Hanwha Q CELLS became the latest company to develop a gigawatt-scale manufacturing facility in the United States. However, no overseas company has promised new battery capacity, which indicates that the long-term value of the U.S. economy may be lower than expected.
The South Korean company will open a 1.6 GW component factory in Georgia. The company said it will seek to use the 2.5 GW tariff-free battery quota set by President Trump's 201st trade tariff.
MJ Shiao, head of renewable energy and emerging technologies at GTM Research, said, 'According to news released in the past few months, the new production capacity of domestic components exceeds 3GW, and the capacity of First Solar's new battery is 1.2GW.'
'If all new plants and expansion projects other than JinkoSolar, First Solar and Hanwha Q CELLS are completed as scheduled, then by the end of 2019, the module's production capacity will exceed 6GW.'
Although no crystal silicon cell capacity increase plan was announced (excluding SunPower's reorganization of the SolarWorld Americas plant), the United States may supply more components instead of duty-free batteries.
Shiao said, 'The new plant's component manufacturers are also competing for tariff-free imports of 2.5GW battery capacity. At present, the import of crystalline silicon batteries has been very low, since the introduction of tariffs in February, using less than 5% of the quota. With the start of the assembly line, this number will only rise.
'This is of course the result of tariff collection. The 201 case seems to be a catalyst. But remember, Chinese manufacturers must now deal with three types of tariffs, that is, tariffs on solar products exported to the United States, Europe and India. At one point, I think component manufacturers are tired of fighting tariffs in large markets, and they see domestic manufacturing as a hedge against future trade actions.
Trump may get the manufacturing jobs he wants, but his long-term viability raises doubts.
So, faced with this situation, President Trump hopes that the manufacturing jobs will 'return' to the United States. This is what he got. But President Trump’s bigger goal is to resolve trade imbalances with China and ensure blue-collar assembly jobs. It is only a short-term solution. China and Korea are proud to have R&D as their starting point, including supply chain from advanced battery production to large-scale component production.
As Shiao pointed out, this is a hedging scheme. After three rounds of tariffs, two anti-dumping cases and the current 201 guarantee tax case, this is the preferred option. In addition to President Trump’s increase in the number of jobs in the short term, these factories What wealth will be left behind?
Shiao said, 'After the tariff expires, I still worry about the long-term competitiveness between these component assembly plants and imported products.'
'As soon as the tariff expires, investment tax credits are gradually stopped. If these manufacturers want to continue operations, then they need to develop a radical cost reduction roadmap.'
If the 201 case expires within four years, suppose that in the absence of any alternatives, component import prices are likely to plummet. Meanwhile, the gradual suspension of investment tax credits will allow investors to face these credit losses. , will seek to maximize the efficiency of the project.
Downstream
The new plant will help convert the 2.5 GW quota to supply to downstream sectors. However, if there is no new battery capacity, the quota will not be released or there will be no exemption for other existing battery-producing countries. This quota will also become an upper limit value. .
Cypress Creek was listed in mid-May. The company stopped the development of the 1.5 GW project and pointed directly to the 201 tariff as the responsible party.
In a statement to PV Tech, the company stated, 'Obviously, we were disappointed when the tariff was announced. But this was within our expectations and we were also preparing for it.'
'For example, we bought some components before the tariff went into effect. Because the price of utility solar was extremely sensitive, tariffs forced the company to reassess some of the projects. Just like now, we have stopped investing about 150 projects, totaling 1.5 GW. Eventually, jobs and taxes in rural villages in the United States will disappear, and this is what they need most.'
In November 2017, as part of the 2GW project and $1.5 billion investment commitment, the company launched a vocational training program in South Carolina. Now, the company hopes that the value of such investments can temporarily ease the situation of the utility sector.
'We hope that the U.S. Trade Representative Office will be able to exempt utility components so that the solar industry can develop, create new domestic energy investments, and provide jobs for thousands of Americans. In 2017, Cypress Creek was one of the leading utility solar developers. The company is very proud of this. Due to tariffs, the solar industry has slowed down. Nevertheless, we still hope to grow at a steady pace. We are passionately pursuing our mission and do my best to provide more for this land. Solar energy. '
Cypress Creek is not the only company that needs to reassess the project.
Eric Millard, chief commercial officer of developer Conti Solar, said, 'From a broader perspective, the 201 trade case has had a negative impact on the solar industry, and a large number of projects have been delayed. As the component prices have skyrocketed, these projects are also considering cancelling construction.'
Dan Whitten, vice president of communications at the US Solar Energy Industry Association, emphasized that no matter what kind of manufacturing news has recently been released, the association still believes that the net impact on the entire industry is negative. The association is opposed to the 201 tariff case.
'We support 100% U.S. manufacturing. Hanwha Q CELL, and other companies have announced that they want to build factories in the U.S., we very much welcome. It is not yet clear how many new U.S. manufacturing plants will actually be added, but the fact remains that Ultimately, new manufacturing plants are unable to meet the demand for components in the United States now or in the future. The structure of tariffs will still result in the cancellation of multi-billion dollar projects and the loss of thousands of jobs. Overall, they are against US solar energy. The market is harmful. '
If the authorities wish to encourage the development and manufacture of batteries instead of forcing the biggest players in the industry to adopt expedient measures, the authorities may have to use honey rather than vinegar to trap flies.
201 tariff content
Components and batteries face a tariff rate of 30% for the first year and a 5% year-on-year decline for the next three years, which means that the tariff rate for the fourth year will be reduced to 15%.
The first batch of 2.5GW imported batteries will be exempted from the four-year tariff. This regulation will take effect on February 7, 2018.
The United States exempted several emerging economies, including India, Turkey, Brazil, and South Africa, from tariffs. The domestic demand of these four countries is very strong.
Several companies and countries that are not exempted are taking legal action or seeking a complaint through the WTO.
