Trade Case Causes Stir at International Solar Conference

Hanging like a thick fog over the proceedings of the annual Solar Power International (SPI) conference in Las Vegas, an ongoing trade case cast uncertainty on the industry. The case, which pits two solar manufacturers against just about everybody else in the industry, was the focus of several panels and nearly all side conversation at the conference, which ran September 11-13.

The petitioners, Suniva and SolarWorld, argue that imports of foreign made solar modules have made it impossible for them to compete in the industry. They ask that the International Trade Commission (ITC) recommend significant tariffs on all foreign made modules.

However, the Solar Energy Industries Association (SEIA) and representatives from several major solar companies argue that the tariffs would cripple the U.S. solar industry. Opponents of the tariffs go so far as to allege that the problems Suniva and SolarWorld have had in the industry are wholly due to their own business practices.

"This is a case about companies that are saying they can't compete. This is not a case about violation of our trade laws. This is not a case about a particular country that is doing something nefarious. This [is] really a case about two-two-two companies that are saying: 'we can't compete and we need help,' " SEIA President and CEO Abby Ross Hopper said during the conference, emphasizing how few companies are in favor of the tariffs.

The case was filed with the ITC in April under Section 201 of the Trade Act and seeks relief from foreign-manufactured crystalline silicon photovoltaic (CSPV) cells and modules.

Crunch Time

The ITC heard arguments in the case during an August 15 hearing. The industry is now waiting for the ITC to determine if the foreign-manufactured modules have in fact caused injury to Suniva and SolarWorld. That determination will be made by September 22. If it is determined that there was injury, a hearing to determine what remedy is appropriate will be held October 3. The ITC will then need to report its relief recommendations to President Donald Trump by November 13. What Trump will do with the recommendation is a complete unknown.

Speaking with POWER on the sidelines of the conference, John Bereckis, president of Boviet Solar USA's Modules division, said he believes that it is likely that the ITC will determine that there was injury caused, but that the petitioners won't have the upper hand in the following hearing. "That is what's going to come out in this next portion of the hearing is: 'Okay, yes, there [were] a lot of modules that were brought in. Yes, the market price set itself under your price point, but now you have to show us why and how you were damaged,' " he said. "I think they're going to fail to paint a very good picture on that because large developers that have contracts with them, they failed those contracts, they defaulted on those contracts."

Burning Bridges

There is no doubt that within the industry, the gloves have come off in this case. During presentations and interviews, industry representatives were not shy about taking aim at the character of Suniva and SolarWorld. Suniva filed bankruptcy in April, just before filing the case with the ITC. SolarWorld joined the petition shortly after that.

Complaints about the business practices of SolarWorld were aired freely during the conference. "I think it's fairly clear that these two companies constantly missed delivery timelines, suffered recalls-which we all know are fairly rare in this industry-delivered obviously broken panels that couldn't produce the power output that was promised, didn't honor warranty claims, refused to submit to product testing that obviously long-term owners like us care about," Ed Fenster, executive chairman of SunRun, said during a general session at the conference.

Others noted that Suniva and SolarWorld, even with the lessened competition that would result from the tariffs, would be unable to meet the demand of the U.S. solar industry, a claim backed up by the experiences of former customers. "Often when people reached out to them to purchase panels because they were made in the United States, they were met with panels " manufactured elsewhere, and what's interesting is in the commission hearing, they didn't really dispute those facts," Fenster said.

George Hershman, senior vice president and general manager of Swinerton Renewable Energy, backed up Fenster's claim, citing his company's experience with SolarWorld. "We gave them an opportunity to supply 75 megawatts, which is a small portion of what we put in place last year, and they couldn't supply the product, and what they did supply they brought in from overseas. They don't have the capability," he said.

Even if Suniva and SolarWorld's petition is granted, it seemed unlikely to attendees of the conference that anybody in the industry would be likely to work with them. "People are like: 'I'm never going to use SolarWorld again. They screwed me and screwed me,' " Bereckis said, going on to express confusion at the strategy of SolarWorld and Suniva. "Why would I bad mouth the people that are in the same industry that I'm trying to be successful in?" he said.

