Photo courtesy of AL ISSA

(ITC press release, Nov. 7) The U.S. International Trade Commission (USITC) today determined that a U.S. industry is materially injured by reason of imports of crystalline silicon photovoltaic cells and modules from China that the U.S. Department of Commerce (Commerce) has determined are subsidized and sold in the United States at less than fair value.

All six Commissioners voted in the affirmative.

As a result of the USITC’s affirmative determinations, Commerce will issue antidumping and countervailing duty orders on imports of these products from China.

The Commerce Department previously made affirmative critical circumstances determinations in its investigations. Therefore, the Commissioners who made affirmative determinations today are required to determine whether imports covered by the Commerce critical circumstances determinations are likely to undermine seriously the remedial effect of the antidumping and countervailing duty orders Commerce will issue.

With respect to critical circumstances, Commissioners Daniel R. Pearson, Shara L. Aranoff, David S. Johanson, and Meredith M. Broadbent voted in the negative. Chairman Irving A. Williamson and Commissioner Dean A. Pinkert voted in the affirmative with respect to critical circumstances.

As a result of the Commission’s negative determinations regarding critical circumstances, the antidumping and countervailing duty orders concerning these imports will not apply retroactively to goods that entered the United States prior to the date of publication in the Federal Register of the Department of Commerce’s affirmative preliminary determinations.

The Commission’s public report Crystalline Silicon Photovoltaic Cells and Modules from China (Investigation Nos. 701-TA-481 and 731-TA-1190 (Final), USITC Publication 4360, November 2012) will contain the views of the Commissioners and information developed during the investigations.

Copies may be obtained after December 14, 2012, by emailing pubrequest@usitc.gov, calling 202.205.2000, or by writing the Office of the Secretary, 500 E Street SW, Washington, DC 20436. Requests may also be made by fax to 202.205.2104.

FACTUAL HIGHLIGHTS

Crystalline Silicon Photovoltaic Cells and Modules from China
Investigation Nos. 701-TA-481 and 731-TA-1190 (Final)

Product Description: The merchandise covered by this investigation are crystalline silicon photovoltaic cells, and modules, laminates, and panels, consisting of crystalline silicon photovoltaic cells, whether or not partially or fully assembled into other products, including, but not limited to, modules, laminates, panels and building integrated materials. This investigation covers crystalline silicon photovoltaic cells of thickness equal to or greater than 20 micrometers, having a p/n junction formed by any means, whether or not the cell has undergone other processing, including, but not limited to, cleaning, etching, coating, and/or addition of materials (including, but not limited to, metallization and conductor patterns) to collect and forward the electricity that is generated by the cell. Subject merchandise may be described at the time of importation as parts for final finished products that are assembled after importation, including, but not limited to, modules, laminates, panels, building-integrated modules, building integrated panels, or other finished goods kits. Such parts that otherwise meet the definition of merchandise under consideration are included in the scope of this investigation. Excluded from the scope of this investigation are thin film photovoltaic products produced from amorphous silicon (a-Si), cadmium telluride (CdTe), or copper indium gallium selenide (CIGS). Also excluded from the scope of this investigation are crystalline silicon photovoltaic cells, not exceeding 10,000mm2 in surface area, that are permanently integrated into a consumer good whose function is other than power generation and that consumes the electricity generated by the integrated crystalline silicon photovoltaic cell. Where more than one cell is permanently integrated into a consumer good, the surface area for purposes of this exclusion shall be the total combined surface area of all cells that are integrated into the consumer good. Modules, laminates, and panels produced in a third-country from cells produced in the People’s Republic of China are covered by this investigation; however, modules, laminates, and panels produced in China from cells produced in a third country are not covered by this investigation. Merchandise covered by this investigation is currently classified in the Harmonized Tariff System of the United States ( HTSUS”) under subheadings 8501.61.0000, 8507.20.80, 8541.40.6020, 8541.40.6030, and 8501.31.8000. These HTSUS subheadings are provided for convenience and customs purposes; the written description of the scope of this investigation is dispositive.

Status of Proceedings:
1. Type of investigations:  Final antidumping and countervailing duty.
2. Petitioner:  SolarWorld Industries America, Inc., Hillsboro, OR. 
3. Investigations instituted by USITC:  October 19, 2011.
4. USITC hearing:  October 3, 2012.
5. USITC vote:  November 7, 2012.
6. USITC notification of Department of Commerce:  November 30, 2012.

