Solar Dumping

In a preliminary ruling, the Department of Commerce has found that Chinese solar panel makers “dumped” solar panels on the U.S. market, illegally selling them at unfair prices. Therefore, the department says, some 61 Chinese manufacturers of crystalline silicon photovoltaic cells and panels will be subject to tariffs of about 31%.

The department’s May 17 announcement is a response to dumping charges brought last year by seven solar panel manufacturers with facilities in the U.S. (C&EN, Oct. 31, 2011, page 9). The companies are led by SolarWorld, which has facilities in Oregon, California, Sweden, and Germany and has its headquarters in Germany.

The group charged that illegal Chinese government subsidies allow Chinese companies to sell cells and panels below their manufacturing costs.

“The verdict is in,” says Gordon Brinser, president of SolarWorld Industries America. “In addition to its preliminary finding that Chinese solar companies were on the receiving end of at least 10 [World Trade Organization]-illegal subsidies, Commerce has now confirmed that Chinese manufacturers are guilty of illegally dumping solar cells and panels in the U.S. market.”

SolarWorld and the other companies stress that the decision underscores the importance of domestic solar manufacturing to the U.S. economy and to U.S. jobs. They say that the ruling will also help determine whether the U.S. will be a global competitor in clean technologies or outsource that industry to China.

Last year, prices of Chinese solar modules plummeted more than 40%, causing a flood of cheap products into the U.S. market and driving some U.S. companies out of business. But the influx made solar modules more affordable than ever in the U.S. and helped increase solar panel installations and spur sales of solar-related equipment. Because of this last effect, not all U.S. solar panel companies support the dumping charges of SolarWorld.

The Coalition for Affordable Solar Energy (CASE), a broad solar industry trade association, notes that the vast majority of the 100,000 jobs in the U.S. solar industry are in sales, marketing, design, installation, engineering construction, and maintenance of projects and not in manufacturing of solar modules.

“These jobs depend on affordably priced solar panels, and companies would have to lay off workers if solar panel prices rise as a result of this investigation,” the coalition states. Another U.S. solar industry trade group, the Solar Energy Industries Association (SEIA), warns of a trade war and urges the U.S. and Chinese governments to quickly resolve the growing solar trade conflict.

SEIA also notes that the U.S. solar industry goes well beyond producing solar cells and modules: It includes billions of dollars of recent investments in production of polysilicon, polymers, and solar-manufacturing equipment, products that are largely destined for export.

“If the U.S.-China solar trade disputes continue to escalate, it will jeopardize U.S. solar investments,” SEIA says. The U.S. solar industry grew more than 100% last year, according to an SEIA study. That study also finds that U.S. solar industry exports to China last year exceeded Chinese exports to the U.S. by $240 million when all solar-related products, raw material, and capital equipment are included.

Suntech Power Holdings is the world’s largest maker of solar panels and the primary Chinese company affected by the Commerce Department’s ruling. It says that the decision could lead to a “deepening solar trade war” and vowed to challenge the decision. “These duties do not reflect the reality of a highly competitive global solar industry,” Suntech officials say.

“Nothing we are doing can start a trade war,” SolarWorld’s Brinser says. “The government of China did that by mounting massive illegal trade practices in 2009, and we are trying to stop them.” He adds that bankruptcies and downsizing have cost thousands of U.S. jobs and affected at least 12 U.S. solar panel companies.

Shyam Mehta, a solar analyst with the economic research firm GTM Research, predicts that the impact of the tariffs could be “significant.” But he notes that Commerce’s decision is preliminary and will be contested by Chinese manufacturers as well as some U.S. solar companies (see page 23).

China-based manufacturers are likely to increase their prices for modules and cells sold to the U.S. market, he says, and in the short term, that may dampen demand and slow the growth of solar installations in the U.S.

However, he adds, “Chinese firms are hardly likely to stand still” while the U.S. finalizes its ruling.

For instance, Chinese companies could set up solar-cell manufacturing outside China and then assemble the modules in China, he said. This would allow them, under the May 17 ruling, to bypass import tariffs with only a slight increase in cost, he says.

The department’s decision is preliminary, and the Commerce Department notes that a final determination will not be made until later this year.