Tier I PV Makers Largely Unscathed By US DOC’s Preliminary CVD Rates

CEA Expects Contract Terms Changing In Future With Module Buyers Paying Duties

This list shows the preliminary CVD rates announced by the US DOC for Chinese manufacturers shipping their cells and modules from the 4 Southeast Asian nations. (Photo Credit: Clean Energy Associates)

Published on:

Oct 09, 2024, 9:07 am

Key Takeaways

CEA believes the Preliminary Determination of CVD rates by the DOC will not so much impact tier-I companies
It is the smaller players that have been slapped with the highest rates which will likely force them out of the US market
Going forward, this will also lead to a change in the contractual agreements since the importer of modules is liable to pay the duties

The countervailing duty (CVD) rates for imported PV cells, whether or not assembled into modules from 4 Southeast Asian nations, issued by the US Department of Commerce (DOC) in its Preliminary Determination earlier this month, are not likely to obstruct the continued exports to the US market by most, large tier I solar PV manufacturers.

This is the observation of North American solar PV, green hydrogen and battery storage market intelligence firm Clean Energy Associates (CEA). The department issued the rates based on a finding of adverse facts available (AFA) for manufacturers supplying their cells and modules from Cambodia, Malaysia, Thailand, and Cambodia.

According to the CEA, smaller companies that received higher AFA rates will likely be ‘forced to withdraw from the US market.’ Nevertheless, the limited scale of their exports will have a ‘minimal’ impact on the US module availability.

Here’s a broad summary of the preliminary CVD rates issued for companies operating in these 4 markets:

For Cambodia, the rates based on AFA vary from 8.25% for SolarSpace and all others to 68.45% for Jintek PV and ISC Cambodia. No critical circumstances were found.

For Malaysia, rates vary from 3.47% for JinkoSolar, 14.72% for Hanwha Qcells, 123.94% for Baojia New Energy, Pax Union Resources and SunMax Energy, and 9.13% for all others. Here too the department did not find any critical circumstances.

In Thailand, Trinasolar gets a de minimis CVD rate of 0.14%, but Sunshine Electrical and Taihua New Energy get 34.52% each, while all others get a 23.06% rate. For the latter 3, critical circumstances have been determined.

GEP New Energy, Vietnam Green Energy, Shengtian New Energy and HT Solar have been slapped with the highest preliminary CVD rate of 292.61% with critical circumstances, while Boviet Solar gets a de minimis rate of 0.81%, and JA Solar 2.85%.

The de minimis level shows that Trinasolar and Boviet Solar will not be required to pay cash deposits. If they manage to maintain this level through the CVD Final Determination, they will not be liable for duties.

This means that projects and companies dealing with smaller Vietnamese producers will be at high risk.

The rest of the manufacturers and exporters in Thailand and Vietnam, where the DOC found critical circumstances, will have to pay cash deposits to the US Customs on PV cells and modules entered into the US 90 days or fewer before the publication of the Preliminary Determination in the Federal Register.

If the International Trade Commission (ITC) reaches a negative finding, the DOC will refund cash deposits for goods entered before the date of the Preliminary Determination.

The DOC is also expected to publish its Preliminary Determination for the anti-dumping investigation. Till then, there will be uncertainty around the rates and timelines.

“As anti-dumping rates are additive to CVD rates, there is a risk that combined duties for some companies and countries will be high enough to create a meaningful barrier to continued exports to the United States,” opines CEA.

What these duties will do next, according to the CEA analysts, is change the contract terms as to who ends up paying the duties. The importer of record is ultimately responsible for paying the CVD.

It explained, “Large module makers often have U.S. subsidiaries that act as importers of record. However, developers, EPCs, and other module buyers may be fully or partially liable for duties if they were the importer of record or agreed to cover all or part of the cost of duties in their contracts. Going forward for new contracts, duties are expected to be passed on to module buyers.”

Meanwhile, the 7-member American Alliance for Solar Manufacturing Trade Committee (AASMTC), on whose complaint the DOC based its case, has welcomed the preliminary determination (see US ITC To Continue AD/CVD Investigations Into Solar Imports). AASMTC members are Convalt, First Solar, Meyer Burger, Mission Solar, Qcells, REC Silicon, and Swift Solar.

“Today’s announcement is an important early step in a year-long process to determine the amount of illegal government subsidies benefiting these companies,” said a Partner at Wiley Rein and lead counsel to the petitioners, Tim Brightbill. “This preliminary determination shows that we are still very early in these investigations, and we expect the final determination to reflect the true harm these imports bring to U.S. manufacturing.”

The final determination is expected to be released on April 11, 2025 for CVD. For AD, the Preliminary Determination is likely on November 27, 2024, while the Final Determination will be on April 11, 2025.

Earlier this year, in July 2024, an ACORE-commissioned CEA report assessed the impact of AD/CVD on Southeast Asian solar cells and modules in the US market and projected that it will significantly restrict solar supply and installations in the market. It forecasts that the price of US-made solar modules will go up by $0.10/W and that of imported modules by $0.15/W in such a scenario (see Potential AD/CVD Tariffs To Hurt US Solar Sector).

markets