U.S. Industry:
1. Number of U.S. producers: 14.
2. Location of producers' cell and module plants:  Arizona, California, Delaware, Florida, Georgia,
       Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oregon, Tennessee,
       Washington, and Wisconsin. 
3. Employment of production and related workers of crystalline silicon photovoltaic modules in 2011: 
       1,856.
4. U.S. producers' U.S. shipments of crystalline silicon photovoltaic modules in 2011: $790.5 million.
5. Apparent U.S. consumption of crystalline silicon photovoltaic modules in 2011:  $3.01 billion.   
6. Ratio of subject imports from China to apparent U.S. consumption of crystalline silicon 
       photovoltaic modules in 2011:  57.4 percent.

U.S. Imports in 2011:
1. Quantity of imports of crystalline silicon photovoltaic cells and modules from China:  1.5 million
   kilowatts.
2. Value of imports of crystalline silicon photovoltaic modules from China:  $1.9 billion.

Photo by Ingrid Taylar

Summary:  The U.S. Commerce Department announced on Wednesday that Chinese producers/exporters have sold solar cells in the United States at dumping margins ranging from 18.32 to 249.96 percent and that they have received countervailable subsidies of 14.78 to 15.97 percent.

Suntech factories were found to have a dumping margin of 31.73 percent and subsidy rate of 14.78 percent. Trina Solar has a dumping margin of 18.32 percent and a subsidy rate of 15.97 percent.

Fifty-nine other exporters qualified for a separate dumping rate of 25.96 percent and a subsidy rate of 15.4 percent. All remaining Chinese exporters received a final dumping rate of 249.96 percent plus the 15.4 percent subsidy rate.

U.S. Customs will now collect cash deposits or bonds against the new tariffs.

Commerce Finds Dumping and Subsidization of Crystalline Silicon Photovoltaic Cells,
Whether or Not Assembled into Modules from the People’s Republic of China

(Department of Commerce Fact Sheet)

