This text is an extract from Wooden Mackenzie’s report ‘The US photo voltaic commerce boundaries (virtually) labored. However they will not any extra’.
In January 2018, the U.S. authorities applied Part 201 photo voltaic tariffs on imported cells and modules. After preliminary successes, our evaluation exhibits that the effectiveness of this method is now on a decline.
The commerce boundaries, composed of a number of layers of tariffs and import quotas, have been efficient in 2018 and early 2019. The two.5-gigawatt photo voltaic cell import cap was sufficient to assist home photo voltaic module manufacturing, and tariffs on imported modules have been excessive sufficient to degree the enjoying subject.
Nevertheless, the effectiveness of the commerce boundaries began to erode in 2019 as a consequence of robust demand within the U.S. photo voltaic market. We anticipate that the market will develop by 33 % in 2020 and 48 % in 2021 from the 2019 degree. This may require home producers to acquire extra photo voltaic cells from abroad suppliers than the tariff-free import quota helps. They stand to overlook out on market alternatives if the quota isn’t elevated to match demand.
Module imports from China on the rise
Module imports from China have been on the rise since January 2019. That’s regardless of a mix of Part 201 tariffs, anti-dumping and countervailing duties (ADCVD), and Part 301 tariffs, a.okay.a. ‘the China tariffs.’ In line with U.S. customs information, China exported 314 megawatts of photo voltaic modules to the U.S. in 2019, and the development continues in 2020. Over 490 megawatts of modules have been imported from China in Q1 2020, already exceeding all of 2019’s imports by 22 %.
Three elements are answerable for this development:
Heightened demand for bifacial photo voltaic modules
On-again-off-again Part 201 tariffs on bifacial modules
The associated fee competitiveness of bifacial modules made in China.
Greater than 95 % of the Chinese language module imports in 2019 got here within the second half of the 12 months, after the announcement of the bifacial module Part 201 tariff exemption. The exemption created a window of alternative for U.S. photo voltaic builders to acquire cheaper modules from China, however coverage flip-flops over the previous 12 months have made it laborious for builders to show their opportunistic actions right into a routine procurement apply.
The effectiveness of the U.S. photo voltaic commerce boundaries will depend on your viewpoint. From the angle of home photo voltaic producers, the coverage partially achieved its objective: It grew U.S. manufacturing capability and carved out a large marketplace for home modules.
Nevertheless, if the aim of the coverage is to guard and develop the whole photo voltaic business, then the added price and provide constraints have been counterproductive.
Tariffs have made photo voltaic modules artificially dearer within the U.S.. The associated fee is about 79 % greater than in main European markets, 75 % greater than Japan, and about 85 % greater than in China. With out the tariffs, U.S. photo voltaic system costs may very well be practically 30 % decrease. Utility-scale photo voltaic with high-efficiency modules and trackers within the U.S. would price lower than $1.00/W to construct in 2020, two years sooner than the present price trajectory.
The Part 201 tariffs are at present scheduled to part out on February 7, 2022. The U.S. federal authorities will decide what occurs subsequent.
If the U.S. extends the identical set of tariffs for an additional spherical, by 2026 it could price twice as a lot to purchase photo voltaic modules within the U.S. than in Europe or Canada. In that case, installations will fall nicely beneath our present outlook.
Learn the report to seek out out extra concerning the forces influencing procurement technique. Wooden Mackenzie photo voltaic shoppers can entry the report right here.