Concurrent with the two-year halt of solar tariffs on major Southeast Asian panels suppliers, the Biden Administration invoked the Defense Production Act and is using the full power of federal procurement capabilities to boost US-made solar.
June 6, 2022
The dominant story in solar for 2022 has been the Department of Commerce’s investigation into alleged anticircumvention/antidumping violations of four solar panel suppliers Southeastern Asian countries suspected of harboring Chinese solar goods. Tariffs attached to goods supplied by these countries could range 50-250% of the cost of goods and would back-date to the February filing by US-based manufacturer Auxin solar.
The uncertainty and risk level caused by this investigation essentially froze the solar industry in its tracks, with hundreds of megawatts of projects cancelled or delayed and the industry cutting its forecasts for deployment this year in half. This uncertainty will now be alleviated, for now, as the Biden Administration enacted a 24-month moratorium on tariffs from these locations.
This development came with praise from most major players in the solar industry, save US-based manufacturers like First Solar. One of the major criticisms of the investigation was that it appeared to be a feeble, poorly planned attempt to boost US-based manufacturing. Many industry players said they were open to supporting domestic manufacture of US solar goods, but that the tariffs were a short-term measure that blindsided developers and crushed deployment in the near- and mid-term.
The moratorium was launched alongside a few other actions designed to support domestic manufacturing, indicating the White House heard the near-uniform message from the solar industry that executive actions and stated goals were misaligned. With these new actions, the Biden administration is steering the market back towards the high bar of 100% carbon pollution free electricity by 2030, among other climate-driven emissions goals.
While the actions have been generally celebrated, the industry is still awaiting long-term industrial policy like the provisions introduced in earlier drafts of the Build Back Better Act. It is calling for a swift end to the investigation for greater long-term clarity.
“While I applaud the President for his leadership in building a brighter future today, the lingering threat of tariffs stemming from the ongoing circumvention case will continue to jeopardize our clean energy progress. I strongly urge the Department of Commerce to work toward a swift end to this case and put the solar industry fully back to work.” George Hershman, CEO, SOLV Energy
In addition to the halt of tariffs, the White House invoked the Defense Production Act for clean energy, and stated goals to use the full power of federal procurement through master supply agreements and giving solar goods “super preference” status.
The Defense Production Act
In pursuit of a rapid expansion to 22.5 GW of domestic solar manufacturing by 2024, the Defense Production Act (DPA) of 1950 was invoked. This act will not end the antidumping investigation, but it will eliminate the provision that would have back-dated tariffs to the date of the February Auxin Solar petition.
The DPA, to be administered by the Department of Energy will be directed to boost five key technologies, including solar panel parts including modules and module components, insulation for buildings, efficient electric heat pumps for heating and cooling, equipment for making electricity-generated fuels, including electrolyzes, fuel cells, and related platinum group metals, and critical power grid infrastructure like transformers.
The Act will encourage strong labor standards, including agreements for project labor and community benefits that ensure prevailing wages are paid and a quota of local hiring is met. The administration also stated goals of environmental justice and empowering clean energy transition in low-income communities that have historically (and continue to) bear an inequitable burden in energy-related injustices.
Following the announcement, the Biden administration said it will meet with industry, labor, environmental justice, and key stakeholders to enable a strong implementation of the DPA.
Federal procurement
The administration said it is also using the full power of federal procurement in action to increase domestic manufacturing capacity.
Master Supply Agreements will be put in place to enable domestic clean electricity providers to sell products to the US government rapidly and efficiently. Such agreements standardize contracts, making them easier to administer, and supporting transparent quality control for all parties involved.
It also enacted the use of “Super Preferences” which apply domestic component content standards for federal procurement of solar projects. The procurement will be in alignment with the Buy American Act.
The White House said these actions combined will pave the way for 10 GW of solar procurement over the next decade by the United States government alone. In cooperation with local and state governments and municipal utilities, the administration said the actions will make a potential market impact of as much as 100 GW over the next decade.
The Biden Administration’s briefing on these actions, plus existing actions already in place to support US solar can be found here.
