Solar Industry ‘Frozen’ as Biden Administration Investigates China

Plans to install 60 square kilometers of solar panels in Vermont have been put on hold.

A solar farm that would power hundreds of homes in Maine is partially built.

A project in Texas that would have powered more than 10,000 homes has been delayed until at least next year.

tens of billions of dollars and tens of thousands of jobs are at risk as solar companies delay projects, scramble for supplies and shut down construction sites around the country.

The Commerce Department is investigating whether Chinese companies are skirting U.S. tariffs by moving components for solar panels through four Southeast Asian countries.

The threat of retroactive tariffs has stopped imports of components from Cambodia, Malaysia, Thailand, and Vietnam. The most popular type of solar modules in the United States are provided by these four countries.

More than 700 companies have been surveyed in the last few days, and the Solar Energy Industries Association says that hundreds of companies are considering layoffs.

Energy experts warn that the effects are only beginning. A monthslong halt on imports from the four countries could have lasting ramifications for the Biden administration's ambitious goals to ramp up renewable energy development.

The industry is frozen and already leading to layoffs, according to a political scientist at the University of California, Santa Barbara.

The Commerce Department began an investigation on March 25 after Auxin Solar, a small solar panel manufacturer based in California, filed a petition requesting an inquiry into whether China was circumventing rules intended to prevent state-subsidized solar parts from flooding the U.S. market.

The Obama administration imposed tariffs on Chinese solar panels in 2012 in order to prevent China from dominating the emerging global market. President Donald J. Trump imposed additional tariffs on certain solar products from China.

China has dominated the global supply chain for solar panels. The government has nurtured giant factories that make polysilicon and components for solar cells that absorb energy from sunlight and convert it into electricity.

To avoid trade problems, U.S. solar installers have bought panels from the four Southeast Asian countries. According to Auxin, many of those panels are manufactured by overseas subsidiaries of Chinese companies.

The Commerce Department had previously said that parts from China were not subject to tariffs because they had been transformed by companies in Southeast Asia.

If the Commerce Department finds that the panels coming from Southeast Asia should have been subject to tariffs, panels sold in the United States after the start of the investigation could carry steep duties. The shipment of solar panels has stopped because of the threat of additional costs.

Mamun Rashid, the founder and chief executive of Auxin, said in an interview that he filed the petition because he hopes the investigation will help spur domestic manufacturing.

It would be irresponsible of us not to speak up about the trade laws being violated.

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Mr. Rashid said he was not working in concert with any other energy companies, investors or industry groups.

The process for evaluating trade disputes is complex and designed to prevent political interference. Gina Raimondo said that her department was obliged to pursue the issue.

She said at the hearing on Capitol Hill that she was required by statute to investigate a claim that companies operating in other countries are trying to circumvent.

The Commerce Department is committed to holding foreign producers accountable and is driving efforts to strengthen supply chains at the heart of the clean energy transition.

The United States installed a record number of solar panels last year. Only one-fifth of the panels were manufactured in the US, while the rest were imported from Malaysia, Vietnam, Thailand and Cambodia.

The solar industry's advocates are incensed by the effects of the federal investigation.

The Solar Energy Industry Association's chief executive said that the mere request by one company can bring the industry to its knees. People are starting to be laid off because shipments have stopped.

The sudden freeze in solar panel installation is colliding with Mr. Biden's aim to accelerate the annual pace of solar installations nationwide in order to realize his pledge to cut U.S. emissions at least 50 percent below 2005 levels by the end of this decade.

Nick Bullinger, chief operating officer of Hecate Energy, a solar company based in Chicago, said the investigation has undermined the administration's goal of renewable energy development. The country is falling further behind in achieving its climate goals as the tariffs investigation continues.

Large and small companies are being affected by the disruption.

NextEra Energy, one of the largest renewable energy companies in the country, said it expected between two and three gigawatts worth of solar and storage construction to not be completed this year.

David Reuter, chief communications officer at NextEra, said that it is disrupting the solar business and the industry as a whole. NextEra's shares have fallen in the last three weeks.

Green Lantern Solar, a private solar installer based in Vermont, has stopped work on projects in Vermont and Maine.

Scott Buckley, Green Lantern's president, said that the ramification is significant and that they had to call all of their suppliers.

The number of solar panels that will be installed through next year is predicted to decline by 46 percent according to the Solar Energy Industries Association.

First Solar, which makes a type of solar panel unaffected by the dispute, said it was supportive of the investigation.

Reuven Proneca, a spokesman for First Solar, said that they were interested in ensuring a level playing field for domestic manufacturers.

There are few easy replacements for products from Cambodia, Malaysia, Thailand and Vietnam for US companies looking for solar panels.

Mr. Buckley of Green Lantern Solar said that they have called every American panel manufacturer that they could find, and not one of them has panels available for them with any anticipated timelines.

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Some solar industry advocates think that the Commerce Department has the ability to quickly reverse course and end the investigation.

Heather Zichal, chief executive of American Clean Power, wrote in a post that the secretary's hands are not tied.

She said there was only so much she could do and that she would commit to moving as fast as possible.

The United States would have to invest a lot more in domestic manufacturing in order to compete with other countries that make solar products. New tax credits for solar wafers, cells and modules produced at home would be provided by the Build Back Better bill in Congress. Last year, Senator Joe Manchin III, a West Virginia Democrat, came out in opposition to the legislation.

While the solar industry waits for a decision from the Commerce Department, renewable power advocates worry that time is running out. The Solar Energy Industry Association estimates that the lost or delayed solar deployment will lead to an additional 368 million metric tons of carbon emissions by the year 2035, the equivalent of keeping 78 million gasoline-powered vehicles on the road.

It is going to slow down the industry at a time when we need to be moving faster.

Brad Plumer was involved in reporting.