There was mixed reaction yesterday to President Joe Biden’s move to institute a two-year pause on the imposition of additional tariffs and duties on imported Chinese solar panels. The Commerce department had been investigating allegations of dumping and slave labor by Chinese manufacturers. The Administration rationalized its creation of a two-year “safe harbor” for Chinese panels as a “bridge” to help spur construction of stalled U.S. solar power projects.
Naturally, the U.S. manufacturers were unhappy that the president was ushering in unwanted competition from questionable players. California-based Auxin Solar, criticized Biden for interfering with the Commerce department’s “quasi-judicial” process. While Arizona-based First Solar
FSLR
said Biden’s move undermined the domestic photovoltaic panel industry. According to First Solar VP Samantha Sloan, Biden’s move “sends the message that companies can circumvent American laws and that the U.S. Government will let them get away with it.” The move was an “ineffective use of taxpayer dollars” which “falls well short of a durable solar industrial policy,” wrote Sloan in a statement. “Had the administration consulted with America’s solar manufacturers, they would have known as much.”
Biden sought to balance the impact to the likes of First Solar by also using his emergency powers to invoke the Defense Production Act in support of domestic production not just of solar, but also electric heat pumps (to help replace furnaces burning oil and gas) as well as electrolyzers (to make hydrogen) and platinum group metals required for emissions controls and catalytic converters.
Naturally, solar installation companies don’t mind. They want to woo new customers with cheaper, more plentiful panels. John Berger, CEO of publicly traded Sunnova, applauded the move. “A two-year moratorium is a great step in the right direction,” said Berger in phone interview. “Tariffs not only hurt the American economy and the consumer, they also stifle innovation and competition in the market.” Berger insists that Sunnova and its partners conduct due diligence on Chinese suppliers to ensure that their panels or components are not made with Uighur slave labor from China’s Xinjiang region. “We don’t want anything we wouldn’t be proud to install. The solar industry has done more than any other to make sure we screen that problem.” Berger says he’d love to see additional assistance in the form of a renewal of federal investment tax credits on solar projects. Sunnova shares climbed 10% on the news.
There’s ample irony here, says Frank Maisano, policy strategist at law firm Bracewell. “At the heart of the solar tariffs case is the thought that China and southeast Asian states subsidize solar. Well, the Defense Production Act package does the same thing.” It will be tough for America to out-subsidize China, wrote James Taylor, president of the Heartland Institute think tank, in a statement Monday. “There is little the Biden Administration can do to make American solar panels economically competitive with China,” which is “one of the few nations that will tolerate the environmental devastation of rare-earth mineral production necessary for solar panels.”
First Solar says it was already set to double its domestic manufacturing without help of the Defense Production Act. It’s building a third manufacturing plant in Ohio that will increase total output to 6 gigawatts of panels per year. Shares in First Solar fell nearly 4% on the news, and are off 40% since peaking in late 2021.
Other beneficiaries of Biden’s move were surprised. “We were not asking for this,” said Francis Dietz, VP of public affairs at the Air Conditioning, Heating and Refrigeration Institute. Electric heat pumps are already a growing business for the likes of Carrier, Trane and Rheem, and Dietz says that the biggest help from the Defense Production Act designation would be in helping to resolve a shortage of trained factory workers and installers.
Apparent winners from Biden’s move so far include Albuquerque-based Array Technologies, which makes systems to hold and operate panels at utility-scale solar farms; it was up 18% yesterday. Meanwhile, smaller Austin-based FTC Solar surged 32%; it makes systems that help panels tilt during the day to track the sun. Shoals Technologies of Tennessee, manufacturer of wires and connectors used in solar installation, jumped 21%.
For more, check out my Forbes Magazine story from last year on Shoals billionaire founder Dean Solon:
