Probe of China freezes solar panel projects

Commerce Department investigates whether Beijing is circumventing tariffs

Around the country, solar companies are delaying projects, scrambling for supplies, shutting down construction sites and warning that tens of billions of dollars — and tens of thousands of jobs — are at risk.

The tumult is the result of a decision by the Commerce Department to investigate whether Chinese companies are circumventing U.S. tariffs by moving components for solar panels through four Southeast Asian countries.

Although officials have not yet found any evidence of trade violations, the threat of retroactive tariffs has effectively stopped imports of crystalline silicon panels and components from Cambodia, Malaysia, Thailand and Vietnam. These four countries provide 82% of the most popular type of solar modules used in the United States.

In a matter of weeks, 318 solar projects in the United States have been canceled or delayed, and hundreds of companies are considering layoffs, according to the Solar Energy Industries Association.

Energy experts warn that the fallout is only beginning. A monthslong halt on imports from the four countries could have lasting ramifications for the multibillion-dollar solar industry and for the Biden administration’s ambitious goals to ramp up renewable energy development to combat climate change.

The Commerce Department initiated its investigation March 25 after Auxin Solar, a small solar panel manufacturer based in California, filed a petition requesting an inquiry into whether China was circumventing rules intended to prevent statesubsidized solar parts from flooding the U.S. Tariffs on Chinese solar panels have been in place since 2012.

To avoid trade problems, U. S. solar installers have bought many of their panels from the four Southeast Asian countries.

But according to Auxin, many of those panels are manufactured by overseas subsidiaries of Chinese companies and use cells, wafers and other parts that originated in China.

Until now, the Commerce Department had signaled that because the parts coming from China were substantially transformed by the companies in Southeast Asia, those components were not subject to the tariffs.

But if the Commerce Department finds the panels coming from Southeast Asia included Chinese-made parts that should have been subject to tariffs, panels sold in the United States after the start of the investigation could carry steep duties. And the threat of those additional costs has caused shipments of solar panels to grind to a halt.