America's solar swipe

Solar trade tensions between America and China step up another gear and the clean energy battle between the two regions may only just be beginning. But what's the great news in solar?

The trade tensions between the world's largest and second-largest economies jumped another level last week when the US Department of Commerce imposed anti-dumping duties on solar PV panels from China.

The duty of about 31 per cent – retroactively imposed from the third week of February – was higher than the industry had expected. Combined with the countervailing duties imposed in March, they would make some Chinese modules 27 per cent more expensive in the US than those from comparable international manufacturers, according to Bloomberg New Energy Finance analysts.

The case began in October 2011 with a petition from SolarWorld Industries America. It argued that Chinese companies such as Suntech Power and Trina Solar were unfairly benefitting from government subsidies. In a statement after the duties were announced, Gordon Brinser, president of the US unit of SolarWorld, said: “Commerce today put importers and purchasers on notice about the consequences of importing illegally subsidised and dumped products from China.”

The share price of SolarWorld jumped as much as 18 per cent in Frankfurt on May 18 after the tariff imposition was announced on May 17.

The dumping probe could soon embrace Europe too, with SolarWorld chief executive officer Frank Asbeck saying the company would bring an anti-dumping complaint across the Atlantic.

The Chinese government has officially expressed dissatisfaction with the new tariffs and there is a possibility that retaliation could go beyond the clean energy sector.

There were other opponents of the punitive tariffs too, such as the Washington-based Coalition for Affordable Solar Energy, which includes Westinghouse Solar and more than 100 other companies. They claimed that the new levies would cost jobs.

“These duties do not reflect the reality of a highly competitive global solar industry,” Andrew Beebe, Suntech’s chief commercial officer, said in an emailed statement.

This is an issue which still has to play itself out. For now, the countervailing and anti-dumping duties are preliminary and could decrease, increase or even be eliminated when a final decision is taken in October. Separately, the US International Trade Commission is investigation whether dumping of PV cells and panels by China injures the domestic industry. The deadline for the final determination is November 19.

Imports are also being curtailed through another tool being embraced by many countries – local content rules. SolarWorld's Asbeck said last week that German states were studying local content rules to favour local producers. Though Germany boasts one of the largest solar markets, local manufacturers Q-Cells and Solon filed for insolvency in the last six months. Another German solar manufacturer – Sovello – filed for insolvency last week and sought permission to restructure in the process.

There was good news on solar too. It is becoming increasingly cost competitive. Spain announced another project that will not rely on subsidies at all. The 400MW project, to be developed by SAG Solarstrom and Valsolar, joins a handful of projects being built in the nation without the support of subsidies, which were halted for all new plants in January. It is expected to begin construction in 2014 and be completed by 2015.

“This project will be a milestone nationally and in Europe,” Oliver Guenther, a Solarstrom board member, told a press conference on 14 May. “It will be the first of this size in Europe that will generate power without state subsidies.”

Another bright spark was Estonia, where environment minister Keit Pentus said subsidies to renewable energy producers will not be lowered retroactively. The ruling coalition partners have agreed that they cannot force a retroactive change in subsidies, introduced in 2007, as it would affect the “fragile” investment climate, Pentus told lawmakers in a question-and-answer session last week, according to a transcript on the parliament’s website. Consumers pay for the subsidies directly through their energy bills.

The Wilderhill New Energy Global Innovation Index – which tracks 98 clean energy stocks – touched a low of 111 last week, eroding more than 75 per cent of its all-time high value of 468.75 reached on November 8, 2007.

EU carbon falls

European carbon allowances (EUAs) for December 2012 delivery fell 5.7 per cent last week, closing at €6.45/tonne, compared with €6.84/t the week before. December EUAs followed declining oil prices to a weekly intraday low of €6.30/t on Wednesday after Greece failed to form a new government and called for new elections, raising concerns that the region’s debt crisis will deteriorate. Carbon rebounded later in the day along with equities. Its losses last week were limited by continued speculation about a set-aside of allowances or a delay to Phase III (2013-20) auctions.

United Nations Certified Emission Reduction credits (CERs) for December 2012 lost 7.4 per cent last week to close at €3.40/t, down from €3.67/t at the end of the previous week.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles