OPIS Insights

Watch: Barron’s Senior Energy Writer Laura Sanicola and OPIS Senior Editor of US Solar Colt Shaw discuss what’s ahead for energy this week.

Watch this week’s episode for insights into the state of the U.S. solar market, especially the fallout for importers in the wake of a recent court decision on solar tariffs and how this could affect solar manufacturers going forward.

Transcript:

LAURA SANICOLA: Hi, everyone. This is Laura Sanicola, author of Barron’s Energy Insider, and I’m here today with Colt Shaw, Senior Editor for US Solar at OPIS. Colt, thanks for joining me.

COLT SHAW: Hi, Laura. Thanks for having me back.

SANICOLA: Of course. So let’s talk solar panels and, this complicated case where, earlier this month, the government stopped defending a policy that had been basically protecting solar imports from tariffs.

Can you walk me through what happened and, you know, does this increase the risk that these companies could be charged tariffs retroactively on panels they already brought to the US?

SHAW: Yeah. Definitely. And it is a complicated case, I’ll just try to give a quick kind of overview. A lot of this goes back to the original tariffs from 2012 in the Obama administration.

So, basically, the Biden administration put together a two year tariff moratorium on bifacial solar modules in between June of 2022 and June of 2024. Basically, it just exempted these modules, imported modules from tariffs. There was an ongoing ADCVD case at the time. There was also a circumvention case for previous, tariffs placed on Chinese solar imports.

So last summer, a court ruled, that these, moratoriums were not legal and vacated them. But shortly after that order was stayed, as an appeal was filed by a number of major, solar developers and solar manufacturers as well as the Department of Commerce and, Customs and Border Protection. Obviously, the trade officials, the trade agencies responsible for the moratorium in the first place. So, the kind of most relevant news is about a week ago, the government agencies involved have decided to drop their appeal, which leaves the solar companies and solar trade groups, among which the biggest names are Chinese solar manufacturers like Boviet, JA, Jinko, Trina, Canadian Solar.

It kind of leaves them alone in this fight against what would be kind of a massive bill coming due that was, you know, completely unexpected. People were buying under the assumption that they were free from tariffs during this period. At the same time, the court did grant them a thirty day extension to the remaining appellants for filing their their opening brief, which maybe gives them a little bit of time to kind of regroup and rethink how they’re going to push back against this.

SANICOLA: So help me put this in context. How much of the solar capacity installed over the past two years used modules that were covered by this moratorium, and how dependent was the US market on the Southeast Asian imports?

SHAW: Yeah. Extremely dependent. I mean, the moratorium was put in place specifically because the industry was in contact with, you know, US officials in trying to explain that there just was not sufficient capacity in the US in terms of domestic manufacturing to keep up with demand for solar farms and, you know, residential solar and things like that. So basically, they were saying if you do put this you know, these if you do apply these old tariffs as a circumvention to the circumvention case, it basically would just be a tax on US solar companies.

So they were highly dependent. I mean, the Coalition for a Prosperous America estimated roughly eighty eight gigawatts are could be affected. Eighty-eight gigawatts worth of module capacity, and they put that number between, like, fifty-four and sixty-seven billion dollars. So it’s definitely nothing to sneeze at.

SANICOLA: Are companies already changing where they source their panels from because of this legal risk? And has it started to affect module prices yet? And what else is affecting module prices right now or could be in the future?

SHAW: Yeah. I would say procurement teams are looking elsewhere, but it’s not specifically because of this auction case. In fact, I feel like the them vacating the the order last summer weirdly didn’t get much attention just because there was so much other tariff news. You know, the reciprocal, the IIPA tariffs, a new ADCVD probe on Laos, Indonesia. So I would say just over the recent years, just this you know, the the the ongoing trade pressure has made it so that Vietnam, Malaysia, Thailand, Cambodia are no longer exactly kind of like the hub for all procurement activity.

There are factories popping up across Middle East and North Africa. And, you know, US capacity, at least module assembly has, you know, taken on an increasingly a growing share of mark the market. So I would say there are other market pressures. This has not specifically changed module pricing at all just because it’s very fluid, and there’s constantly new factories trying to keep ahead of, you know, US trade probes and things like that.

But I would say it’s more just a a retroactive risk. I think there’s a lot of thinking, a lot of feeling that a lot of smaller companies, if they really do end up having to pay, you know, an exorbitant retroactive tariff could put them out of business.

The bigger companies that are, you know, really involved in the appeal might have the cash to get through it, but it’s still going to be a significant shakeup. So I don’t see them, you know, kind of pulling back the appeal at all. They’re just gonna kind of have to rethink how they’re gonna do it without the US backing.

SANICOLA: Alright. Well, thanks so much for breaking that down for us, and thanks everyone for joining. We’ll see you next week.