Huawei, the world's largest solar inverter manufacturer, hit an obstacle to U.S. expansion Monday.
A bipartisan group of 11 U.S. senators asked for a ban on the use of Huawei inverters in the U.S., calling them a "national security threat" to the nation's energy infrastructure.
The letter, addressed to Energy Secretary Rick Perry and Homeland Security Secretary Kirstjen Nielsen, built on earlier action by Congress to limit Huawei's presence in the U.S. telecom market based on potential links between the company and Chinese intelligence services.
"Both large-scale photovoltaic systems and those used by homeowners, school districts, and businesses are equally vulnerable to cyberattacks," the letter states. "Our federal government should consider a ban on the use of Huawei inverters in the United States and work with state and local regulators to raise awareness and mitigate potential threats."
Senator John Cornyn (R-TX) wrote the letter. The signatories came largely from the Senate Intelligence Committee, including Chairman Richard Burr (R-NC) and ranking member Mark Warner (D-VA).
Huawei did not respond to a request for comment.
The letter delivers a public perception blow to Huawei's recent push to enter the U.S. residential market with its FusionHome product line, which packages solar inverters, optimizers, smart energy controls and battery storage compatibility.
If the letter results in a full-on ban, it would drastically affect the competitive landscape for U.S. inverters.
Huawei has built up an empire in other markets with aggressively low pricing that undercuts the competition. It has been active in U.S. commercial and utility-scale projects, but the residential product has taken longer to arrive than originally promised. The looming specter of the company one day entering the U.S. residential inverter sector nonetheless has moved stock analyst sentiment on other leading brands, like U.S. residential leader SolarEdge.
In a market where deals often hinge on upfront cost, a lower-priced Huawei inverter could take substantial market share from incumbents. Now, though, customers have to weigh the possibility that the device they bring into their homes to control their energy production and consumption could open them up to cyber-infiltration by foreign elements.
It should be noted that the senators do not provide evidence in the letter to substantiate their concerns with Huawei's solar technology. Rather, the letter references a law passed by Congress last year to prohibit government agencies from procuring telecommunications products from Huawei and other Chinese companies.
Earlier in 2018, U.S. intelligence officials testified before Congress that Huawei communications equipment posed a cybersecurity threat. They worried that ties between Huawei and the Chinese government could jeopardize the safety of telecom products, opening up customers to surveillance or hacking.
Solar inverters are far less ubiquitous than cellphones and cellular networks, but they do control the output of solar power plants. Theoretically, a concerted effort to manipulate inverters could cut off the flow of electricity from the plants, or could attempt to use those devices to access other electrical grid control systems. Former Homeland Security Secretary Tom Ridge spelled out those risks in an op-ed in The Hill last fall.
It's not clear what a ban on use of Huawei inverters would mean for customers who paid for them before a prohibition potentially comes into force.
Federal action against Huawei could make it harder for the company to service warranties, which would be a concern for inverter installers and distributors, said Ben Gallagher, senior analyst at Wood Mackenzie Power & Renewables.
"While this letter might not be the straw that breaks the camel's back, this type of scrutiny may force them to voluntarily exit the U.S. market," he said.