Although much attention has been focused on the U.S. withdrawal from the Paris Accord, the greatest current threat to solar development in the U.S. is a petition for an import tariff filed earlier this year by Suniva, a solar cell and panel manufacturer in the state of Georgia. Suniva’s petition was filed with the U.S. International Trade Commission on April 26, 2017, and it requests a tariff of 40¢ a watt on imported solar cells and a floor price of 78¢ a watt on imported solar panels. Suniva’s request was joined on May 25, 2017 by SolarWorld Americas, the U.S. arm of German solar manufacturer SolarWorld. Suniva is currently in bankruptcy, and its request was made at the behest of a creditor apparently seeking to maximize the value of Suniva’s assets prior to selling them.

Although the tariff on imported solar cells and panels is purportedly designed to prop up the dwindling U.S. manufacturing base for those items, by raising the prices of solar equipment, the tariff would have highly negative impacts on the “downstream” solar installation and deployment industries. Analysts say the tariff would roughly double the cost of solar modules, which would lead to a corresponding increase in prices for PPAs and other solar deployment contracts. This would have serious impacts on the solar market, and one study estimates that it could cause U.S. solar development demand to shrink by approximately 60% from 2018-2021. Residential and commercial solar may become non-viable in entire states due to raised costs. More broadly, the uncertainty regarding the imposition of tariffs has begun to chill development already.

Suniva’s petition was made under Section 201 of the Trade Act of 1974, which provides a regulatory means for domestic manufacturers to request relief from foreign competition. Under Section 201, a request is first reviewed by the U.S. International Trade Commission, a quasi-judicial federal agency which must evaluate whether the threshold requirement of “serious injury” has been met and then must recommend a remedy if warranted. The President reviews the Commission’s recommendation, but is free to adjust the final remedy.

The International Trade Commission is due to make its injury determination by September 22, 2017, and must make its recommendation to the President by November 13th. The President must then decide on the final remedy within 60 days. Since the enactment of the Trade Act, 73 requests have been investigated, and a final remedy granted in only 35.6% of them. However, the Trump administration has spoken out in favor of protectionism, and cited Section 201 as a “vital tool” in its 2017 Trade Policy Agenda. The Solar Energy Industries Association, a leading industry organization, has committed to fighting the tariff, and the summer will likely see an escalation of lobbying efforts on this issue.

For more information on this and other issues relating to solar development, contact Alex Leff, Dan Chorost, or Devin McDougall.