A long-running battle in the global photovoltaic market between the U.S. and China over anti-dumping and subsidy charges could expand into higher solar costs, particularly if punitive tariffs are also levied on Taiwanese cells. However, enough tariff-free capacity should still be available to ensure there are no shortages in the U.S. this year, according to new analysis from IHS Technology.
In ongoing investigations expected to culminate later in the year, the U.S. International Trade Commission is determining if further penalties should be imposed on solar modules containing cells manufactured in Taiwan. Having already punished China in 2012 with anti-dumping and countervailing duties, the U.S. now is seeking to close a loophole in which Chinese module manufacturers circumvented the large fines – ranging from 34% to 250% – by using third-party suppliers of PV cells located in Taiwan.
If the final ruling, expected in October, determines there is cause to impose penalties also on Taiwanese-sourced PV components, the price of solar cells and panels would almost certainly rise in the U.S., IHS says. This, in turn, is prompting fears that an increase in pricing might cause PV panel shortages in the U.S. market and disrupt the growth of PV installations.
But the prospect of a shortage here at home is unlikely, at least for this year, IHS predicts. In all, an estimated 57.8 GW of production capacity representing crystalline solar cells and thin-film solar modules is available globally, 11.2 GW of which is located outside of China and Taiwan. Those 11.2 GW of capacity is not covered under the present U.S. inquiries, and when added to 6.1 GW of global thin-film capacities, the overall available supply of tariff-free solar capacities would amount to 17.3 GW, the report says.
At such levels, enough volume remains to support the entire breadth of U.S. solar installations for 2014, projected to reach 6.5 GW. This means the U.S. need not fear the possibility of a shortage this year, IHS believes.
‘While 2014 U.S. solar installations shouldn't be severely impacted even if broader penalties were to be assessed against Taiwanese – and effectively, also Chinese – PV suppliers, anti-dumping duties imposed on such a significant portion of supply will have a noticeable effect on the U.S. solar market,’ says Wade Shafer, senior analyst for solar demand at IHS.
The lowest module prices currently available in the U.S. market – all of them Chinese modules containing Taiwanese cells – are in the range of $0.62/W to $0.65/W, IHS reports. Non-Chinese suppliers, in comparison, offer products at prices higher than $0.70/W. Depending on the final outcome of the trade case, PV module prices could rise to somewhere between $0.75/W and $0.80/W.
‘To maintain their market share in this region, the Chinese may have to pass on a portion of their margin to customers and also offer better financing conditions in order to remain competitive, despite punitive tariffs,’ says Stefan de Haan, associate director for the solar supply chain at IHS.
Chinese companies are now increasing their shipment volumes to the U.S. to build up module stocks not yet affected by tariffs, prior to the final decision in October. Such a move will allow them a buffer of a few months, de Haan says.
‘In view of the importance of the U.S. market, Chinese companies are expected to ramp up manufacturing facilities in the North American Free Trade Agreement zone, particularly in Mexico,’ he says.