tariffs of up to 240%. This will further increase the prices of panels. The ruling would also jeopardize half of the solar projects planned for completion in the US this year.
Fluctuations in federal policies that cause industry stress
Matt Smith, a consultant at SolarWorks, envisioned a way to avoid the solar supply issues related to Asian. One suggestion was to buy US source solar products from Canada. The second was to get the product from a Norwegian firm distributed through Singapore.
American manufacturers are trying to cope with ever-changing federal policy. The issue is being further complicated by the COVID-19 pandemic. Difficulties have arisen in convincing investors to finance domestic solar projects.
The new two-year rule has brought China into a happy state. The country was expected to add 75 to 90 gigawatts (GW) of solar power in 2022. This number is more than the record increase in capacity last year.
China Photovoltaic Industry Association (CPIA) Honorary President Wang Bohua told delegates at a recent conference that China could add 83-99 GW of new capacity every year from 2022 to 2025.
With President Biden’s new decree, that figure could climb further by the end of 2022.
Editor’s Note: The summary bullets for this article were selected by Seeking Alpha editors.