• On October 10, 2012, the Department of Commerce (Commerce) announced its affirmative final determinations in the antidumping (AD) and countervailing duty (CVD) investigations of imports of crystalline silicon photovoltaic cells, whether or not assembled into modules (solar cells) from the People’s Republic of China (China).
• The AD and CVD laws provide U.S. businesses, workers, and farmers with a transparent mechanism to seek relief from the market distorting effects caused by injurious dumping and subsidization of imports into the United States, and thus to have an opportunity to compete on a level playing field.
• For the purpose of AD investigations, dumping occurs when a foreign company sells a product in the United States at less than its fair value. For the purpose of CVD investigations, countervailable subsidies are financial assistance from foreign governments that benefit the production of goods from foreign companies and are limited to specific enterprises or industries, or are contingent either upon export performance or upon the use of domestic goods over imported goods.
• Commerce determined that Chinese producers/exporters have sold solar cells in the United States at dumping margins ranging from 18.32 to 249.96 percent. Commerce also determined that Chinese producers/exporters have received countervailable subsidies of 14.78 to 15.97 percent.
• In the AD investigation, mandatory respondent Suntech Power Co., Ltd., which includes Wuxi Suntech Power Co., Ltd., Luoyang Suntech Power Co., Ltd., and Wuxi Sun-Shine Power Co., Ltd., was determined to have a final dumping margin of 31.73 percent. Mandatory respondent Changzhou Trina Solar Energy Co., Ltd., which includes Trina Solar (Changzhou) Science & Technology Co., Ltd. was determined to have a final dumping margin of 18.32 percent.
• Fifty-nine other exporters (see attached list) qualified for a separate dumping rate of 25.96 percent. All remaining Chinese exporters received a final dumping rate of 249.96 percent.
• In the CVD investigation, mandatory respondent Wuxi Suntech Power Co., Ltd., and 10 of its affiliates (see final subsidy rate chart), was determined to have a final net subsidy rate of 14.78 percent. Mandatory respondent Changzhou Trina Solar Energy Co., Ltd. and Trina Solar (Changzhou) Science & Technology Co., Ltd. was determined to have a final net subsidy rate of 15.97 percent.
• All other Chinese producers/exporters received a final net subsidy rate of 15.24 percent.
• Commerce found that critical circumstances exist in the CVD investigation. In addition, Commerce found that critical circumstances exist in the AD investigation for all companies except Wuxi Suntech. As a result, provisional duty deposits, normally collected as of the date of publication of Commerce’s preliminary determinations, will be collected 90 days prior to that date with the
U.S. Department of Commerce | International Trade Administration
exception of antidumping duty deposits applied to Wuxi Suntech. Antidumping duty deposits applied to Wuxi Suntech will be collected as of the date of publication of Commerce’s preliminary AD determination. In order for this early duty deposit collection to be maintained, the U.S. International Trade Commission (ITC) must also reach an affirmative finding regarding critical circumstances.
• As a result of the final AD determination, Commerce will instruct U.S. Customs and Border Protection (CBP) to collect cash deposits or bonds equal to the applicable weighted-average dumping margins. As a result of the affirmative final CVD determination, Commerce will order the resumption of the suspension of liquidation and require a cash deposit equal to the final net subsidy rates if the ITC issues a final affirmative injury determination.
• In the CVD investigation, Commerce concluded that all producers and exporters benefited from an export subsidy (“export buyer’s credits”). Commerce, in accordance with the statute, is required to adjust AD rates to account for such export subsidies. In keeping with Commerce’s practice in investigations, Commerce will require cash deposits in the AD proceeding equal to the calculated dumping margins reduced by the appropriate export subsidy rate. Specifically, the required cash deposit rates will be equal to the calculated dumping margins reduced by 10.54%, the export subsidy rate.
• The petitioner for these investigations is SolarWorld Industries America Inc. (OR).
• The products covered by these investigations are crystalline silicon photovoltaic cells, and modules, laminates, and panels, consisting of crystalline silicon photovoltaic cells, whether or not partially or fully assembled into other products, including, but not limited to, modules, laminates, panels and building integrated materials.
• These investigations covers crystalline silicon photovoltaic cells of thickness equal to or greater than 20 micrometers, having a p/n junction formed by any means, whether or not the cell has undergone other processing, including, but not limited to, cleaning, etching, coating, and/or addition of materials (including, but not limited to, metallization and conductor patterns) to collect and forward the electricity that is generated by the cell.
• Subject merchandise may be described at the time of importation as parts for final finished products that are assembled after importation, including, but not limited to, modules, laminates, panels, building-integrated modules, building-integrated panels, or other finished goods kits. Such parts that otherwise meet the definition of subject merchandise are included in the scope of this investigation.
• Excluded from the scope of these investigations are thin film photovoltaic products produced from amorphous silicon (a-Si), cadmium telluride (CdTe), or copper indium gallium selenide (CIGS).
• Also excluded from the scope of these investigations are crystalline silicon photovoltaic cells, not exceeding 10,000mm2 in surface area, that are permanently integrated into a consumer good whose function is other than power generation and that consumes the electricity generated by the integrated crystalline silicon photovoltaic cell. Where more than one cell is permanently integrated into a consumer good, the surface area for purposes of this exclusion shall be the total combined surface area of all cells that are integrated into the consumer good.
U.S. Department of Commerce | International Trade Administration
• Modules, laminates, and panels produced in a third-country from cells produced in the PRC are covered by these investigations; however, modules, laminates, and panels produced in the PRC from cells produced in a third-country are not covered by these investigations.
• Merchandise covered by these investigations is currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under subheadings 8501.61.0000, 8507.20.80, 8541.40.6020, 8541.40.6030, and 8501.31.8000. These HTSUS subheadings are provided for convenience and customs purposes; the written description of the scope of these investigations is dispositive.
• In 2011, imports of solar cells from China were valued at an estimated $3.1 billion. However, the solar cells subject to these investigations are classified within HTSUS basket categories that contain products beyond the scope of the investigations.
NEXT STEPS
• The U.S. International Trade Commission (ITC) is scheduled to make its final determination on or before November 23, 2012.
• If the ITC makes an affirmative final determination that imports of solar cells from China materially injure, or threaten material injury to, the domestic industry, Commerce will issue AD and CVD orders. If the ITC makes a negative determination of injury, the investigations will be terminated.

