Advisory firm Clean Energy Associates (CEA) expects solar PV import volumes and prices to remain largely unchanged following the U.S. Department of Commerce issuing its final determination in the anti-circumvention case regarding imports of solar PV cells and modules from Cambodia, Malaysia, Thailand and Vietnam on Aug. 18.
Because Commerce’s final decision is similar to its preliminary determination published in December 2022, CEA’s analysis of the effect on solar PV supply is similar. The first expects “no significant impact on solar PV import volumes and prices” as a result of the final determination. However, certain suppliers will not be able to avoid paying duties and are unlikely to continue to export directly to the U.S. market after June 6, 2024.
The final determination applies a blanket finding of circumvention to suppliers in all four named countries, except those specifically found to not be circumventing, according to the CEA. Among named suppliers, only Jinko (Malaysia), Hanwha QCells (Malaysia) and Boviet (Vietnam) were found not to be circumventing.
However, due to the availability of multiple pathways to avoid paying duties, most solar PV manufacturers in the named countries should be able to continue to export PV modules to the United States duty-free, the company reported.
CEA reports that there are three ways that modules from the named countries imported into the United States can avoid duties. If any of these three conditions apply, there are no duties (except for companies to which “adverse facts available” apply):
- Use a non-China wafer to make the cells.
- Use no more than two named bill of materials (BoM) components (silver paste, backsheets, glass, EVA, junction boxes, aluminum frames) from China.
- Be found not to be circumventing the duties.
Even for suppliers found to be circumventing and unable to access non-China wafers, CEA says that it should be relatively easy to switch BoM supply chains to take advantage of the “no more than two” rule and in most cases to update certifications accordingly. Therefore, the supply of modules from Southeast Asia is likely to continue, even though some suppliers will likely have to use a different supply chain if they want to continue to export without AD/CVD duties to the United States.
For cells exported directly to the United States, it is more challenging to avoid duties. Only those suppliers that either 1) use a non-China wafer and/or 2) are found to not be circumventing can avoid duties.
Therefore, most companies that do not have captive wafer factories in the named countries are unlikely to be able to export cells duty-free to the United States. This limits the already scarce potential available supply of cells for U.S. module manufacturers, including the many module factories which have been announced and/or are under construction.
As clarified in Commerce’s Dec. 19, 2022, memo, manufacturers in third countries, such as India and Mexico, can import solar PV cells from the named countries, use these in modules, and export the modules to the United States without the modules being subject to duties. This applies even if the cells used would be subject to duties if directly exported from the named countries to the United States.
Commerce found that 23 companies did not cooperate with the investigation and therefore applied “adverse facts available” (AFA). Companies with AFA rulings are not eligible to use the certifications that allow them to avoid duties using the “no more than two” or “non-China wafer” rules.
CEA reports that companies with AFA applied were mostly low-volume solar PV makers that do not export significant volumes to the United States. However, Vina Solar (Vietnam) and New East Solar (Cambodia) export to the United States and are listed as being subject to AFA.
“We expect that companies to which AFA is applied will either attempt to get this finding revoked and/or cease exporting directly to the United States, due to the impact of tariffs of an unpredictable value,” a CEA statement said.
Per President Joe Biden’s emergency Proclamation 10414 issued on June 6, 2022, imports of cells and modules from the named countries that are imported after June 6, 2022, but before June 6, 2024, will not be subject to duties. For cells and modules imported after Nov. 15, 2022, it is necessary for the cells and modules to be used or installed within 180 days to avoid duties. This emergency proclamation applies to all importers, including companies with AFA rulings.
Subscribers to CEA’s Market Intelligence reports will be receiving more detailed information on this topic in the coming days and weeks.
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