US Solar Manufacturing Climbed During Tariffs, Trade Panel Finds

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(Bloomberg) -- American production of solar equipment has increased in the face of tariffs, but that hasn’t stemmed losses by domestic manufacturers, according to a US International Trade Commission report Tuesday.

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At issue are tariffs first imposed by former President Donald Trump in 2018 and extended by President Joe Biden four years later. Under the levies, imports of one-sided crystalline silicon photovoltaic cells and modules face 14.25% duties the rest of this year and 14% for most of 2025.

“The safeguard measure has resulted in positive industry adjustments in terms of significant expansion and investment in domestic CSPV module manufacturing and announced plans to restart domestic CSPV cell manufacturing,” the ITC concluded in its 408-page assessment.

Even so, the industry faces major headwinds, with surging imports that manufacturers say are undermining both the tariff protection and a slew of incentives under the Inflation Reduction Act. Despite the support, “module producers continue to experience operating and net losses,” the commission said.

Manufacturing groups say the assessment points to the need for more relief, heightening pressure on Biden to take further steps to nurture a domestic supply chain divorced from China. Biden could respond to the report by seeking changes such as increasing the duties or spiking an often-used exemption for two-sided solar panels.

Biden’s IRA has driven a swell of investment in domestic solar manufacturing facilities. Jobs, output and other economic indicators tied to US solar module manufacturing have generally climbed since 2017, the year before the tariffs were first imposed, the ITC said.

Solar module producers had a greater share of the market in 2022 compared to 2020. But that belies some intervening declines, as well as a drop in the first half of last year compared to the first six months of 2022. Further, despite net sales increasing by quantity and value between 2020 and 2022, gross profits improving and capital expenditures increasing, the industry was “operating at a loss throughout the review period.”

“The IRA should be a signature achievement of the administration, but those investments could be undercut or negated by the import surge that we’re seeing,” said Tim Brightbill, a partner at Wiley Rein LLP and trade counsel to the American Alliance for Solar Manufacturing. “A lot of these investments don’t pencil out with the import surge and the price declines that we’ve seen. It’s a real threat.”

Manufacturing of photovoltaic cells, which are bundled together into modules and panels, has yet to see an uptick. There has been no domestic production of CSPV cells since Biden renewed the tariffs, the ITC said.

The report shows manufacturers are still experiencing “substantial injury” amid imports, said Mike Carr, executive director of the Solar Energy Manufacturers for America Coalition. Across the industry, “basically, everybody’s bleeding cash.”

Biden faces calls from some domestic manufacturers and renewable developers to quadruple an existing exemption for the first 5 gigawatts of imported silicon solar cells. Advocates of an increase say the current allowance doesn’t provide enough headroom for domestic panel makers that will be reliant on foreign cells in the near term. There’s not enough domestic cell supply yet to keep pace with a wave of planned and announced US panel manufacturing, they argue.

Biden also is under pressure to do away with another exemption for two-sided solar panels that some US manufacturers say undermines the trade protection.

The existing carve-out for two-sided, or bifacial, models was initially intended to ensure a steady flow of the supplies for large, utility-scale solar projects. But those models are being widely imported and used for residential projects, even though there’s no practical advantage in using them on rooftops where just one side is able to generate power.

US imports shifted from single-sided solar products to bifacial models “beginning in 2020 — and accelerating markedly between 2021 and 2022,” the ITC said.

(Updates with comments from trade lawyer and solar manufacturing group from fifth paragraph.)

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