Several people commented that they believe SolarWorld's actions are essentially holding the industry hostage. "It's the analogy of 'well, if I can't play, I'm going to take my ball and go home and ruin it for everybody else,' " Bereckis said.

Questioning Motives

Adding further intrigue to the case, the path to Suniva's petition would be almost unbelievable, if there weren't a public paper trail. Suniva owes several million dollars to UK venture capital firm SQN. "Now, in an effort to recapture that investment in a bankrupt company, [SQN] became the debtor in possession and drug Suniva into this case. SolarWorld was obviously a willing participant," Hershman said.

After filing the petition, SQN wrote a letter to the China Chamber of Commerce for Import and Export of Machinery and Electronic Products. In that letter, SQN told the organization that if it could "find somebody to buy our equipment or repay us for our debt, we will drop this case," Hershman explained. "So this was about a failed debt that then has blossomed into this case where SolarWorld has come in. It's hard to even look past that. This is an attempt to extort money out of manufacturers that have now put all of our jobs at risk."

Others noted that neither petitioner is U.S. owned. "Suniva, by the way, the original technology came out of Georgia Tech like a dozen years ago, and they were started as an American company with private capital of some sort, but they ran into bankruptcy issues and were acquired by a Chinese company," Tony Clifford, chief development officer at Standard Solar told POWER. "SolarWorld AG is nominally a German company."

Who Benefits?

According to SEIA, if the tariffs requested-40 cents per watt of capacity on imported solar cells and a minimum price for modules of 78 cents per watt-are put in place, "88,000 jobs will be lost nationwide, including 6,300 jobs in Texas, 4,700 in North Carolina and a whopping 7,000 jobs in South Carolina."

Many note that while the modules in question are largely made overseas, imposing the tariffs would cost the industry jobs down the supply chain, such as in the manufacturing of racking systems. "The rise in solar costs would slash demand. Solar project costs would rise dramatically for both rooftop and utility scale, and solar would become less competitive," according to an SEIA fact sheet.

SolarWorld argues that the influx of foreign modules has resulted in several U.S. manufacturers shutting their doors. "Nearly 30 U.S. crystalline-silicon solar technology manufacturing sites have closed down since 2012, a period in which imports of such products surged by nearly five-fold," according to an August 9 release. Panelists at the SPI general session were quick to note that the case only applies to manufacturers of CSPV cells.

While both sides argue that there is much at stake, figuring out exactly who would benefit from the tariffs is difficult. While Bereckis noted that SolarWorld has burned many bridges in the industry, Clifford suggested that the company would benefit, but only temporarily. "Certainly the debtor in possession of Suniva benefits. SolarWorld will benefit, at least for some period of time, but the long-term benefit just is not there," Clifford said.

Bereckis was quick to note that Suniva itself is extremely unlikely to benefit at all from the tariffs. "Suniva's not going to benefit from it," he said. "They filed bankruptcy, and they're not going to come out of bankruptcy, even though they say: 'Hey, if this tariff comes along, it'll give us an opportunity to reset the clock.' It's not going to happen. We know it's not going to happen."

Bereckis suggested that Boviet would benefit in some ways from the tariffs, but the company remains opposed to them. "We'll make more money to be really honest. If I'm selling a product at 45 cents and they say its 70 cents, great, I just made more money. That just means I can't sell it any cheaper, it doesn't mean it's going to cost me more to make." He went on to note that the people who will really be hurt if the tariffs take effect are consumers. "I think the end-user, the consumer, the business owner, the people that are utilizing [the product will suffer]."

In the long run, most attendees seemed to believe that the industry would recover from the tariffs, but things could be rough for some time. "That would be a speed bump. It'll be a rather large speed bump, but it would be a speed bump, not a concrete wall," David Chiesa, senior director and business developer at S&C Electric Co. told POWER. "The industry will adapt and overcome. It's just going to lose some of its momentum, which is tough."

-Abby L. Harvey is a POWER reporter.

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