China To The United States: Two Can Play At That Game, Files WTO Complaint Over Tariffs

By Frank Andorka, Senior Correspondent

Reuters is reporting that China has filed a World Trade Organization (WTO) complaint against the United States over the solar tariffs President Donald J. Trump imposed in February.

Who could have seen THAT coming? (Everyone. Everyone saw this coming.)

From Reuters writers Dan Stanway and Muyu Xu:

China’s commerce ministry said a U.S. decision to subsidize renewable energy firms and impose tariffs on imported products has seriously distorted the global market and harmed China’s interests, firing the latest shot in a broader trade conflict.

This is what happens when you start a trade war – the laws of unintended consequences kick in and suddenly you’re fighting on 10 fronts simultaneously.

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I must admit it’s a little rich that the Chinese are accusing the United States of subsidize its renewable energy firms. That must come as a huge surprise to SunEdison, Sungevity, Suniva and the like. But that irony aside, the latest battle of the solar tariffs – a battle that I’d like to remind everyone didn’t have to be fought, especially on behalf of two firms that no longer exist – will be waged and decided in the international trade court.

I’m taking odds right now that the Trump Administration responds to this decision by saying it won’t be bound by WTO rulings because “Something, something, America First, furriners, bafflegab, argle bargle.”

In filing the complaint, the Chinese Ministry of Commerce said this:

As the U.S. violations have severely distorted the global market for products like photovoltaics and seriously damaged China’s trade interests, China’s use of the WTO dispute settlement mechanism is a necessary measure to safeguard its legitimate rights and interests and maintain multilateral trade rules.

According to the ministry, though exports of solar modules have surged 21% this year, only a small fraction went to the United States, with the bulk going to India, a burgeoning solar market with the advantage of being much closer to China than the United States (which makes it cheaper to ship product to it).

No one knows how this dispute will ultimately turn out, but it once again points out how ridiculous the U.S. decision to impose solar tariffs is. Keep this case on your radar; something tells me it won’t be going away any time soon.

An Interview With 8minutenergy: Martin Hermann On Battery Storage And Tariffs And Their Effect On The Overall Industry, Part II

By Frank Andorka, Senior Correspondent

At Intersolar North America two weeks ago, I sat down with Martin Hermann, founder and CEO of 8minutenergy on the heels of their announcement of their Eagle Shadow Mountain project, which was signed at a flat rate of $23.76 per megawatt-hour throughout its 25-year PPA term, or 2.3 cents per kilowatt-hour. In Part 1 of our discussions, Martin Hermann and I talked about just how low he thinks module prices can go. In Part II, which will be posted later this week, Martin Hermann discussed the tariffs and their overall effect on the U.S. solar industry. Here is what he had to say in Part II of our discussions.

Frank Andorka, Senior Correspondent: (FA): Storage is another big topic of conversation in the industry. Where do you see energy storage right now and how does it help the market mature?

Martin Hermann (MH): The headline is that the future of dispatchable solar is here. The value is here right now for dispatchable utility-scale solar to replace gas peaker plants and even combined cycle plants in the sunnier parts of the country. I am optimistic about where we are as an industry and where we are going with batteries, although I’m not as strong an advocate for distributed generation as some others in the industry. We calculated how much it would cost to run the California grid on only distributed renewables plus storage, and we discovered costs would be six times higher than they are now. So while solar-plus-storage is the future of electricity generation, I think it will be primarily on the utility-scale side of the ledger. You need to put the technology where it will work at its strength.

FA:So what is going on with the tariff situation? What kind of impact do you think they will have on the

MH: I think the good news is that our technology at this point is bigger than tariffs and it will continue to grow. At 8minutenergy, we are completely focused on the U.S. market, and are seeing some remarkable projects come to fruition, including our Eagle Shadow Mountain plant in Nevada that is leading the nation as the lowest-cost solar project. Now, the U.S. market overall might grow more slowly in the short-term than countries that are not putting tariffs on solar. India, for example, continues to move forward and they are the second-largest market behind China, so little blips here and there in other markets aren’t going to derail the global solar industry. Besides India, there are other markets that are starting to install massive amounts of solar, which I believe is just a testimony to the overwhelmingly strong fundamentals of the industry.

FA:Do you think China’s decision to stop building new projects in the second half of the year is going to have the effect of flooding the market with inexpensive modules and, if so, do you think it could end up having a positive effect on the U.S. market?

MH: It is too early to tell. I’d be a little cautious about saying that a major policy change in China is going to have a significant effect on the U.S. market. It’s certainly true that there will be an oversupply of modules, but I see those going to markets much closer to China, like India, instead. There will be other countries that will benefit, too. I’m just not sure the U.S. market will be affected significantly by the recent decisions in China.

