Monday, May 09, 2022

Probe of Chinese solar-panel makers all but halts imports, slowing clean-energy projects and giving coal a reprieve

"Auxin Solar Inc., a tiny, struggling maker of solar panels, has thrown the entire American renewable-energy industry into chaos," Phred Dvorak and Katherine Blunt report for The Wall Street Journal. "A petition Auxin filed with the Commerce Department accusing Chinese companies of circumventing tariffs spurred a U.S. probe in March that has effectively halted most solar-panel imports, according to utilities and industry groups, delaying solar projects all over the country. Since the Commerce Department agreed to investigate, the complaint has halted panel shipments from Southeast Asia to the U.S., according to utilities and trade groups, because makers overseas worry that they could be hit retroactively with extra duties."

If it's bad for solar, it's good for coal. Dvorak and Blunt note, "Indiana-based utility NiSource Inc. said delays of up to 18 months in solar projects meant it would have to keep coal-fired power plants that are slated for retirement running longer than expected."

The investigation triggered an immediate backlash from utilities and politicians, who warn it "could set back U.S. efforts to transition to cleaner energy sources to combat climate change. A U.S. solar trade group estimates the turmoil could cost the industry billions of dollars," Dvorak and Blunt report. Auxin CEO Mamun Rashid said his employees have been harassed and his company servers hacked. He said hurting the renewable-energy industry is the last thing he wants to do, but that unfair trade practices have made it impossible to compete with Chinese solar-cell factories, the Journal reports.

"The furor over the petition by Auxin, a privately held company based in San Jose, Calif., highlights how dependent the American solar industry is on foreign supplies, most of which are controlled by Chinese companies that can produce large volumes at low prices," Dvorak and Blunt report. "Chinese manufacturers make around 63% of the polysilicon used in most solar panels globally, and more than two-thirds of the wafers that are the next step in the manufacturing process. For the past decade, the U.S. has tried to keep some solar manufacturing at home by levying tariffs on the solar cells and panels that are the final stages of production, including steep duties on Chinese makers. But production instead shifted to Southeast Asian countries such as Malaysia, Thailand, Vietnam and Cambodia, which last year manufactured nearly half of the cells and 80% of the panels that U.S. solar companies depended on for their projects, according to trade associations."

A group of American solar-panel manufacturers complained anonymously to Commerce last year that Chinese manufacturers were getting around tariffs by routing their business through those Southeast Asian countries, but it was rejected because the businesses didn't identify themselves. "Auxin, which had been a member of the group, decided to try again on its own and in the open, according to a person familiar with the matter," Dvorak and Blunt report.

The nation's largest solar manufacturer, First Solar, Inc., has publicly supported Auxin though it isn't part of the petition (and, owing to different materials and manufacturing processes, isn't affected by the tariffs). Samantha Sloan, the company's vice-president of policy, told the Journal that the blowback against Auxin suggests that some "are afraid that the Department will find that Chinese solar manufacturers are, in fact, engaged in circumvention and will hold them accountable for their unfair and unlawful trade practices," she said.

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