Regulatory Update: Suniva 201 Petition, Implications for Solar Buyers

June 30, 2017 Jenna Bieller

Regulatory Update: Suniva 201 Petition, Implications for Solar Buyers

Dubbed a doomsday scenario for U.S. solar by reporters at GTM Research, Suniva’s recent filing of a Section 201 petition could have broad, rippling effects on the utility-scale solar industry in the United States.

If you haven’t heard of this yet, it’s time to listen up. To provide some background before we dive into the implications of this case, in April of 2017 Georgia-based (but Chinese-owned) solar cell and module manufacturer Suniva, Inc. filed a petition with the International Trade Commission (ITC) as a reaction to intense competitive pressure placed on the U.S.-based solar manufacturer by foreign producers. This petition, filed under Section 201 of the Trade Act of 1974, is meant to provide global safeguards against “serious injury” to domestic manufacturers from imports. In mid-April, Suniva filed for Chapter 11 bankruptcy. On May 25thSolarWorld Americas became a co-petitioner in the 201 safeguard case. Earlier in May, SolarWorld AG, parent company to SolarWorld Americas, also filed for bankruptcy.

In Suniva’s petition, they recommended the ITC place a $0.40/W duty on cells and set a floor price of $0.78/W on crystalline modules manufactured outside the United States. Though Suniva’s requests are just that – requests – a potential price increase of this magnitude would have very material effects on large-scale solar power projects in particular. At the utility-scale level that many corporate buyers are seeking, panels currently trade below $0.30/watt. The requested tariffs could more than double the price for solar panels, crippling two-thirds of projects expected to come online in the next 5 years.

Today, the ITC voted 4-0 in favor of Suniva and SolarWorld Americas, finding that competition from foreign imports did cause serious injury on US solar manufacturers. The continuing process and key dates for the Suniva 201 petition are as follows:

  • ITC agrees to review the petition (already agreed)
  • ITC determined that “serious injury” did occur (decided on Sept. 22nd)
  • ITC makes recommendation for remedy if “serious injury” did occur (to make recommendation by Nov. 13th)
  • ITC recommendation goes before President Trump to decide on corrective action within 60 days.

What's next? How does this impact the industry and what impacts should your company expect?

The potential impact on the U.S. solar industry is large. The Solar Energy Industries Association (SEIA) pegs this impact on solar industry jobs to be 88,000 jobs lost throughout the solar supply chain. Industry experts at GTM Research suggest solar modules spiking back to 2012 prices if the ITC takes Suniva’s recommendations.

This is a big deal – and not just for stakeholders directly involved in the solar industry. Anyone in the market for solar power, including C&I energy buyers, should pay incredibly close attention to this case as it plays out. For many companies pursuing renewable energy goals, solar power projects have begun to rise to the top of their agendas as they provide competitive economics in many markets. A mandated price increase that applies to potentially all imported solar modules would greatly affect the competitiveness of renewable energy in a market that is clearly eager for a clean power transition.

The ITC's remedy is yet to be determined, and therefore the effects of today's decision are uncertain and unclear. Some say they expect little to happen. Others are less optimistic. See commentary from both sides in this article

This industry is constantly changing, making it an exciting, dynamic, and, at times, a lucrative environment in which to do business. The Strategic Renewables team at Schneider Electric – Renewable Choice is already in negotiations with solar developers to gain an even deeper understanding of where the market stands on the Suniva 201 petition, and how potential outcomes could alter risk profiles for companies entering into long-term solar contracts via power purchase agreements. This case serves as a reminder of why C&I buyers choose to work with an advisor who proactively advocates for the best interest of both the buyer and the environment.

We will continue to monitor the situation and are available for any questions. We are here to help your company navigate these policy changes and understand the possible future scenarios that may unfold while implementing safeguards and measures along the way. 

Reach out to our team for more information on the Suniva 201 petition and to discuss the unique implications for your organization.

 

 

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