Could The Solar Trade Petition Destroy The Industry? Not If It Fights Back
This piece also appeared in PV Magazine.
If you follow the solar industry even tangentially, you’ve heard of the Section 201 trade complaint brought by failed module manufacturer Suniva, joined in their attempted highway robbery by nearly bankrupt module manufacturer SolarWorld by now.
In case you are not familiar with this particular industry blot, Suniva filed for relief under a little-known act that could exempt the United States from global trade agreements and allow President Trump to take unrestricted trade actions against solar imports from multiple nations. Essentially, Suniva and SolarWorld allege that international competition caused one bankruptcy and could potentially cause another.
For some reason, the U.S. International Trade Commission decided the complaint had merit and is moving ahead with its investigation. Here are the dates you need to circle on your calendar:
● Today—The commission is taking testimony from Suniva, SolarWorld and other interested parties to determine the extent of the “damage” international competition has really caused.
● Sept. 22—On that day, the solar industry will find out the ITC’s recommendation on what should be done with the complaint (if there’s any justice in the world, it dismiss the complaint out of hand).
● Nov. 13—That’s when the ITC will deliver its report to President Donald J. Trump, who has broad authority to either accept the ITC recommendations or do anything he wants instead (yep, that could actually happen).
But amid all the hand wringing and public (and loud, incredibly loud) opposition to the complaint, what gets lost is the effects the trade complaint are already having on the solar industry—what some have called “The Suniva Effect.”
The industry uncertainty created by Suniva and SolarWorld has created a rush on solar modules as developers hedge their bets. If Suniva is granted relief under its petition, the number of modules is expected to fall precipitously, and developers don’t want to be caught with no materials. So instead of typical inventory exhaustion that happens every year in October or November, the shortage started in June—five months ahead of schedule.
And the Chinese and Indian solar industries have figured out that instability can kill a solar market as quickly as if there were no more sun. Consequently, unlike policymakers in the United States, stability in the solar markets continues unabated, which means while our market panics, those markets are still growing fast.
Of course, like any smart capitalists, module manufacturers are following the money to markets where they can have reasonable expectations of continued growth moving forward. Right now, that place is not the United States.
That puts U.S. solar companies in a bit of a bind. With solar growing exponentially every year, people across the country have projects they want to build. But how can you possibly sign a deal without knowing what the price of modules is going to be next year?
Right, you can’t—and that’s where this trade case is already harming the industry. Shovel-ready projects can’t move forward until the final costs are calculated, and uncertain module prices have made many companies hit the pause button on 2018 planning.
Companies that have their own financing mechanisms—typically self-financed or the result of close relationships with banks and institutional investors—may weather this module shortage without it affecting their business significantly. I’m not saying those companies won’t be affected at all. I’m saying those companies may have the internal resources to ride it out more easily.
But for the small solar companies that make up the overwhelming majority of the industry’s backbone, even the smallest of delays in signing project contracts can be devastating. A disruption in cash flow could mean layoffs or worse.
No one in the industry wants to see the march to the Solar Century littered with the corpses of dead solar companies that went out of business because two selfish module manufacturers decided their self-interests were more important than the overall health of the U.S. solar industry.
A diverse and broad coalition, involving solar and non-solar organizations, has already formed to bring this fight to the trade commission, Congress and President Trump, but they can’t do it alone.
Fortunately, there are ways you can help. The trade commission is currently in the midst of taking public comments on the case. Admittedly, most people in the industry are pulled in so many directions the idea of taking on one more task is daunting. But this is the biggest fight the industry has seen since the pending expiration of the Investment Tax Credit in 2016, a disruption we were thankfully able to avoid.
The solar industry won that fight because of the activism of the industry and our allies in the general public. It’s time to mobilize that army again to fight against this trade petition like our livelihoods are at stake—because they are.