Representatives for Suniva and SolarWorld stood before a packed hearing room Tuesday and urged the International Trade Commission to endorse their proposed tariffs on imported solar equipment, while dozens of witnesses took turns denouncing the measures as a threat to the U.S. solar industry.
The 10-hour hearing at the ITC in Washington, D.C. was the last chance for public testimony before officials send their final recommendations to President Donald Trump.
The two financially troubled solar manufacturers are seeking a tariff of 25 cents per watt on CSPV cells -- down from an initial 40 cents per watt request -- and 32 cents per watt on CSPV modules. They say the tariffs are needed to revive their industry, which has been flooded by cheap imports from Asia.
“These tariffs would return U.S. prices to levels in late 2015…just before the most recent price crush,” testified SolarWorld Americas CEO Juergen Stein, adding that proposed trade remedies would create a minimum of 35,000 jobs.
Suniva also requested a floor price on all imported solar products of 74 cents per watt, down modestly from the 78 cents per watt in the initial petition, while SolarWorld proposed an import quota starting at 0.22 gigawatts for cells and 5.7 gigawatts for modules. Both companies said they believe an effective remedy must include two parts: either the requested tariff plus Suniva’s requested module floor price or the requested tariff plus SolarWorld’s requested quota.
“If the remedy is not effective enough to heal the injury…almost 30 companies will have died in the last five years for nothing,” said Matt Card, executive vice president of commercial operations at Suniva. "American solar cell and module manufacturers will just be added to the scrap heap of death, like so many manufacturing segments before us."
Roughly two dozen solar executives and industry experts spoke against the Suniva-SolarWorld remedy proposal on Tuesday afternoon, far outnumbering the six witnesses that testified in support of the petitioners.
The only lawmaker to testify against the petition was New Mexico Senator Martin Heinrich, who was among 16 senators who sent a letter in August urging the ITC not to impose tariffs.
“In New Mexico alone, we stand to lose 1,545 jobs in 2020 if high tariffs are imposed on solar panels,” said Heinrich. “That would result in a loss of between $45 million and $64 million in wages for our state’s workers.”
Rep. Suzanne Bonamici and Sen. Ron Wyden, both Democrats from SolarWorld’s home state of Oregon, said they supported the trade recommendations.
Based on estimations by the Solar Energy Industries Association (SEIA), the remedies proposed by petitioners would destroy between 48,000 to 63,000 American solar jobs next year, and between 60,000 and 84,000 jobs by 2020.
The damage is “not as bad as the bloodletting in Suniva’s original proposal, but devastating to American families all the same,” said Alexandra Hobson, a spokesperson for SEIA. The group previously estimated that the original 40 cents per watt scenario could destroy 88,000 jobs in installation, sales and construction.
Even with tariffs, the future for Suniva and SolarWorld remains unclear. There’s no guarantee that they can ramp their factories to full production capacity in a timely manner, and neither company has submitted an adjustment plan to explain how trade remedies will enable them to get ahead of the foreign competition.
“Why haven’t we seen either an adjustment plan or commitments?” asked Commission Chairman Rhonda Schmidtlein.
“The industry did submit specific adjustment commitments as part of its questionnaire responses, which you had right from the beginning,” replied SolarWorld lawyer Tim Brightbill, who ultimately agreed to include more information in a post-hearing brief.
“You envision a revived upstream supply chain. You envision that there would be 35,000 jobs created at minimum,” said Schmidtlein. “That sounds like a wish list to me.”
Suniva and SolarWorld filed their petition under Section 201 of the 1974 Trade Act, which is an obscure part of U.S. trade law that could allow the president to implement tariffs, minimum prices or quotas on solar products from anywhere in the world.
Suniva asked commissioners to recommend four years of tariffs on cells and modules that would ramp down annually, in accordance with the statute. An analysis by GTM Research found that a 30-cent-per-watt tariff with annual step-downs would reduce potential deployments by 38 percent over a four-year window.
Commissioner Meredith Broadbent asked the petitioners if they believe their proposed remedies will allow solar energy to remain cost-competitive with other forms of energy in the utility market.
