Biden Administration Adjusts Solar Trade Policies

In a move aimed at addressing concerns within the solar industry, the Biden administration has recently made significant adjustments to solar trade policies, including hiking tariffs and launching an import probe.

One notable adjustment is the decision to no longer exempt countries from tariffs on “bifacial,” or two-sided, solar panels, a technology that constitutes the majority of solar imports. These panels will now face a 14.25 percent duty, according to statements from the White House.

“The investment boom that we’re seeing in the United States is threatened by unfair and non-market practices taking place overseas,” remarked White House climate adviser Ali Zaidi during a press briefing.

These policy changes come amid ongoing challenges within the solar industry, including inflation and post-pandemic disruptions. While the Solar Energy Industries Association publicly supported the reinstatement of the Trump-era exemption on bifacial modules in 2021, many solar manufacturers have argued that tariffs are necessary to contend with an influx of cheap imports, particularly from Southeast Asian countries.

The Biden administration’s actions may further intertwine tariff policy with the presidential race and impact solar manufacturing in swing states. The White House has emphasized that the tariffs on Southeast Asian countries aim to address circumvention of existing U.S. fees on Chinese solar manufacturers.

In addition to removing exemptions, the administration has pledged to increase the U.S. tariff-rate quota for imported solar cells “as necessary” to ensure domestic panel manufacturers have sufficient supply. This effort aligns with the goal of bolstering U.S. manufacturing capacity, according to Zaidi.

Furthermore, the administration announced $70 million in grants for domestic solar producers from the bipartisan infrastructure law. These grants will support 18 projects aimed at strengthening the domestic solar supply chain.

The White House has also provided guidance on the domestic content adder, a tax credit bonus for clean energy projects utilizing a substantial amount of American products. The new guidance simplifies the determination process for project eligibility, allowing developers to utilize default cost percentages provided by the Department of Energy.

These tariff adjustments follow a series of actions by the Biden administration to restrict imports of clean energy products, particularly those linked to China. Additionally, the administration has initiated investigations into alleged illegal trade practices by Chinese companies in Southeast Asian countries, which could result in further tariffs.

The investigations were prompted by a petition from a coalition of seven solar manufacturers, alleging subsidized imports from Malaysia, Cambodia, Thailand, and Vietnam are harming U.S. producers. The International Trade Commission will assess the impact of Southeast Asian imports on U.S. solar manufacturers, with Commerce’s determination expected later this year.

Criticism of the tougher tariff regime has emerged from some solar manufacturers, who argue that retaliatory trade measures could impede U.S. solar deployment in the short term. However, the U.S. solar industry continues to experience significant growth, with residential and commercial installations projected to double by the end of the decade.

SEIA and Wood Mackenzie predict that solar installations in the U.S. will reach 15 million by 2034, with residential projects driving much of the growth. Solar is expected to surpass natural gas as the leading energy source for power generation in the U.S. by 2050, signaling a shift towards cleaner energy solutions.

As the solar industry navigates these policy shifts and market dynamics, stakeholders are closely monitoring developments to assess their implications for the sector’s growth and sustainability. The Biden administration’s efforts to balance trade considerations with domestic manufacturing priorities will likely shape the trajectory of the solar industry in the years to come.