Trump’s Titanic Gift to China’s Solar Makers

(Bloomberg Businessweek) -- For most of the past year, there’s been a big hole in President Trump’s China tariffs—one in the shape of a solar panel. Companies that build America’s major solar farms spent 2018 and early 2019 begging the administration to exempt jumbo versions of two-sided “bifacial” panels used to create vast, utility-scale solar farms. Relatively few bifacials are made domestically. For some reason, when the administration finally agreed to issue an exemption, it was much broader than the industry had suggested. So broad, in fact, that it reshaped the market and left Chinese panel makers as dominant as ever..Since June, all bifacial panels have been tariff-free, and Chinese panel makers are turning the once-niche design into a cornerstone of their U.S.-aimed product lines. A trade court has temporarily blocked the White House’s efforts to kill the exemption. Trump is expected to decide as soon as next month, as part of a scheduled review, whether to make the otherwise-harsh solar tariffs even harsher. Trade adviser Peter Navarro has said “the loophole for bifacial solar panels China is currently exploiting needs to be slammed shut.” The White House declined to comment..Solar power is one of America’s cheapest sources of electricity, and installing it is one of its fastest-growing occupations. Chinese companies’ cheap panels are a big reason: “They’ve lowered the price of solar for the whole world,” says Noah Kaufman, a Columbia economist with a focus on global energy policy. They also crowded out domestic U.S. manufacturing, meaning the White House could satisfy ailing homegrown panel makers as well as its favored fossil fuel industries by making the Chinese models less competitive. The administration had solar panels—including bifacials—among its first set of tariffs in early 2018. The tariff started at 30%, with annual decreases scheduled in years two through four. (Those decreases are among the potential subjects of the scheduled tariff review.).Even the threat of the tariffs pushed many utility-scale developers to delay or temporarily shelve solar plant projects as early as 2017. The Solar Energy Industries Association, a trade group, pushed for an exemption on hefty bifacials used in utility-scale solar farms. (Such panels can weigh more than 70 pounds, and they’re up to a third longer than residential models.) For more than a year, a group representing about a dozen major solar farm companies lobbied Washington for the move, including executives from Southern Current, SPower, Clearway Energy Group, and Cypress Creek Renewables..Some proponents were skeptical they’d get the exclusion, but the Department of Energy seemed more receptive than the Department of Commerce to their argument: that big bifacial panels represented an obscure but critical market that American companies could turn into a mainstream business. “This is the chance to bring back the manufacturing base,” the argument went, according to Bret Sowers, a vice president at Southern Current. They framed the exemption as harmless to makers of residential panels, because the bigger bifacial modules are tough to put on the roof of a typical home. At the time, there were few in circulation, and vanishingly few made in the U.S..The Energy Department didn’t respond to a request for comment, and the Commerce Department deferred to the Office of the U.S. Trade Representative, which didn’t respond, either..In June, solar advocates thanked Trump for granting the exemption, but they soon realized they’d won more than they bargained for—that instead of sparing only the utility-scale bifacial panels, the administration hadexempted all bifacials. The day after the exemption was made public, BloombergNEF, which researches clean energy markets, estimated that motivated Chinese manufacturers could convert single-sided production lines to produce bifacials if they were willing to shut down production for two months..Neutering the tariffs, the broad exemption has been a disaster for U.S.-based panel makers, said Andy Munro, general counsel of Hanwha Q Cells America, the local arm of a South Korean manufacturer. “It is an existential threat to U.S. solar manufacturers,” he said in a statement. In December, U.S. trade court Judge Gary Katzmann issued a preliminary injunction freezing the administration’s efforts to roll back the exemption, saying the government hadn’t followed the procedure due any such move, including providing adequate time for public comment..For all the chaos the tariffs and exemption have sown, the policies have encouraged some new U.S. manufacturing. A few solar panel factories have opened in the U.S. in the tariffs’ wake. Still, the vast majority of U.S. solar jobs aren’t in manufacturing..The industry is negotiating with the administration to resolve the exemption withdrawal, but, if a comment period is required, it may remain in place for at least a few more months. In the meantime, the economics continue to favor panels made outside the U.S., says Jigar Shah, co-founder of the green venture firm Generate Capital Inc. “There’s no way,” he says, “to make solar panels here as cheaply as you can in Asia.” —With Justin Sink Read more: A $1 Billion Solar Plant Was Obsolete Before It Ever Went Online.To contact the editor responsible for this story: Jeff Muskus at jmuskus@bloomberg.net, Lynn DoanJon Morgan.©2020 Bloomberg L.P.

Trump’s Titanic Gift to China’s Solar Makers

The White House put an easily exploited loophole in its tariffs, and the effort to undo it has been held up in court.

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