The recent anti-dumping and countervailing duty (ADCV) investigation launched by the U.S. Department of Commerce has raised concerns among domestic light owners about potential penalties for panel imports, which are retroactive in nature. In response, Chinese PV panel makers are halting shipments to the U.S. until the results of the investigation and any retroactive actions by the U.S. Department of Commerce are officially announced. It is reported that the preliminary judgment is scheduled to be officially announced in August this year, and the final judgment will be announced in January 2023.
The investigation comes as domestic PV companies worry about the rapid rise of Chinese manufacturers who use cheap raw materials and move cell and panel assembly to Southeast Asia to circumvent existing import bans on Chinese products. With imports frozen during the survey period, annual new capacity additions in the U.S. are likely to plummet from 22.6 GW in 2021 to less than 10.07 GW this year, which would also be the lowest level since 2019.
The U.S. Department of Commerce is investigating imports of photovoltaic products from four Southeast Asian countries that hold significant positions in the U.S. photovoltaic market—Cambodia, Malaysia, Thailand and Vietnam. Imports from these countries account for 85% of all U.S. PV panel demand in 2021, totaling 21.8 GW. In January and February 2022, the combined share of these four countries in annual U.S. PV panel imports accounted for 99% of nearly 100%. According to research by energy research agency Rystad Energy, after the U.S. Department of Commerce (DOC) launched an anti-dumping investigation on photovoltaic panels produced in Southeast Asian countries, the photovoltaic installed capacity of up to 17.5 GW originally planned to be implemented in 2022 is difficult to advance. The U.S. is expected to install more than 27 GW of PV in the utility, residential and commercial and industrial (C&I) markets this year, but with rising commodity prices and the new threat of tariffs on key imports, 64% of new capacity additions Currently in danger of stagnation.
“In order to limit the roundabout imports of cheap Chinese PV panels from Southeast Asia into the U.S. market, and with an eye toward the goal of rebuilding the U.S. domestic supply chain, the U.S. has significantly lowered its forecast for PV installations in 2022 and beyond. The most devastating event ever faced," said Marcelo Ortega, renewable energy analyst at Rystad Energy.
On March 25, 2022, the U.S. Department of Commerce decided to investigate crystalline silicon photovoltaic products imported from Cambodia, Malaysia, Thailand and Vietnam. Chinese PV panel makers circumvent ADCV trade rules by outsourcing final assembly of cells and panels to these four low-wage Southeast Asian countries, while still using cheap Chinese raw materials, according to U.S. domestic PV companies.
In a 2012 anti-dumping investigation against Chinese PV panel makers, ADCV tariffs ended up being applied at different rates to different suppliers. The most common rate is 30.66%, but some are as low as 24%, while some other suppliers are subject to 250% anti-dumping duties. If the U.S. Department of Commerce decides to extend the tariffs, the import of related products after the announcement of the investigation is allowed, but the import tariffs can be retroactive to November last year. Between November 2021 and February 2022, U.S. domestic importers imported more than $1.46 billion worth of photovoltaic panel products from the four Southeast Asian countries surveyed above, meaning Chinese suppliers could share between $365 million and $365 million. $3.6 billion in additional tariffs retroactively.
Because Chinese PV panel makers are reluctant to risk such high fines, a large number of companies choose to completely stop exporting panels to the US market.
This anti-dumping investigation will not only be limited to crystalline silicon photovoltaic panel products, but will also include the import of photovoltaic cells. This has major implications for domestic panel manufacturing in the U.S., where 5GW of domestic PV capacity is largely concentrated in panel assembly and relies heavily on cells imported from overseas. Last year, 46% of imported photovoltaic cells came from the countries that were surveyed.
U.S. domestic manufacturers are also feeling the impact of the investigation. While the threat of sanctions could incentivize suppliers to build new PV capacity in the U.S., it will take at least 18 months to build a domestic U.S. supply chain from crystalline silicon to panel assembly. If an investment decision is made after August 2022, preliminary results will be announced at that time, and the capacity could be operational as early as January 2024.
Additionally, the U.S. PV industry is in for a rough start to 2022 before the official anti-dumping investigation begins. More than 7GW of PV projects last year were delayed by more than six months due to high commodity prices, uncertainty over federal tax credits and unfavorable policies.