The Office of the United States Trade Representative (USTR) has issued an order exempting bifacial and a few other types of solar panels from the levy of newly-imposed safeguard duty of 25%.

The exemption came into effect from June 13, 2019.

The USTR has exempted bifacial solar panels that absorb light and generate electricity on each side of the panel and that consist of only bifacial solar cells that absorb light and generate electricity on each side of the cells; flexible fiberglass solar panels without glass components other than fiberglass, such panels having power outputs ranging from 250 to 900 watts.

The USTR has also exempted solar panels consisting of solar cells arranged in rows that are laminated in the panel and that are separated by more than 10 mm, with an optical film spanning the gaps between all rows that is designed to direct sunlight onto the solar cells, and not including panels that lack optical film or only have a white or other backing layer that absorbs or scatters sunlight.

The USTR has stated that it will not be entertaining additional exclusion requests at this time. However, it will monitor the developments in the U.S. market for concentrated solar photovoltaic (CSPV) products and, if warranted, provide an opportunity to submit additional requests for exclusion at a future date.

Talking about how this will affect the Indian solar manufacturers, Sunil Rathi, Director, Waaree Energies, said, “Initially, India, as a developing country, held a Special Trade Status in the U.S which exempted us from paying export duty on PV modules. The U.S. has historically been one of the two biggest markets for India’s PV manufacturers, with 47% of India’s solar PV exports in 2018 directed to the country. Considering that India no longer holds the beneficiary status, it will hamper the export of modules, thus impacting a major chunk of the business for the domestic manufacturers. Moreover, since a portion of the additional duty will be offset to the end consumer, it is bound to hamper the cost advantage that Indian manufacturers held in the U.S. markets. The idea of the Indian manufacturers banking on exports to propel their growth will take a hit as players will now have to look at alternative export markets.

Simultaneously, while bifacial modules have been exempt from such duties, the lack of a definitive timeline to the exemption holds the proverbial sword of uncertainty. Bifacial modules provide higher output in comparison to mono facial ones, and while experts believe that the former will flood the U.S. utility-scale segment until there is absolute clarity on the timeline of the exemption, this seems like a stop-gap measure with interim relief. The new policy change has only been implemented a few days ago. Hence, it is too early to comment on the actual quantifiable effect these changes have made on Indian solar manufacturers. However, we think a shift in the manufacturing to bifacial from monofacial modules due to the advantages it brings with it.

Removal of safeguard duty on bifacial solar modules is likely to increase its demand in the U.S., which could bring down the bifacial ASPs leading to the adoption of bifacial modules in other markets including India.

According to Mercom analysts, module suppliers from China have been pitching bifacial modules to the Indian solar developers, but the cost has been the impediment so far. Bifacial solar modules could be a good fit for large-scale solar projects in Rajasthan due to the high reflectivity in the desert environment.

Recently, the United States President Donald Trump ended India’s designation as a beneficiary developing country, thereby ending duty-free status of about 2,000 products amounting to approximately $6 billion, including solar cells and modules.