New U.S. import tariffs have prompted China's solar panel makers to buy more expensive supplies elsewhere and avoid the new duties, but prices for the renewable energy equipment continue to decline.
The United States put two new import duties totaling about 35 percent on solar equipment from China, citing the country's unfair support of its industry and illegal dumping of inventories in the U.S. market.
China's solar manufacturers such as Suntech Power Holdings (STP.N), Yingli Green Energy (YGE.N) and Canadian Solar (CSIQ.O) have criticized the tariffs set this year as a threat to their young industry that will slow its growth by raising costs.
With the U.S. market expected to top 3 gigawatts of installations this year, Chinese solar panel makers have no plans to exit the U.S. market, and most have sought to buy key solar components outside of China to evade the U.S. tariffs.
Newly released import data showed U.S. solar imports from China fell 45 percent in May from a year ago, according to the Coalition for American Solar Manufacturing (CASM), whose trade complaint triggered the investigation into solar imports.
Canadian Solar, which makes most of its panels in China, has been buying solar cells from Taiwan for years as part of its supply chain strategy, said Chief Financial Officer Michael Potter. Now all U.S.-bound modules would be made with these slightly more expensive Taiwanese cells to avoid the tariff.
"That essentially is going to get passed through to the U.S. consumer," Potter said in an interview. "It's not like it's costing a lot more today compared to what the prices used to be, but there's certain to be a price difference now."
GTM Research estimates the cost impact for a top-tier Chinese manufacturer buying solar cells in Taiwan at 7 cents per watt, compared with overall solar panel production costs that are in the range of 70 cents per watt and still falling.
So far, shifting production has not slowed the steep declines in solar prices, a trend that has helped make the power source more attractive to consumers even as it has nearly erased profits of the companies that make the panels.
Prices for solar panels fell a modest 0.78 percent to about 76 cents per watt in the past week, market analysts at PV Insights reported on Wednesday, although prices had posted steeper declines earlier this month of about 5 percent.
So far this year, panel prices have fallen by about 20 percent, on top of the drop of about 50 percent in 2011.
NO MAJOR DISRUPTION SEEN
The tariffs are a "huge distraction," said Robert Petrina, the head of Yingli Green Energy Americas. But the company does not anticipate any major disruption to selling into the U.S. market.
Chinese companies supplied half the panels sold in the United States last year, and likely saw that share climb in the early months of 2012 before the tariffs were imposed, according to analysts at GTM Research.
David Kurzman, a renewable energy expert and portfolio manager at Leuthold Weeden Capital Management, believes that within two years, Chinese module makers will have entirely circumvented the import duties by shifting work to other countries.
"The tariffs are too little, too late in terms of their intended effect," he said.
Suntech, with the biggest solar manufacturing capacity in the world and a plant already built in Arizona, insists it has ample supply of U.S. tariff-free panels to sell for the foreseeable future.
Mark Kingsley, chief commercial officer at China-based Trina Solar Ltd (TSL.N), said the duties would only accelerate the trend to shift production closer to the end-market.
"It globalized the industry years faster than it would have (otherwise)," Kingsley said.
The May import data showed sharp increases in imports from Malaysia, Taiwan and the Philippines, CASM said.
Also, with global demand for renewable power surging, the manufacturers are increasingly looking at other markets.
Trina has just expanded into Canada in a deal with a module maker in the province, North America's second-largest solar photovoltaic (PV) market after California.
Shawn Qu, Canadian Solar's founder and chief executive, revealed that he is close to signing off on a new plant to build new high-efficiency solar cells that would have to be sold elsewhere under the current tariff regime.
"You are not going to see this solar cell in the United States in the near future," Qu said at the Intersolar North American conference in San Francisco last week. "Too bad. This solar cell is produced in China."
Source: http://www.reuters.com/article/2012/07/18/us-solar-tariffs-idUSBRE86H1I320120718
| A parking structure at the University of California San Diego uses innovative solar trees to collect renewable energy from the Sun February 8, 2011 |
The United States put two new import duties totaling about 35 percent on solar equipment from China, citing the country's unfair support of its industry and illegal dumping of inventories in the U.S. market.
China's solar manufacturers such as Suntech Power Holdings (STP.N), Yingli Green Energy (YGE.N) and Canadian Solar (CSIQ.O) have criticized the tariffs set this year as a threat to their young industry that will slow its growth by raising costs.
With the U.S. market expected to top 3 gigawatts of installations this year, Chinese solar panel makers have no plans to exit the U.S. market, and most have sought to buy key solar components outside of China to evade the U.S. tariffs.
Newly released import data showed U.S. solar imports from China fell 45 percent in May from a year ago, according to the Coalition for American Solar Manufacturing (CASM), whose trade complaint triggered the investigation into solar imports.
Canadian Solar, which makes most of its panels in China, has been buying solar cells from Taiwan for years as part of its supply chain strategy, said Chief Financial Officer Michael Potter. Now all U.S.-bound modules would be made with these slightly more expensive Taiwanese cells to avoid the tariff.
"That essentially is going to get passed through to the U.S. consumer," Potter said in an interview. "It's not like it's costing a lot more today compared to what the prices used to be, but there's certain to be a price difference now."
GTM Research estimates the cost impact for a top-tier Chinese manufacturer buying solar cells in Taiwan at 7 cents per watt, compared with overall solar panel production costs that are in the range of 70 cents per watt and still falling.
So far, shifting production has not slowed the steep declines in solar prices, a trend that has helped make the power source more attractive to consumers even as it has nearly erased profits of the companies that make the panels.
Prices for solar panels fell a modest 0.78 percent to about 76 cents per watt in the past week, market analysts at PV Insights reported on Wednesday, although prices had posted steeper declines earlier this month of about 5 percent.
So far this year, panel prices have fallen by about 20 percent, on top of the drop of about 50 percent in 2011.
NO MAJOR DISRUPTION SEEN
The tariffs are a "huge distraction," said Robert Petrina, the head of Yingli Green Energy Americas. But the company does not anticipate any major disruption to selling into the U.S. market.
Chinese companies supplied half the panels sold in the United States last year, and likely saw that share climb in the early months of 2012 before the tariffs were imposed, according to analysts at GTM Research.
David Kurzman, a renewable energy expert and portfolio manager at Leuthold Weeden Capital Management, believes that within two years, Chinese module makers will have entirely circumvented the import duties by shifting work to other countries.
"The tariffs are too little, too late in terms of their intended effect," he said.
Suntech, with the biggest solar manufacturing capacity in the world and a plant already built in Arizona, insists it has ample supply of U.S. tariff-free panels to sell for the foreseeable future.
Mark Kingsley, chief commercial officer at China-based Trina Solar Ltd (TSL.N), said the duties would only accelerate the trend to shift production closer to the end-market.
"It globalized the industry years faster than it would have (otherwise)," Kingsley said.
The May import data showed sharp increases in imports from Malaysia, Taiwan and the Philippines, CASM said.
Also, with global demand for renewable power surging, the manufacturers are increasingly looking at other markets.
Trina has just expanded into Canada in a deal with a module maker in the province, North America's second-largest solar photovoltaic (PV) market after California.
Shawn Qu, Canadian Solar's founder and chief executive, revealed that he is close to signing off on a new plant to build new high-efficiency solar cells that would have to be sold elsewhere under the current tariff regime.
"You are not going to see this solar cell in the United States in the near future," Qu said at the Intersolar North American conference in San Francisco last week. "Too bad. This solar cell is produced in China."
Source: http://www.reuters.com/article/2012/07/18/us-solar-tariffs-idUSBRE86H1I320120718
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