Final Dumping Margins for Each Producer Listed HERE.

Photo by Ingrid Taylar

A few days after the U.S. Department of Commerce imposed a 25 percent tariff on wind turbine towers made in China, and two weeks after announcing a 31 percent tariff on silicon solar cells and modules made in China, another set of Commerce officials, representing the United States at the Asia-Pacific Economic Cooperation meeting in Kazan, Russia, agreed to work for sharp tariff reductions in “green goods” by September. Products slated for freer trade between the 21 nations include wind turbines and solar panels.

The fact that two different sets of officials in two separate offices within the U.S. Department of Commerce are calling simultaneously for two opposing trade policies is just the latest irony in the evolving mix of alliances created by SolarWorld’s anti-dumping petition.

It would be easy to divide the renewable energy world into three camps:

• For high tariffs on Chinese goods — the Coalition for American Solar Manufacturing (CASM) and its allies, including manufacturers of silicon modules with factories outside China (including Korea, Taiwan, Japan, Malaysia and the Philippines);
• Against  — the Coalition for Affordable Solar Energy (CASE) and its allies, including American installers, developers and most balance-of-system operators; and
• Those caught in the middle — including trade associations serving both sides and factories exporting raw materials like polysilicon, who now may be threatened by retaliatory tariffs imposed by China.

It’s not that simple, of course. The middle ground is dangerous territory for officials and companies in both China and the United States, precisely because they have to do business with both sides. Speaking for the middle ground, the Solar Energy Industries Association (SEIA) has been calling for mediation. Immediately following the May 17 announcement of U.S. tariffs on Chinese modules, SEIA President Rhone Resch issued a statement beginning “The solar industry calls upon the U.S. and Chinese governments to immediately work together towards a mutually satisfactory resolution of the growing trade conflict within the solar industry. While trade remedy proceedings are basic principles of the rules-based global trading system, so too are collaboration and negotiations.” Meanwhile, both CASM and CASE reiterated their own entrenched positions.

It’s still unclear what long-term consequences the tariffs will have. Retroactive charges against Chinese imports had the immediate effect of sharply cutting the flow of new modules into the United States. Market research firms variously forecast a drop of 45 percent to 75 percent in the volume of shipments this year. But those cutbacks were largely made by smaller Chinese factories that were nowhere close to running profitably to begin with. Bloomberg New Energy Finance now predicts that more than half of all module manufacturers will fail or be acquired by larger companies, but that was the case before the tariffs, too.

The import slowdown did not immediately affect the availability or price of existing inventory. Spot prices for modules did not rebound, or even level out, following the tariff announcements (though some of the price reductions were masked by the weakening of the euro). Worldwide, silicon-PV factories continued to trim margins (and put each other into bankruptcy) in pursuit of market share in countries without new import barriers: Japan’s newly announced 42-yen-per-kilowatt-hour feed-in tariff drove some of the action, and Australia (without its own significant PV manufacturing base to protect) began to look like a safer bet than any country eager to impose a domestic-content requirement. And so the flood of inventory was diverted, not curtailed.

During the months leading up to the tariff announcements, solar installations continued to boom both in Germany and North America (especially in New Jersey). Toward the end of May, a German research organization reported that half of the country’s mid-day electricity demand was met by solar sources. Thanks to a wide variety of causes, the wholesale price of electricity in Europe fell in May by 5 to 11 percent.

Moreover, while the tariffs may provoke a palpable price increase for American installers and developers, it may not do so for end consumers. That’s because the installer business itself is consolidating rapidly, mainly around leasing/PPA companies with a business model based on zero upfront cost. As far as Joe and Jill Householder are concerned, a 31 percent tariff on zero is zero. SolarCity, SunRun, Clean Power Finance and the other large consolidators of small systems can find ways to fold the tariff into the business model. Don’t lose sight of the fact that the average cost per watt to install an American system is still roughly double the cost in Germany: There’s still a lot of inefficiency in the North American permitting-and-labor process. Squeezing that out can go a long way to ironing over a higher module cost — at least for bigger companies. That gives the small locally-owned installer a powerful incentive to become a subcontractor.

