Federal Investigation Casts Shadow Over American Solar Industry
The U.S. Department of Commerce is investigating whether four Southeast Asian countries, which supply solar panels for about 80% of American solar projects, are illegally circumventing tariffs on Chinese solar components.
The investigation is slowing down the American solar industry — in Virginia, projects totaling 1,800 MW of solar capacity have either been delayed or canceled.
The delays highlight the need to foster an American solar panel manufacturing industry, which would lower the cost of solar energy and bring the nation closer to energy independence.
Solar developers throughout Virginia and the United States are facing delays, hiring freezes, and even project cancellations in what’s becoming a massive disruption to the industry caused by a federal investigation. The U.S. Department of Commerce is currently investigating whether solar panel and cell manufacturers in four Southeast Asian countries are avoiding American tariffs on Chinese solar components. Roughly half of Virginia’s large-scale solar projects currently in development are facing delays or cancellation on account of the investigation. The disruption serves as a reminder of the need to foster a new American solar manufacturing industry in order to meet the demands of a carbon-free future.
The Department of Commerce launched its investigation after being petitioned by Auxin Solar, a small solar panel manufacturer based out of San Jose, California. The petition alleged that solar panel manufacturers in Cambodia, Malaysia, Thailand, and Vietnam are illegally sidestepping rules imposed by the U.S. that tax solar panels and cells that contain Chinese components. These rules were put into place during the Obama administration with the intention of boosting the American solar manufacturing industry. Solar panels from the four Southeast Asian countries account for about 80% of the total number of installations planned in the U.S. in 2022.
Concerns about whether the results of the investigation could cause solar panels from Southeast Asia to face retroactive tariffs — as high as 240% — are leading to delayed or canceled projects.
Impacts to the American solar industry have been immediate and extreme. According to the Solar Energy Industries Association, which conducted a survey last month, the number of solar developments planned for 2022 and 2023 could be cut by 46%. About 230,000 Americans are employed in the solar industry, but the investigation could cause 100,000 layoffs. In Virginia, delays are currently holding up the development of 1,800 MW of solar capacity. That means nearly $2 billion in solar investment is currently at risk in Virginia alone.
The delayed and canceled projects may make it more difficult for the United States and Virginia to achieve decarbonization goals. Plans for a carbon-free electric grid by 2050 rely on the steady development of solar projects. Ratepayers may be affected too. Delays in adding more solar capacity to the electric grid could increase reliance on fossil fuels, which entails higher electric bills; in Virginia, public utilities are allowed to charge customers to recover fuel costs.
Earlier this month, 22 United States Senators including Virginia Sen. Tim Kaine sent a letter to President Biden urging him to make a preliminary determination on the Department of Commerce investigation. The letter noted that the investigation is damaging the booming American solar industry and has the potential to raise energy prices even higher than they have been recently.
Similar to the way in which Virginia is becoming home to a wind turbine manufacturing industry in Hampton Roads, it’s essential to foster an American solar panel manufacturing industry. Beyond continuing to drive down the cost of solar energy, creating jobs for Americans, and helping to meet decarbonization goals, a domestic solar panel manufacturing industry would also bolster the nation’s energy independence.