Biden to halt solar tariff threat for two years

The high-growth, multibillion-dollar U.S. solar industry is getting a two-year reprieve from an import tariff threat that has left it in limbo, courtesy of an executive decision from President Biden, according to news reports.

The threat to the industry started when Auxin Solar, a tiny California-based maker of solar panels, convinced the U.S. Department of Commerce to investigate whether new tariffs should be imposed on panel manufacturers in Southeast Asia for allegedly circumventing existing tariffs on Chinese solar companies. The threat of potential new tariffs, which could have been made retroactive, stopped the industry in its tracks and led to many projects being put on hold over the last few months.

But Biden will announce on Monday that no new tariffs will be imposed on solar imports for the next 24 months. According to a Reuters source, ​“There is going to be this safe-harbor timeout on the…collection of duties, and that’s at the heart of what’s going to save all of these solar projects and ensure that they are going forward.” 

Canary Media’s Julian Spector recently reported on the murky rules governing the Commerce Department’s investigation and the ability of the White House to intervene. Biden’s decision to pause the tariffs does not mark the end of the Commerce inquiry. But a source told Reuters that if tariffs are eventually imposed, they will not be retroactive.

Biden is also taking action to bolster and build up the U.S. solar manufacturing supply chain by invoking the Defense Production Act to drive domestic production of solar panels and other renewable energy technologies, with the help of loans and grants, Reuters reports.

“Devil in the details, but it looks like the president is finally starting to listen,” John Berger, CEO of solar installer Sunnova, told Canary Media.

The fast-expanding utility-scale solar industry in the U.S. is dependent on inexpensive imported solar panels. This decision by Biden will allow the supply chain to restart, but there’s still significant uncertainty in the sector, and project development companies with thin margins that depend on tax-equity financing don’t tolerate uncertainty well.

As of 2020, only 14 percent of U.S. solar workers were employed in manufacturing. A far larger share of the solar workforce — 67 percent — worked in solar installation and development, according to the most recent National Solar Jobs Census.

For now, the solar development and installation industry can get back to work. The U.S. solar manufacturing sector, however, will take much longer to rev up. But depending on what Biden announces on Monday and in the days after, it could get a much-needed boost.