Solar Development in the US and China in the Shadow of Suniva’s Section 201 Trade Case

As Renewable Energy World has meticulously documented since Suniva, Inc. filed its case with the International Trade Commission (ITC) in April 2017 alleging that imports of solar cells and modules from overseas manufacturers (primarily China) had resulted in serious harm to U.S. domestic manufacturers, the Section 201 trade case has roiled the solar industry in the US and China.

Now that the ITC unanimously found on Sept. 22 that overseas manufacturers’ actions have resulted in serious harm to the U.S. solar manufacturing sector, the stage appears to be set for the Trump Administration to impose tariffs. Unfortunately, China is in a much better position to weather this unproductive trade skirmish than the U.S.

Procedurally, the ITC will hold a hearing on Oct. 3to consider what remedies should be imposed. The recommendations of the ITC on remedies will be forwarded to the White House by mid-November, which in turn tees up the opportunity for the Trump Administration to impose tariffs on imported solar cells and modules in the name of protecting U.S. manufacturers and ostensibly U.S. jobs. Of course, the reality is that the loss of job growth from the inevitable slowdown in solar installations as tariffs increase costs, will vastly exceed any increase in growth of jobs in the U.S. solar manufacturing sector.

The Trump administration’s actions will undoubtedly result in a blow to a U.S. solar industry that has grown impressively, but still lags far behind the Chinese. The actions of the Trump Administration in the Suniva case will serve to impede the U.S. solar industry, without significantly helping to reinvigorate the U.S. solar manufacturing sector.

Meanwhile, because China has become both the world’s largest producer of solar cells and modules, and the largest consumer of solar power over the last several years, though the expected punitive tariffs certainly will reduce Chinese exports of solar equipment to the U.S., it will not impede the Chinese’ breathtaking growth in solar power installations. This will only serve to hamper solar power growth in the U.S., while redirecting more resources to solar installations in China, which likely will lead to even more rapid growth in China and a widening lead for China in the adoption of solar power.

Since 2013, when China first exceeded Germany in solar capacity, in the ensuing four years, China has remained the number one country worldwide in solar power. As of the end of 2016, with worldwide installed solar power capacity reaching approximately 303,000 MW, China, at 78,000 MW accounted for 25.7 percent of the total.

As was mentioned here recently, by mid-year 2017 the Chinese already had exceeded 100,000 MW in installed solar power capacity, almost double the installed capacity of solar power in the U.S. (estimated to be approximately 50,000 MW); this milestone was achieved a full four years earlier than the Chinese had originally estimated in the 13th Five Year Program for Solar Power Development. Though China was indisputably the number one solar power nation in the world, the gap in growth going forward (where the U.S. had the second fastest growth in solar installations, after China in 2016) will be ever larger for the foreseeable future as the Section 201 tariffs take effect.

The unfortunate effect of the impending impediment to the continued healthy development of the U.S. solar industry which the Trump Administration surely will place in the way of the U.S. solar industry, is an ever growing divide between the U.S. and China.

The Chinese meanwhile are breaking record after record in solar power installations, thanks in large measure to a robust and very competitive solar equipment manufacturing industry that has driven down the cost of solar cells and modules and an enlightened public policy by Beijing. One indicator underscores the strength of the Chinese solar industry and how it was poised to lap the U.S. solar industry, even before the impediments of the Suniva 201 tariffs take effect: the Chinese press reports that in June, 2017 alone the installed capacity of solar power in China totaled 13,500 MW, which was a mere 1,000 MW less than the total that the U.S. solar industry installed for all of 2016!

And so while the Trump Administration is poised to feed us more empty calories of trade protectionism, which will surely impede the further ramp-up of U.S. solar installations and the dramatic job growth that that entails, the Chinese remain on track to continue to dominate solar equipment manufacturing worldwide, while building and deploying the world’s fastest growing and most significant installed base of solar power. 

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Lou Schwartz is a lawyer and China specialist whose firm, China Strategies, LLC, focuses on the environmental and renewable energy sectors in China and provides its clients a range of support, including research and analysis, due diligence, merger and acquisition, private equity investment, compliance and data security. Lou has written and lectured widely about China and has taught law and development in China at the university level.

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