Import License Fees: A Reasoned Argument For A Tariff Alternative

By Frank Andorka, Senior Correspondent

Let me start by stipulating that American jobs are important to me. Let me further stipulate U.S. manufacturing jobs are of particular importance to me. I come from blue-collar roots two generations back, and I am fully on board with keeping manufacturing jobs in the United States and using the levers of government, when necessary, to do so.

But these tariffs on solar are killing me, and they are doing real harm to the industry. As we’ve reported, companies like Cypress Creek Renewables are canceling enormous numbers of projects, which means jobs not created and jobs lost. The “return” of solar manufacturing jobs in the module segment remains largely mythical, with gains being modest at best and nonexistent at worse.

With each passing month, it becomes ever more clear that tariffs were the wrong governmental lever to pull to save the solar manufacturing industry. What, then, should government be doing instead?

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That’s a question that has been kicked around here at SolarWakeup with its proprietor, Yann Brandt, who is far more involved in the financial end of solar than I have ever been (Yann has actually done deals; I’ve only written about them). And he has a proposal that sounds reasonable to me that I think is crazy enough it just might work: import license fees.

The program would work like this: The U.S. government would add a 3-cent import license fee to every imported module. By our calculations, that would generate $300 million on every 10 GW of imported modules. Compared to the 30% tariffs importers are currently paying, that’s a tiny drop in the bucket and might even allow an increase in inexpensive imports to come into the country. The flow of modules would reignite interest in projects currently in question and would stop the hemorrhaging of jobs from the downstream solar industry – where most of the jobs, as we’ve repeated ad nauseum, are.

Once the money is collected, it could be distributed evenly across all module manufacturers on a simple formula: total money collected divided by the total number of watts produced. The resulting boon to the admittedly struggling U.S. module segment would allow for the companies to come up with the next revolutionary discovery that will reshape the solar industry not just in the United States but the world.

Import license fees are a far more equitable, thoughtful and effective way of rebuilding the U.S. solar module manufacturing industry. But first, the tariffs have to go – and soon. Otherwise, not even license fees will stop the slowing of the project pipeline, damaging the industry for years to come.

More:

It’s Not Just Us: PRI Finds Trump’s Tariffs Are Tarnishing Solar’s Shine

The Tariffs Are Taking A Devastating Toll

11 States To Feel Sting Of Cypress Creek Retrenchment

Low And Behold, GOP Finds Solar Tariffs To Be A Bad Idea

The Tariffs Are Taking A Devastating Toll

By Tony Clifford, CDO of Standard Solar

As a general rule, it doesn’t hurt to be right—but when it comes to the devastating effects the Section 201 solar tariffs are having on the industry, I wish I’d been wrong.

Last year, two foreign-owned companies held the U.S. solar industry hostage to their own selfish needs, and 9,800 people lost their jobs in 2017 alone. And I have to be blunt: 2018 has not gotten off to any better start.

I’ve heard some so-called industry “experts” suggest the tariffs are having the desired effect, i.e. that solar manufacturing jobs are coming back to the United States. They point to a handful of companies that say they’re expanding their module factories and one new factory planned in Jacksonville, Florida, as evidence.

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But as one industry commentator pointed out, the number of jobs gained in the expansions are nowhere near what they’d need to be to make up for the losses. And those who were counting on the Jacksonville factory to make up the difference…well, I’ve got some bad news for you.

The number of jobs that factory is now supposed to be half of what the company had originally pledged (400 vs. 800), and the financial investment isn’t anywhere near the amount of money originally envisioned.

Meanwhile, elsewhere in the industry, jobs are still being lost. So far this year, we’ve seen some installation companies laying off employees by the hundreds, and one major racking manufacturer is closing its U.S. operations (in that case, the tariffs were just the fatal blow to a company already suffering from other financial strains, but without the tariffs, I believe they might have survived).

And here’s the infuriating irony: Those two foreign-owned firms for whom the entire industry held its collective breath as their trade complaint made its way through the process, ostensibly so those two companies could survive and advance?

One company was recently purchased by its well-capitalized competitor, and the other—about which I warned you innumerable times last year—is being sold off for parts (literally) by its rapacious largest creditor.

So one wonders if there might have been ulterior motives there after all. Personally, I think the trade complaint was filed primarily to boost valuations for both of the companies in question. As a result, the executives at both may walk away with impressive golden parachutes while the remains of those companies burn to ashes.

Oh, and by the way, no new jobs will be created at either (though in the one case, the sale might mean the 300 employees at its manufacturing plant might keep their jobs so, you know, small victories and all that).

All of this is to say that when I called last year’s trade complaint destructive and devastating, I wasn’t kidding. And though I currently look like some sort of doomsday Nostradamus, there is possibly light at the end of the tunnel—a national bill to remove the tariffs is currently pending before Congress. But it’s something that’s going to take all of us fighting as hard as we ever have to bring that light to the industry.

Fortunately, the solar industry has been in fights like this before and won, so I have no doubt we can win this one, too. It’s time to pick up the phone and start making calls—the battle is too important to your livelihoods to stand idly by and do nothing.