In March this year, the U.S. Department of Commerce launched an anti-tariff investigation on solar products from Cambodia, Vietnam, Malaysia and Thailand. The investigation targets include Trina Solar, JinkoSolar, and LONGi Green Energy, which have cell module production capacity in four Southeast Asian countries. of leading companies. Once the relevant investigation is carried out, it may lead to retrospective tariffs of up to 250%.
Since January 2018, due to the impact of the 201 tariff bill, U.S. imports of photovoltaic products from China have decreased by 86%. During this period, U.S. imports of photovoltaic products from Malaysia, Thailand, Vietnam, and Cambodia increased sharply.
Obviously constrained by the import supply of solar cell equipment, some solar projects in the United States are currently almost at a standstill. Therefore, in May, the U.S. Trade Office announced that the two actions to increase tariffs on my country had expired and the review process was started, and it was possible to exempt the tariffs already imposed. In June, the White House announced that it would not impose any new tariffs on solar imports for two years, allowing the United States to import solar modules from four Southeast Asian countries without being affected by the tariffs for two years.
And almost at the same time, on June 6, Biden approved the "Defense Production Act" (DPA) to promote the development of the US clean energy industry, and plans to triple the domestic solar manufacturing capacity in the United States by 2024.
DPA Action Rules
Goal: Significantly increase U.S. solar manufacturing capacity
On June 6, 2022, the White House issued a communiqué stating that Biden took executive measures to stimulate the development of clean energy manufacturing in the United States, including approving the Defense Production Act, reducing energy costs, strengthening power grid construction, and creating high-paying jobs.
According to the plan, by 2024, the domestic solar manufacturing capacity in the United States will be tripled. The expansion of solar manufacturing capacity announced by President Biden since taking office will add an additional 15 gigawatts to the current 7.5 gigawatts, bringing the total to 22.5 gigawatts by the end of his first term.
Plan: Stimulate domestic PV demand and supply through government purchases
1. Authorize the use of the Defense Production Act (DPA) to accelerate domestic production of clean energy technologies, including solar panel components.
In deploying the DPA, the Biden administration will strongly encourage the use of strong labor standards, including program labor agreements and community benefit agreements that provide wages that meet or exceed current standards and include local employment terms. The government will also encourage projects with environmental justice outcomes that enable low-income communities historically overburdened by legacy pollution to make a clean energy transition. Following the announcement of this bill, the White House and the Department of Energy will convene relevant industry, labor, environmental justice and other key stakeholders to maximize the DPA's role in strengthening domestic clean energy manufacturing.
2. Harness the full power of federal procurement to stimulate additional domestic solar manufacturing capacity through the creation of a master supply agreement (including "super-preferential" status).
Biden wants to use the full power of federal procurement to stimulate more domestic solar manufacturing capacity. Biden directed the development of two innovative tools to accelerate clean energy manufacturing in the U.S.: the Master Supply Agreement for Domestically Manufactured Solar Systems, which increases the speed and efficiency of domestic clean electricity suppliers’ sales to the U.S. government; Preferences), the domestic standard for federally procured solar energy systems, including domestically manufactured solar PV modules compliant with the Buy American Act. It is hoped that the federal procurement measures will stimulate demand for domestically produced solar modules in the short term and encourage local governments as well as municipal utilities to drive 100GW of installed capacity.
3. Open a 24-month PV import tariff exemption period to reserve the supply of domestic PV modules.
Specifically, a 24-month tariff exemption is granted for solar modules sourced from Cambodia, Malaysia, Thailand and Vietnam to ensure a reliable supply of modules needed for U.S. solar deployment and grids to meet power generation needs while scaling up domestic production.
Key technical directions: involving photovoltaics, new energy grids, building renovation, hydrogen energy
1. Solar energy
Photovoltaic is the largest source of new energy generation capacity in the United States and the cheapest source of new energy electricity in many regions. However, domestic solar PV production in the United States cannot meet current demand. By supporting a safe, stable, diverse and competitive domestic solar supply chain, Biden hopes to use the above plan to enhance domestic supply, promote energy independence, and reduce energy costs for U.S. consumers.
2. Transformers and grid components
The United States is highly dependent on critical grid components sourced abroad. Traditional industries are insufficient to meet the unprecedented increase in electrification needed to support America’s decarbonization, defense against cybersecurity attacks, and maintenance of critical infrastructure, and will not be able to meet America’s electricity needs in the near term. Achieve reliable power system supply by expanding domestic production of transformers and critical grid components. Supply chain delays have resulted in up to two-year wait times for some critical grid components in rural and urban America. Projections indicate that the U.S. will need to expand its power transmission system by 60 percent by 2030 and possibly triple it by 2050 to meet the country's increased renewable energy generation and expanding electrification needs.
3. Heat pump
According to statistics, all buildings and other facilities in the United States consume more than 40% of the energy. In order to reduce the amount of energy required by buildings and thus reduce dependence on oil and gas, heat pumps are seen as a solution. Currently, however, U.S. HVAC manufacturers are not producing heat pumps at the required rate. Biden wants manufacturing to expand and speed up the installation of heat pumps in homes and residential buildings by qualified construction professionals.
4. Building outer layer insulation
About half of all homes in the U.S. were built before modern building energy codes, which means they lack modern insulation, leading to energy seepage. Building retrofits are predicted to reduce energy use by 50% or more. In addition to lowering home energy costs and increasing the domestic clean energy workforce, well-insulated buildings provide "passive survivability" that maintains safe indoor temperatures for longer periods of time in the event of an energy outage, thereby reducing personnel exposure to extreme weather casualties. While current U.S. insulation production is sufficient for new construction, there is still insufficient demand for insulation retrofits in older buildings.
5. Electrolyzers, fuel cells and platinum group metals
Electrolyzers, fuel cells and platinum group metal (PGM) catalysts are seen as key links to increase green hydrogen production. Clean hydrogen produced through electrolysis is expected to help meet U.S. decarbonization goals. Biden wants to reduce reliance on Russia (the world's second-largest producer of platinum group metals) and China by supporting domestic supply chains for electrolyzers, fuel cells and platinum group metal catalysts.
The relaxation of PV imports stems from a serious shortage of domestic production capacity
The U.S. solar market will install a record 23.6 GW in 2021 despite the pandemic and supply chain impacts. But the negative impact on pricing and procurement continues into 2022, which will see its first annual decline, according to the American Solar Energy Association. Assuming supply chains recover and there are no major trade barriers, growth should resume in 2023 before the cut in the investment tax credit in 2024.
Because the U.S. PV module market is heavily dependent on imports. The US domestic photovoltaic module production capacity is only 7.5GW, of which the crystalline silicon module production capacity is about 5GW, and the thin-film module production capacity is about 2.5GW, which can only meet 15% of the US PV market demand. As a result, prices across the U.S. solar industry have continued to rise over the past year. For the first time since the 2014 solar system price data model was established, prices across all market segments increased for three consecutive quarters, with utility-scale solar prices 18% higher than a year earlier. Rising prices have impacted solar industry deployment, with one-third of projects delayed by a quarter or more in the fourth quarter of 2021, and 13% of planned projects since 2022 have been delayed by a year or more, or even canceled outright.