A ruling by the New York U.S. Customs Office seems to have shaken up the solar industry. The NY office deemed that because of a type of bypass diode, which allows energy to flow around cells that are shaded, the Chinese-manufactured PV panel technically classifies as a generator and is subject to an import tariff.

The solar industry has prepared itself to oppose this ruling, ultimately willing to take it to the U.S. Court of International Trade if the industry’s attempts at the U.S. Customs and Border Protection headquarters in Washington fail.  The current ruling is baffling because the bypass diodes are necessary safety functions and have always been on PV panels.

So why is this scary for the industry?  If the tariff is imposed, it may prompt other countries to do the same to protect their own domestic solar industries, thereby making it much harder for U.S.-based companies to compete in the global solar manufacturing market.

For U.S. solar panel importers, things could get scarier a lot sooner.  “In the worst case scenario, U.S. importers of solar panels could face some $70 million in tariffs and penalties for product already imported this year.”  In a growing market, this may be a back breaker for companies just molting their baby feathers.

At the same time, this tariff could help limit China-based companies from importing, forcing those companies to set up some operations on U.S. soil to avoid the extra 2%.  Unfortunately, China is literally giving money away in the form of low interest loans to their fledgling solar manufacturers.  This support by the Chinese government, as well as other countries with similar programs, will likely outweigh the negative impact of a 2% tariff.  If those benefits by foreign governments do outweigh the tariff, the 2% isn’t nearly high enough to force China to build factories on U.S. soil.

True, China’s dominance could be a justifiable fear. Just as true: U.S. companies create U.S. jobs and opportunities, things sorely needed and capable of helping our hemorrhaging economy.  It’s a tough decision that has too many potentialities.  But the chance of a more powerful and financially dominant China is fairly terrifying. The thought alone is enough for U.S. companies to push for equal potential in manufacturing, as in other areas of the U.S. solar industry.

Cheap products and better products are not synonymous in my mind.  But will the U.S. ever compete with how cheaply China can produce things?  I doubt it. And a few U.S. companies outsource their manufacturing to China already.  They’re renewable and yet the panels come all the way across the Pacific and are produced in environmentally suspect China to help cut U.S. carbon emissions. It’s all rather ironic.

Ultimately, self-sustainable means self-sustainable.  That’s the goal, right?

To read the less opinionated Reuters article this post was derived from, click here.

Also, check my other post about worldwide PV panel production having overrun worldwide demand, something that could slow the global PV panel manufacturing market.

Photo Credits: Renewable Energy World

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Posted on October 12th in Solar Politics by Craig.