Now-fading U.S. solar industry star could ignite global trade war before burning out
The once brightly shining star that was Suniva Inc., dimmed by an April 17 bankruptcy protection filing, now hangs over the solar industry as a controversial icon representing a potential worldwide trade war.
Since its inception in 2007, the Norcross, Ga.-based solar manufacturer Suniva had become a top U.S. supplier of crystalline silicon photovoltaic (CSPV) cells and modules, which are used to build solar panels.
To make what becomes a painful story short, the sale of Suniva products got undercut by Asian competitors’ cheaper-priced products, eventually forcing the manufacturer’s subsequent Chapter 11 filing. Suniva then filed an April 27 petition with the U.S. International Trade Commission (USITC) under Sec. 201 of the Trade Act asking it to protect the American solar industry from these cheaper imports by raising trade barriers against several countries.
Suniva has lodged an alarming complaint, say stateside opponents, because the final decision in any USITC case would be made by U.S. President Donald Trump. Solar stakeholders fear Trump, a coal supporter and hard liner on trade, might quash the solar industry’s overall growth by approving stronger tariffs on all solar panels imported into the United States, as Suniva has requested.
And while Suniva’s complaint might benefit solar manufacturers, the entire solar sector could suffer, the U.S. industry’s trade group says.
“We see this as an existential threat to the industry,” said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA), during a press conference call on Monday.
SEIA’s 3 points
In its own letter filed May 12 with USITC Secretary Lisa Barton, SEIA formally opposed Suniva’s import relief request on CSPV cells and modules, as well as Suniva’s request that the commission start a safeguard proceeding.
In its two-page letter to the USITC, SEIA made three points:
1.) Despite Suniva’s growing market share, which SEIA said accounted for 21 percent of U.S. CSPV production last year, the company remains too small a player to claim it represents the industry, SEIA said, making it ineligible to request such relief. And opening an investigation under such circumstances, the trade group said, “would be unprecedented.”
2.) The relief sought “would be extremely damaging,” SEIA said, because the tariffs would create job losses. Suniva’s proposed duty of 40 cents on solar cells would double the price of cells in the United States, endangering the jobs of the roughly 1,500 people who assemble those cells, Hopper said. The duty—coupled with a proposed floor price of 78 cents a watt on solar modules—also would more than triple the cost of large solar projects, SEIA’s letter said. In turn, project economics would be undermined and there would be reduced activity along the solar energy value chain, said Hopper, putting some 260,000 jobs at risk.
3.) Erecting trade walls through tariffs and minimum prices to address the glut of CSPV products won’t stimulate domestic solar cell and module manufacturing, SEIA said. “In fact, it would cause widescale economic hardships on thousands of American workers and their families,” according to SEIA’s letter.
Chinese also complain
In addition to SEIA, two Chinese-owned PV manufacturing companies also reportedly sent letters to the USITC referencing Suniva’s requests.
China-based PV module maker Trina Solar Inc., which has numerous branches in the United States, Europe and Asia, said in a statement that Suniva is abusing Section 201 of the Trade Act of 1974, which would allow Trump to take action by determining “an article is being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or threat thereof, to the domestic industry producing an article like or directly competitive with the imported article,” according to the section’s global safeguards on enforcement.
PV production in the United States is “far insufficient to meet the domestic demand,” according to Trina Solar’s statement. So if the U.S. government takes protective measures against imported solar cells and PV modules based on global safeguards investigations, then U.S.-based PV installation companies and consumers’ interests would be harmed and the global development and use of renewable energy would be hampered, the privately held company said.
Suniva’s bankruptcy filing is “due to the company’s mistaken investment and operational mismanagement,” Trina Solar said, and therefore Suniva has no reason to request global safeguards relief under Section 201.
Jolywood (Taizhou) Solar Technology Co. Ltd., which specializes in making N-type bifacial solar cells and modules, sent a similar letter to the USITC claiming Suniva is essentially abusing the law and if the United States “takes protective measures against photovoltaic products from around the world,” not only will development of the United States upstream and downstream value chain be injured, but the subsequent “rapid decline in the market will bring traumatic shocks to local people and their families.”
Interestingly, Suniva also has roots in China.
With a Chinese president and four Chinese board members, Suniva is 63 percent owned by a Chinese conglomerate, Shunfeng International Clean Energy.
And in bankruptcy, Suniva now has become indebted to another Chinese company, SQN Capital Management LLC, which will gain a whopping ownership stake in Suniva depending on the outcome of the USITC case.
Notes from another insolvent
SolarWorld AG, a solar panel designer and manufacturer headquartered in Bonn, Germany that operates a massive factory in Hillsboro, Ore., through its U.S. branch SolarWorld Americas Inc., has spearheaded several trade cases against Chinese solar manufacturers for allegedly “dumping” solar modules in the United States and Europe—meaning flooding the market with cheaper products.
“The case of Suniva dramatically demonstrates that the U.S. solar manufacturing industry still suffers from unfair trade. In particular, highly subsidized Chinese companies as well as other producers are globally dumping their products, forcing competitors to take losses, lay off workers and exit the market,” Juergen Stein, U.S. president of SolarWorld, said in a statement.
Then last week, SolarWorld AG said it can’t cover its debts and May 11 filed for insolvency, citing ongoing price erosion as one of the reasons. SolarWorld Americas, meanwhile, currently maintains full operations.
In March, SolarWorld had gone so far as to ask the Trump administration to address the related negative effects dumping was having on solar trade during President Xi’s United States visit in April.
As the USITC moves forward on Suniva, Hopper vowed yesterday that SEIA is going to lead the fight on it and be involved “every step of the way.”
Hopper said that the USITC will announce shortly whether it will investigate Suniva’s requests further. Then the commission would have four months starting from the date Suniva’s petition was filed to decide whether there was injury and two more months to announce if a remedy is needed. Then the USITC would have two more months to recommend an actual remedy to Trump.
In the meantime, SEIA is working with the industry to develop alternative solutions and a free-trade-for-all approach. Suniva’s petition is not it, Hopper said.
