A long-running battle in the global photovoltaic (PV) market between the US and China over anti-dumping and subsidy charges could expand into higher solar costs, with wide-ranging ramifications for the US if punitive tariffs are levied on cells from Taiwan.
However, enough tariff-free capacity should still be available in 2014 to ensure there are no shortages in the US in 2014, even if solar modules are expected to feel an impact on pricing, according to new analysis from IHS Technology.
In ongoing investigations expected to culminate later in 2014, the US International Trade Commission is determining if further penalties should be imposed on solar modules containing cells manufactured in Taiwan. Having already punished China in 2012 with anti-dumping and countervailing duties, the US now is seeking to close a loophole in which China module manufacturers circumvented the large fines – ranging from 34-250% – by using third-party suppliers of PV cells located in Taiwan.
If the final ruling, expected in October 2014, determines there is cause to impose penalties also on Taiwan-sourced PV components, the price of solar cells and panels would almost certainly rise in the US. This, in turn, is prompting fears that an increase in pricing might cause PV panel shortages in the US market and disrupt the growth of PV installations.
In all, an estimated 57.8GW of production capacity representing crystalline solar cells and thin-film solar modules is available globally in 2014, 11.2GW of which are located outside of China and Taiwan. Those 11.2GW of capacity are not covered under the present US inquiries, and when added to 6.1GW of global thin-film capacities, the overall available supply of tariff-free solar capacities would amount to 17.3GW, said IHS.
The lowest module prices currently available in the US market – all of them China modules containing Taiwan cells – are in the range of US$0.62-$0.65 per watt. Non-China suppliers, in comparison, offer products at prices higher than US$0.70. Depending on the final outcome of the trade case, PV module prices could rise to somewhere between US$0.75-0.80.
For China, preserving the US market – the third-largest in the world after China and Japan – will be integral, IHS added.
"To maintain their market share in this region, China may have to pass on a portion of their margin to customers and also offer better financing conditions in order to remain competitive, despite punitive tariffs," said Stefan de Haan, associate director for the solar supply chain at IHS.
China-based companies are now increasing their shipment volumes to the US to build up module stocks not yet affected by tariffs, prior to the final decision in October. Such a move will allow them a buffer of a few months, noted de Haan.
"In the mid-term, however, price increases appear unavoidable if anti-dumping duties are, in fact, implemented," de Haan added. "And in view of the importance of the US market, China-based companies are expected to ramp up manufacturing facilities in the North American Free Trade Agreement (NAFTA) zone, particularly in Mexico."