In the long run, trade officials in the United States and China may find some middle ground that won’t make anyone very happy, a kind of product-dumping demilitarized zone where everyone is at war but no one shoots. Tariff or no tariff, big fish will grow bigger and small fry will be absorbed. And the price of solar installations will move steadily downward.

PV production line. Photo courtesy of TIANWEI

Retroactive charges may force smaller companies out of the market

(UPDATE) The U.S. Department of Commerce today posted anti-dumping duties of just over 31 percent on solar cells and modules from the Chinese factories Suntech, Trina and about 60 other companies that provided data in cooperation with investigors. Chinese companies that declined to respond to the DoC investigation will pay 249.96 percent.

These duties apply retroactively, back 90 days to mid-February. Importers must post bonds for these duties on all product shipped in since then.

“It’s too soon to tell how the market will respond to the new tariffs,” said Ben Santarris, head of corporate communications for SolarWorld USA, the lead complainant in the case. “What we can say is that the government has found the Chinese industry guilty of criminal trade practices.”

SolarWorld, and the loose trade group it organized as the Coalition for American Solar Manufacturing (CASM), filed an anti-dumping complaint with the Federal Trade Commission and Department of Commerce on Oct. 19, 2011. The FTC in March imposed anti-subsidy duties of 2.9 to 4.73 percent. Net tariff on some cells and modules may therefore total nearly 255 percent.

Further duties may be announced later this month to offset other forms of subsidies.

Mike Grunow, vice president of marketing at Trina Solar, noted that the most immediate impact would come from the 90-day retroactive charge. Smaller importers, with little cash available, may not be able to pay what amounts to a fine, and will have to withdraw from the market.

“Tier 3 players will withdraw,” Grunow said. “For Tier 2 companies, the fine may amount to 20 to 50 percent of their outstanding cash. Trina has the most robust balance sheet in the category, and for us the retroactive charge is a speed bump.”

Grunow noted that the tariff decision is founded on what he considers a faulty assumption: that manufacturers can determine pricing. “We know that the market sets the price,” he said. “We’re a publicly traded company and our balance sheet shows that we operated in the black for the first time last year, for three quarters.” In the fourth quarter, Grunow said, market conditions forced Trina to cut prices just to move inventory.

Affected companies will appeal the ruling, Grunow said. “We’ll fight this with data.”

In a press release, Jigar Shah, president of the Coalition for Affordable Solar Energy (CASE), stated, “Today SolarWorld received one of its biggest subsidies yet — an average 31 percent tax on its competitors. What’s worse, it will ultimately come right out of the paychecks of American solar workers. Fortunately, these duties are much lower than the 250% tax that SolarWorld originally requested. This decision will increase solar electricity prices in the U.S. precisely at the moment solar power is becoming competitive with fossil fuel generated electricity. At the same time, CASE recognizes that today’s decision is ‘preliminary.’ Between now and a final decision before the end of the year, there are many issues that will be addressed and whose resolution would lead to a significantly lower tariff. CASE will continue to fight SolarWorld’s anti-consumer and anti-jobs efforts to ensure a better result for America’s solar industry.”

The tariff decision is likely to have long-term ramifications. China may respond with its own tariffs on U.S. exports of polysilicon, and Chinese factories may expand their production capabilities in North America. In 1981, after Detroit-based auto companies filed a complaint against Japanese car companies, a “voluntary” trade agreement limited Japan to sending 1.68 million cars to the United States. annually. Toyota, Nissan and Honda responded by building large factories in non-union states, and launched luxury brands (Lexus, Infiniti, Acura) to pad the profit margin on each car exported. The unintended consequence of limiting the import of cheap cars was to create new competition in luxury cars. Chinese factories may seek to adopt analogous tactics. A report published in May by Third Way.org noted that Chinese investment in U.S. clean energy companies jumped 130 percent in 2011.

Significant tariffs are likely to slow the current installation boom, and the U.S. market may suffer a series of plateaus until prices stabilize. Long-term, the cost of fossil fuels will continue to rise while the cost of solar, driven by efficiency improvements on the installation side, should soon resume its downward trend. At the utility scale, a short-term rise in the installed cost of PV may encourage faster installation of concentrating thermal and concentrating PV systems, and provide a boost for thermal storage installations.

Meanwhile, the DoC was scheduled to announce on May 30 a parallel decision on tariffs against Chinese-made wind turbine equipment.