IZZI Logistics

Shadows are falling on the solar industry as the U.S. Department of Commerce tightens the tariff noose.

A new wave of significantly higher tariffs is set to hit solar cell and module imports from Cambodia, Malaysia, Thailand, and Vietnam.

Here's the deal: Commerce found these imports, with a few exceptions, were sidestepping duties aimed at the People's Republic of China (PRC). While a tariff waiver currently softens the blow, that's set to expire in mid-2024.

What's the impact? Solar developers will have to take a hard look at their suppliers and monitor supply chains closely. The risk is clear - substantially higher procurement costs.

How did we get here? A U.S. solar manufacturer lodged a petition alleging certain companies were undermining orders by using PRC parts and components. Commerce launched an investigation, and the results are in.

The verdict? Most imports from the countries in question circumvent orders on a 'country-wide basis.' In the mix, we have solar cells and modules completed in these countries using PRC-produced parts and components.

The silver lining? A few manufacturers are off the hook. For instance, Hanwha Q CELLS in Malaysia and Boviet Solar in Vietnam are not circumventing.

But, there's a twist: The Biden Administration issued an AD/CVD exemption for covered solar cells and modules, citing insufficient domestic electricity generation capacity. This exemption is set to continue until June 6, 2024, or until the emergency ends.

So, what's next? Solar developers need to sharpen their procurement practices and supply chain management. Many cells and modules sourced from the implicated countries are likely to become pricier in mid-2024.

Navigating these murky waters will be critical to maintaining project viability. Careful procurement, managing solar supply chains, and meticulous contractual provisions will be paramount.

Don't let the looming tariffs eclipse your solar project ambitions. Stay informed, stay vigilant, and adapt your strategies to keep your projects shining brightly.

This post is based on article written by Allen & Overy LLP. https://tinyurl.com/yrufn6mw