Why the risk of wildfires may change some of your outdoor holiday plans.
With Trump As Decider, Solar Industry Braces For Possible Trade Barrier
Before a solar project, Mark Holohan usually gives his customers plenty of time to mull over the cost — except lately that’s been difficult.
“We have a sort of panic buying mode in the marketplace right now. Inventories have fallen. Availability has decreased. Prices have risen,” Holohan, the solar division manager at Wilson Electric, recounts over the clatter of machines and workers on the floor of a warehouse in Tempe.
“We used to have product sitting in warehouse that could be shipped in a shorter amount of time. Now we are waiting for another batch to be manufactured,” he said.
That means his company can’t hold a price too long because the math could change. Solar panels are flying off the shelves.
Holohan understands why other installers are in such a rush.
“There’s a threat of a very large price hike looming if the total request on the trade case is granted and so that makes life very difficult for us,” he said.
Others in the industry have been less measured when describing the possible fallout of the latest case in front of the International Trade Commission (ITC).
National trade group Solar Energy Industries Association (SEIA) is calling the matter an “existential threat” that could almost immediately result in the loss of one-third of all solar jobs.
Like many installers, Holohan has relied on a cheap, plentiful supply of solar panels made overseas, mostly in China and Asia. Those low prices have helped solar compete with traditional sources of energy like fossil fuels and grow its workforce to nearly a quarter of a million jobs. Last year, the U.S. installed nearly double as much solar as in the year before. Southwest states like Arizona and Nevada are some of the top markets.
But some domestic makers of solar panels believe that boom has come at their expense.
At the center of the trade dispute are U.S. based manufacturers Suniva and SolarWorld. The companies argue the glut of inexpensive imports, specifically crystalline silicon cells and modules, has dealt “serious injury” to the U.S industry. They’ve petitioned the ITC to impose steep tariffs on foreign imports of that equipment.
Attorney Tim Brightbill of law firm Wiley Rein, which is representing SolarWorld, argues the country’s solar panel manufacturing sector can rebuild and support a thriving solar industry.
“But unfortunately it can’t compete with foreign governments, foreign dumping and subsidies and a global surge of imports, and they shouldn’t have to,” Brightbill said.
In fact, SolarWorld successfully pushed for tariffs on Chinese imports in 2012, but Brightbill said those safeguards have not solved the problem because foreign manufacturers have managed to evade them. As a result, Suniva and SolarWorld have turned to Section 201 of the Trade Act of 1974. It’s a provision designed to give temporary relief to an industry that has suffered serious injury because of increased imports.
The decision would not, however, apply to just a few countries, but rather all panels made anywhere in the world.
“If you lose the manufacturing, then all the innovation, all the know-how, all the investment will go overseas,” Brightbill said.
He cites a study conducted by Mayer Brown, the firm representing Suniva, that a tariff could actually result in more than 140,000 jobs, many of those in manufacturing.
The “injury phase” of the case kicked off this week with an all-day hearing that pitted much of the solar industry against the two manufacturing companies. Regulators have until mid-September to decide whether to let the case go forward. If it does, the decision will end up in the hands of President Donald Trump.
“I think this case aligns very closely with the Administration's goals of increasing U.S. manufacturing,” Brightbill said.
“I don’t see any incentive for him based on his past positions to oppose a safeguard measure,” Aaron Fellmeth, professor of international law at Arizona State University’s Sandra Day O’Connor College of Law. “It’s classic bad politics. It’s a short term fix that ignores the long term problem.”
Fellmeth cites Trump’s criticism of NAFTA, support for U.S. manufacturing and fossil fuels. But he predicts that move may backfire: “There is no example in history of an industry that has prospered in the long run thanks to safeguard measures.”
He said consumers will pay more for solar and the ultimate impacts won’t be confined to the solar industry, either. Countries will try to recoup their losses by imposing duties on U.S. exports, he said.
“You pluck one strand from the web and it may weaken the entire web,” Fellmeth said. “From a simplistic view, it sounds like it is protecting jobs, but any kind of deeper analysis will lead you to conclude that this kind of action has negative reverberations.”
Other sectors of solar manufacturing will suffer too, said Jeff Spies, head of policy at Quick Mount PV, which is based in California and makes equipment to mount solar panels.
“If the intention is to defend U.S. manufacturing, the decision is clear: dismiss this case with no penalties,” Spies said.
The solar supply chain already had 35,000 existing manufacturing jobs, but Spies said those are at risk if the U.S. puts in place the proposed tariffs.
“I can’t even think of anything that comes close to the threat that we see with this particular trade case,” Spies said, “90,000 jobs lost in any other industry would have a lot of politicians freaking out.”
That appears to be happening. A coalition of senators from states like California, Kansas and Nevada recently sent a letter opposing the trade protections. As did a number of conservative free market groups like the Heritage Foundation and the American Legislative Exchange Council (ALEC).
What makes this trade case especially infuriating to many in the solar industry? The two companies asking for the tariffs aren’t even “all American.”
SolarWorld is the subsidiary of a German company, which recently declared insolvency and fired workers from its Oregon-based plant. Founded in Georgia, Suniva declared bankruptcy earlier this year and is majority owned by a Chinese firm.
Mark Holohan of Wilson Electric shakes his head.
“While they have manufacturing here, they aren’t even headquartered here,” he said, “It’s definitely a world market we are dealing with.”EDITOR'S NOTE: The story has been updated to clarify a quote from attorney Tim Brightbill.