US solar industry leaders are campaigning against a likely policy change that will increase import tariffs on Chinese solar panels, saying it could slow the solar industry’s rapid growth domestically.

The US Department of Commerce imposed tariffs on Chinese solar panels made in China in 2012. SolarWorld Industries America filed a petition earlier this year asking the department to close a loophole that excludes panels manufactured outside of China from the tariff.

The department issued a preliminary ruling in SolarWorld’s favor last week. The US Commerce Department and the US International Trade Commission will have to issue final rulings in July before he policy goes into effect.

If the new policy gets final approval, it will result in a 19 to 35 percent tariff on all solar panels manufactured by Chinese solar companies.
 

Bad for installers

“It’s going to do a huge amount of damage to the installers and developers,” Rhone Resch, CEO of the Solar Energy Industries Association told the SFGate.

While some US solar manufacturers, such as SunPower, are responsible for the solar industry’s explosive growth over the last three years, the majority of the growth comes from solar installers and developers.

Companies like SolarCity, which leases rooftop solar arrays to home and business owners, has grown dramatically, expanding across the country and to install thousands of solar panels every day. Many installers depend on cheap solar panels, which have dropped more than 70 percent in price over the last three years, for their growing businesses.

While some US solar panels are competitively priced, the Chinese panels offer another low-cost option.

Reciprocity issues down the road

The United States is depending less on Chinese solar panels today than it did in 2011 when trade concerns were first raised. Imports of Chinese solar panels fell from $3.12 billion in 2011 to $1.49 billion in 2013 – less than half.

That reduction was due, in part, to more cost competitive US solar panels. But it was also a response to shifting focus on the part of Chinese solar panel manufacturers.

China has committed to installing 35 gigawatts of new solar energy generation by 2015. In order to meet that ambitious goal, manufacturers are selling their products locally in China.

But US solar manufacturers also have opportunities in China. SunPower has focused considerable energy on developing a strong business in that rapidly emerging market.

If Chinese solar manufacturers are shut out of the US, some industry leaders worry China will lock out US manufacturers in what promises to be an even bigger market.

The instigator

SolarWorld brought the original trade complaint to the Commerce Department and filed the recent petition to close the loophole. But SolarWorld isn’t a US company. It’s a German company with some ownership originating in Qatar.

“The sad truth is, here you have a company that’s effectively owned by Germany and the Qataris instituting a trade case that’s going to have a huge impact on the solar industry in the United States,” Resch, told SFGate.

Meanwhile, US solar manufacturers have remained quiet on the topic and the thousands of emerging downstream solar businesses in the US are fighting against the new tariffs.