President Trump today revealed the much-anticipated anti-dumping tariffs on imported solar cells and modules at 30 percent for the first year, which will gradually decline in five percent increments over a four-year period to 15 percent by 2022. The first 2.5 GWs of solar cells and modules will be exempt from tariffs.
This decision ends months of uncertainty in the solar markets. The decision, though directly affects the U.S. markets, has reverberated across the world as U.S. installers hoarded solar panels in the second half of 2017 before the United States International Trade Commission (USITC) recommendations. This caused a tight supply situation, which ended up increasing solar panel prices around the world including, India.
Back in May, Suniva, a manufacturer of crystalline silicon modules, filed a Section 201 trade case supported by Solar World Americas claiming harm from low-price Asian imports. While Suniva was going through chapter 11 bankruptcy proceedings, SolarWorld’s parent company in Germany filed for insolvency.
Suniva sought import duties of $0.40 (~₹26.1)/W for solar cells and a $0.78 (~₹50.9)/W floor price for solar modules. But the lower than expected tariff imposition of 30 percent is expected to increase imported module prices by approximately $0.10/W.
The final decision by President Trump is much better than expected for the industry, which was fearing far worse. The 30 percent tariff is not steep enough to dramatically harm the industry while giving domestic manufacturers some help.
This ruling could act as a blueprint for the anti-dumping case filed by the Indian manufacturers against cell and module imports from China, Taiwan and Malaysia. A measured tariff imposition that helps manufacturers somewhat without killing the domestic solar market would be ideal for India.
Since the anti-dumping case was filed in India, solar auctions have slowed and installations are expected to decline year-over-year in 2018. To add to the uncertainty, a preliminary safeguard duty of 70 percent has also been proposed creating utter chaos in the Indian solar industry.
Contradicting policies are pulling government agencies in different directions. While renewable energy agencies are working towards meeting the 100 GW solar installations goal by 2022, the Make in India initiative is driving Ministry of Finance and trade agencies towards a protectionist stand making it harder to reach the 100 GW goal.
What we have learned from the U.S. anti-dumping case is, do not get too aggressive on tariff imposition, be transparent, and end the uncertainty as soon as possible. Indian policy makers would do well to follow this case closely before taking drastic actions.
Image credit: Wikipedia
Raj is a recognized thought leader in clean energy markets where his work has influenced policies worldwide. He has a deep understanding of regulatory policy and clean energy markets and his market and opinion pieces are regularly published on both MercomIndia.com and other leading publications globally. Raj is also a regular speaker and presenter on clean energy policy and finance topics at conferences worldwide. Raj attended the KLE College of Science in Bangalore, India for physics and chemistry, and holds a Bachelor of Science Degree in Hotel and Institutional Management from Johnson and Wales University, Rhode Island. More articles from Raj Prabhu.