Interesting Times, Part 2

Less than two months ago, I wrote a post about LG’s exit from the market and the availability and pricing issues we were experiencing.

Well, the situation has gone from bad to worse.

The Department of Commerce recently launched an investigation into the solar panel import market. A small solar panel manufacturer based in California, Auxin Solar, alleged that Chinese manufacturers were circumventing the Trump-era tariffs on Chinese solar products by moving their assembly to Southeast Asia, while continuing to use Chinese materials and intellectual property. They want tariffs applied to solar panels coming out of Malaysia, Thailand, Cambodia, and Vietnam, as well – locations that supply about 80% of the solar panels installed in the U.S.

Canary Media’s deep dive on the context and potential impact of the trade case is well worth the read.

The solar module distribution chains are already stressed for so many reasons:

  • Increased demand for electricity in general and for renewable energy specifically,
  • Logistics and shipping nightmares (remember the container ships stacking up at West Coast ports?),
  • Background inflation in the economy (8.3% overall in April of 2022),
  • Uncertainty introduced from California’s soon-to-be-revised net metering policies (California has almost as much solar installed as the next 4 states combined),
  • LG’s exit from the market shooting up demand for other premium module products.

The mere possibility of tariffs has been the proverbial straw on the camel’s back.

“Between LG pulling out of the market in February/March and then the opened trade case, it has really crushed the module market over the last 6-8 weeks. In the 8 years I’ve been working in the solar industry, I have never seen these types of price increases or availability issues. It is absolutely crazy what we are experiencing right now.”

Distribution Partner, via email

I won’t go into the merits, or lack thereof, of the Auxin Solar petition (although I will share two more articles by Canary Media: here and here). Let’s talk about the potential effects:

Costs: In just the past month or so, we’ve seen module prices shoot up 20%. Estimates say that the cost of modules may increase 43% if the tariffs are imposed.

Job Losses: Somewhere between half and two thirds of solar installations this year and next year are at risk. Nine in ten jobs in the solar industry are service jobs (e.g. installation); only 10% are in manufacturing. 85,000 non-manufacturing jobs may be lost. Another 15,000 manufacturing jobs may be lost – almost 1/3 of the total domestic solar manufacturing jobs – don’t forget that American manufacturers still import raw materials, such as silicon solar cells.

Burning More Fossil Fuels: The Biden administration wants to transition the electric grid to 100% renewable power by 2035. That’s already a lofty goal – we’re already behind, and crippling the solar industry isn’t going to help.

A final determination won’t be available until later this summer, but we are hoping to get some indication of which way it might go within the next few weeks (maybe… we hope…).

So, what does this mean for Sungineer’s operations? We focus on what we can control.

☼ We coordinate closely with our distributors. Since we custom order products for each job, we notify distribution as soon as a project is booked. Throughout the design and permitting process, distribution informs us of product availability and lead time.

☼ We communicate proactively with our customers, especially during the sales process, to set expectations.

☼ We stick to our values: unapologetically small, no shoddy work, keep it light. Staying small keeps us agile, so we can pivot when changes happen. No shoddy work means when the job is done, it’s done right, the first time, regardless of which modules we use. And keeping it light means we are still having fun!

sunny days ahead 🙂