“We’re proposing a tariff. I couldn’t stand here and say there’s going to be no price effect,” answered Andrew Szamosszegi, principal at consulting firm Capital Trade Inc. “But we think that once the market adjusts around the module prices…there’s still going to be demand, even in the utility sector.”
MJ Shiao, head of Americas research at GTM Research, told commissioners that an “immense decline of solar deployments” would occur due to the market’s high sensitivity to costs. With renewable procurement mandates phasing out, he said that “solar’s economics will be the primary driver of new deployments going forward.”
In a 201 case, a new tariff can’t exceed 50 percent of the average value of an imported product. According to Suniva, 32 cents per watt is equivalent to 50 percent of the value for solar modules during the case reference period of 2013 to 2015. However, the proposed tariff would be closer to 100 percent of the present-day value for modules, which is likely to fall between 35 and 40 cents per watt once the effects of the ongoing trade case end.
“For some reason, the petitioners did not use the most recent three years to calculate their proposed quota,” said Hobson. “The proposal substantially exceeds statutory limits on trade relief.”
SolarWorld lawyer Brightbill defended the calculation to trade commissioners on Tuesday, saying the “most representative period cannot be where module prices collapsed 60 percent” in 2016.
The ITC unanimously agreed on September 22 that imported solar equipment has caused "serious injury" to domestic manufacturers, but it was also required to make separate findings on imports from countries under a free-trade agreement with the United States. It found substantial injury from imports coming from Mexico and South Korea, and a lack of injury from Canada, Singapore and several free-trade partners in South America due to a low volume of imports.
“I think NAFTA will be a huge issue,” said Morten Lund, a solar industry attorney for Stoel Rives, which currently represents SolarWorld in matters unrelated to the trade case. “They have to address it in some fashion, or else there will be even more confusion.”
The 201 rules and NAFTA are both valid laws that are “directly conflicting,” said Lund.
Representatives from South Korea, China, Taiwan, Brazil and the European Union all testified against the trade remedies on Tuesday.
A handful of solar manufacturers asked commissioners to exclude their products from any trade remedies, citing technological differences. Tom Werner, the CEO of California-based SunPower, said his company’s high-efficiency interdigitated back contact modules command a premium price and “are in no way comparable with standard CSPV modules.”
Mike Teresso, the president of California-based Baker Electric Solar, also asked for an exemption for n-type mono cells produced by LG and Sunpower, which his company buys.*
“Our products do not compete with conventional panels or the petitioners in this case,” said William Harmon, the general manager of Utah-based Goal Zero, while holding up a solar-powered flashlight made by his company.
SolarWorld's Stein opposed the move, telling commissioners it would “create loopholes” to offer exemptions to the trade remedies.
“At the end of the day, all are competing against each other…all are making electricity,” said Stein.
Suniva and SolarWorld also suggested non-tariff remedies to help U.S.-based solar cell and module manufacturers, citing three recommendations mentioned in a recent Greentech Media article by GTM Research analysts Shayle Kann and Shiao.
Among the suggestions was a “Buy American” policy for all solar cells and modules purchased by federal agencies and an extension of the Investment Tax Credit program, which gives a 30 percent federal tax credit for residential and commercial solar systems, for projects that use domestically produced cells and panels.
Theoretically, the commission could make policy recommendations and forego any trade remedies, but “as far as I know, that’s never happened,” said Lund.
If the four trade commissioners are in disagreement on remedies, they can submit multiple recommendations to President Trump, who has reportedly been pushing for more tariffs on imported goods.
All parties will submit post-hearing briefs by October 10. The ITC will prepare a final report with its remedy recommendations for the president by November 13, and he has 60 days to decide what remedy to impose. That means the solar industry will likely stay in limbo at least through early 2018.
As the hearing drew to a close, Schmidtlein addressed the crowd.
”It’s not a decision about which job is more important or more valuable,” she said. “This is really not a political decision. It’s based on the evidence, and we’ll balance it as best we can.”
*The article has been updated to clarify that Baker Electric Solar purchases, rather than manufactures, n-type mono cells.