The Future of U.S. Solar Manufacturing

by Kelsey Robarts

Cover Photo Credits

The solar industry hangs in the balance heading into November as the International Trade Commission (ITC) prepares its final comments for the White House on the Suniva-SolarWorld Section 201 trade case. The president’s decision on whether to impose a tariff on imported solar panels and parts could have wide-ranging effects for solar companies, the energy sector, and the entire U.S. manufacturing industry.

Section 201 Cases and Suniva-SolarWorld’s Struggles

The trade case began in April 2017 when the U.S. solar cell and module manufacturer Suniva filed for bankruptcy. Citing the increase in solar panel imports from low-wage manufacturing countries like Mexico, Suniva filed a Section 201 case with the ITC to seek injury and, eventually, to impose tariffs on imported solar panels and parts. SolarWorld Americas also joined the suit when its German parent SolarWorld filed for insolvency. (SolarWorld originally filed for relief in 2014, seeking injury from Chinese and Taiwanese solar products.)

Section 201 trade cases are uncommon, and their remedies tend to be significant trade remedies. As part of the Trade Act of 1974, Section 201 allows U.S. companies to petition to the ITC when they have been significantly injured (or even threatened) by imports in their industry. The Trade Act of 1974 does not require that the foreign companies have committed any unfair trade practices, but the injury must be serious to be confirmed by the ITC.

After a Section 201 case has been filed, the ITC is given 4 months (or 5 in the event of exceptionally complex cases) to conduct an investigation and confirm whether the concerned companies have been seriously injured. They then have another 2 months to decide what recommendations are appropriate. As Section 201 is designed for import relief, the recommendation is generally tariffs, but can be less dramatic policy. For example, Suniva and SolarWorld’s suggestion of a “Buy American” federal tax credit for purchasing solar systems. Once the recommendations are complete, the ITC sends them to the president, who makes the ultimate policy decision.

Suniva-SolarWorld’s Claims and the Solar Industry Opposition

Suniva and SolarWorld were both large voices in the solar industry and claimed to represent the industry as a whole when they filed the 201 case. However, the opposition from U.S. solar and renewable-energy companies and trade associations has been strong. Solar Energy Industries Association, or SEIA, has spearheaded gathering signatories and testimonies petitioning against an import tariff, arguing that Suniva and SolarWorld only represent 500 jobs across the entire solar manufacturing industry, which totals 38,000 workers. The opposition to the claim contained, at the time of the ITC’s injury decision, 27 solar manufacturers, 16 Senators, and 53 House Representatives.

According to Suniva and SolarWorld, increasing solar cell and module imports has led to the collapse of 30 companies in just the past 5 years, which SEIA has not openly disputed. They originally sought a tariff of 40 cents per watt on crystalline silicon photovoltaic (CSPV) cells, and 32 cents per watt on CSPV modules. They have since decreased the CSPV cell request to 25 cents per watt. Suniva has also requested a price floor on all imported solar products, and SolarWorld seeks import quotas on CSPV cells and modules. In its own analysis, Suniva’s firm, Mayer Brown, claims that the tariffs would create a net increase of 114,800 jobs. Other supporters defend the tariff by asserting that it will increase jobs across the entire U.S. manufacturing industry as solar companies create more products domestically. No parties seem to deny that tariffs will have a cross-sector impact, good or bad.

SEIA’s estimates claim that the tariff plan would cause a loss of 48,000 to 63,000 jobs in the next year alone, and anywhere from 60,000 to 84,000 jobs by 2020. Senator Heinrich of New Mexico also testified before the ITC, affirming that his state alone could lose over 1,500 jobs and $45 million to $64 million in wages by 2020 if high imports are chosen.

The ITC has voiced its own concerns about Suniva-SolarWorld’s complaints. Notably, the companies have claimed that the tariffs would bring 35,000 solar manufacturing jobs back to the U.S., but neither has given a plan for how they will proceed post-decision, even though Suniva is currently bankrupt and SolarWorld is insolvent.

While Suniva and SolarWorld’s estimates contradict those of SEIA and the opposition, all parties involved have acknowledged that tariffs have the potential to cause both job creation and loss across the entire manufacturing industry.

ITC’s Decision and the Near Future for U.S. Solar

On September 22, the ITC unanimously agreed that Suniva and SolarWorld had faced serious injury from solar cell and module imports from South Korea and Mexico in particular. A number of other countries, including Canada, Australia, and much of Central and South America were not found to have caused injury to U.S. solar.

October 3 marked the final day of testimony for the ITC’s remedy phase. The ITC has until November 13 to submit its trade remedies and recommendations to the president, who then has another 60 days to make a final decision based on the ITC’s memos. It is most likely that the ITC will recommend some level of tariff.  Although it could recommend any policy brought up by Suniva-SolarWorld or SEIA, a policy recommendation would be exceptional, and trade remedies are standard for the ITC. As the president has made comments disclosing his support for increased tariffs, the near future of the solar manufacturing industry will remain nebulous at least until January.