The U.S. solar industry is healthy, but trouble lurks ahead. According to a new report, potential new tariffs resulting from the antidumping and countervailing duty (AD/CVD) investigations into solar cells and modules imported from Southeast Asia could increase costs and slow down project development in the United States.
Commissioned by the American Council on Renewable Energy (ACORE), this Clean Energy Associates analysis, “Potential Impacts of the 2024 Antidumping and Countervailing Duties on the U.S. Solar Industry,” outlines how the U.S. solar sector is currently in good health with a fast-emerging domestic solar manufacturing supply chain.
However, the imposition of new, unpredictable AD/CVD duties on solar cells and panels imported from Cambodia, Malaysia, Thailand, and Vietnam could raise U.S.-made module costs by 10 cents/Watt and imported module costs by 15 cents/Watt. These higher prices implemented on top of other headwinds — including domestic factors and trade restrictions that are already in place and impacting the industry’s trajectory — could seriously hinder America’s progress on solar deployment. The result could impede America’s ability to provide affordable renewable energy and achieve climate targets.
Upon the release of the report, ACORE and CEA hosted a webinar on July 9 to highlight some of the key findings. Two of the authors of the analysis, Daniel Shreve, VP of market intelligences with the CEA, and Christian Roselund, senior policy analyst with the CEA, discussed the current state of the U.S. solar industry and how new AD/CVD tariffs could create uncertainty and delay future development.
“Solar is a success story,” Shreve said, noting that U.S. PV installations have increased by a 33% compound annual growth rate (CAGR) from 2010 to 2023, with utility-scale projects representing the 70% of the growth in 2023 alone.
“A lot of the focus has been on job creation,” Shreve added. Installers, developers and other “in the field” jobs is where the industry has seen most growth — more than 85% since 2016 — with a smaller percentage made up of manufacturing positions.
While manufacturing jobs have not increased to the level of field labor, U.S. solar manufacturing capacity is another story. Shreve reported that U.S. module capacity could reach 60 GW by 2027, whereas cell manufacturing capacity is lagging and could reach 12 GW in the same period — far below demand.
The lack of significant solar cell manufacturing in the United States is a potential concern, he said. However, the 45X tax credits created by the Inflation Reduction Act (IRA) are providing incentive to increase U.S .solar manufacturing, resulting in costs that are competitive with supply from Southeast Asia.
While the U.S. is actively building its solar module manufacturing capabilities, the researchers explain how more time is still needed, particularly to build cell capacity, to meet demand. Imposing additional tariffs on solar cells will likely harm American module manufacturers, who must rely on imported solar cells to meet their current production needs. The analysis conveys how this could undercut the buildout of a strong domestic solar supply chain and jeopardize U.S. factories and the jobs they support.
Negative AD/CVD impacts
Despite the growth in the market, Roselund highlighted several challenges for the market. As the U.S. International Trade Commission (ITC) weights the AD/CVD case, the solar industry is bracing for trade policies that could negatively impact deployment and raise PV costs.
From the report:
- Anti-circumvention duties extend China’s antidumping and countervailing duties to many Southeast Asia imports, restricting duty-free cell and module volumes for U.S. PV developers and creating competition for non-China cell and module materials.
- Section 301 tariffs set at 25% to 50% for many PV components raise costs for U.S. manufacturers and increase tariff rates on many module materials.
- Section 201 tariffs are reinstated on bifacial module imports, raising costs for importers by over 14%.
Roselund noted that the report could not tell the future, but the last time such tariffs were put in place in 2012, the solar industry experienced the slowest growth in its history.
“The unknowable nature of the duties is a big challenge,” Roselund said, explaining that 1) companies don’t know the amount of the duties imposed until after a review, 2) the duties are applied retroactively after about two years, and 3) the rates vary year to year. He also noted that tariffs have kept U.S. prices higher than world prices for the past decade.
As Shreve noted, there is a 20 GW gap between module manufacturing capacity and cell manufacturing capacity coming online. Roselund noted that the gap will likely continue to grow larger in 2025, with manufacturing expected to slow in 2026.
If new AD/CVD tariffs are imposed, Roselund expects module prices to spike by 10-15 cents/Watt. When the AD/CVD investigation was launched in 2022, manufacturers reopened contracts and increased prices to 40-55 cents/Watt. Data from the new report shows how solar prices have already started to spike since the petitions were filed with the ITC and U.S. Department of Commerce on April 24.
“If companies face uncertainty around their manufacturing, we could end up with projects canceled or delayed based on this uncertainly,” Roselund said. “It would slow down deployment. Many projects may no longer reach the needed investment potential. That in turn negatively impacts jobs in the field, as well as factory jobs, and results in higher energy costs.”
To meet the U.S. government’s target of a 50-52% reduction in greenhouse gas emissions by 2030, the U.S. solar industry must increase from 177 GW of installed capacity to over 500 GW.
“Today, solar is one of the most affordable and reliable energy sources we have to power our economy,” said Ray Long, president and CEO of ACORE. “Injecting uncertainty into the market slows economic growth and the good-paying jobs clean energy creates, undermines U.S. climate objectives, and will inevitably raise energy costs for American families. This is not an appropriate course of action and could unintentionally cede U.S. leadership in the solar industry to other countries.”
Click here to download “Potential Impacts of the 2024 Antidumping and Countervailing Duties on the U.S. Solar Industry.”
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