The US announced new trade investigations and tariffs, aimed at protecting domestic manufacturing
In May, the US government agreed to pursue a second Anti-Dumping / Countervailing Duty (AD/CVD) investigation.
The US International Trade Commission and Department of Commerce announced they will investigate claims brought by the American Alliance for Solar Manufacturing Trade Committee (ASSMTC).1 The new claims allege solar cells and panels made in Southeast Asia (Cambodia, Malaysia, Thailand, and Vietnam) and sold in the US are still harming domestic manufacturers. The move has the backing of several major US solar manufacturers as well as several members of Congress.
Kinect Solar is not affiliated with or endorsed by the American Alliance for Solar Manufacturing Trade Committee (ASSMTC), nor does it share its views. This information is provided solely for the benefit of our readers.
Opponents of the petition expressed concerns that the investigation will create uncertainty and stifle growth in the solar industry. One study estimates that the cost of US-made modules could increase by $0.10 per watt, and imported modules by $0.15 per watt, if the investigation continues.2
Source: Clean Energy Associates and Acore. The “premium” paid by US consumers is the difference between the average US module price versus the average global module price and expressed in dollars USD per watt. The estimate provided for 2025 was derived by adding a $0.15 premium (predicted by Acore) to 2024 premiums. Module prices fluctuate based on market conditions, which are impossible to predict. This figure presents a hypothetical price scenario and is for demonstration purposes only.
The Department of Commerce is scheduled to issue a preliminary determination on the CVD portion of the case as soon as September 23 and the AD portion on November 20. Any temporary measures put into place at those times will remain in effect until the final determinations are reached in each case, which are expected to be announced in spring 2025.3
The US government announced new Section 301 tariffs on Chinese products in solar and other sectors, beginning this year.
The move was a response from the Biden administration to curtail China’s growing market share and to protect US investments in solar and other sectors. Beginning September 27, tariffs on Chinese solar cells will be tariffed at 50%, electric vehicles at 100%, and lithium-ion EV batteries at 25%. Steel and aluminum product tariffs will increase to 25% in 2024, along with a 50% tariff on semiconductors. Some exclusions for solar manufacturing equipment were also removed.4
The Biden administration allowed the bifacial solar exemption on imported modules to expire but also increased the Tariff-Rate Quota (TRQ) for imported solar cells.
The two-year exemption, announced in 2022, was intended to safeguard the supply of bifacial modules, manufactured almost exclusively overseas. Predictably, bifacial modules soon flooded the market. The Biden administration decided to close that loophole by allowing the exemption to expire on June 6, after which date all imported bifacial solar panels are subject to a 14.25% tariff, regardless of country of origin.5 The cost of C&I and utility-scale solar projects is expected to increase by 1 to 2% as a result. In August, the administration bumped the Tariff Rate Quota from 5GW (which was surpassed in June) to 12.5GW.6
There are two important deadlines associated with this change. First, importers with pre-existing contracts for bifacial modules must have accepted delivery by August 14 in order to qualify for the exclusion. Second, any modules already imported under the moratorium must be installed by December 3, 2024 to maintain their tariff exemption.
Lawmakers introduced a new bill to limit the 45X manufacturing production tax credit from benefitting foreign companies.
In August, a group of bipartisan lawmakers looking to prevent Chinese companies from benefiting from IRA incentives introduced a bill “to prohibit allowance of the advanced manufacturing production credit for components produced by foreign entities of concern.” If passed, this law would have had huge implications for global solar manufacturers with plans for US capacity, including Canadian Solar, Trina Solar, JinkoSolar, JA Solar, and LONGi.7 The US House of Representatives did not take up the bill, but the group has vowed to continue to push for future legislation that will limit Chinese-owned firms from setting up shop in the US.8
The IRS provided crucial guidance on key components of the Inflation Reduction Act
The IRS issued long-awaited guidance on the domestic content requirements necessary to qualify for the coveted 10% bonus tax credit available through the Inflation Reduction Act (IRA).
The guidance includes a new elective safe harbor with default cost percentages that developers can use to calculate a project’s eligibility for the 10% bonus to the Investment Tax Credit (ITC) or Production Tax Credit (PTC). Prior to this clarification, developers would have had to rely on manufacturers to provide cost details, a major roadblock to qualifying for the bonus tax credit. The IRS also clarified that only ground-mount and rooftop projects are eligible for the bonus tax credit.9
"Gathering supporting information for a manufacturer’s direct costs of a product had become a challenging task for the industry and Notice 2024-41 is welcome guidance for the renewable energy industry."
The IRS announced guidance that allows non-taxable entities and clean energy project co-owners to claim clean energy credits.
The IRS issued final guidance on prevailing wage and apprenticeship rules.
The Department of the Treasury and the Internal Revenue Service released the final rules in June, which include details about what qualifies for a “good faith” exemption to the requirement and guarantees taxpayers with projects covered by qualifying project labor agreements do not need to pay penalties.11
One court decision ended decades of precedent, plus other policies that impacted the industry
In June, the Supreme Court overturned the Chevron doctrine, a decades-old precedent that gave deference to federal agencies when handling disputes, paving the way for future lawsuits.
The Chevron doctrine was a collection of court decisions that gave government agencies like the Federal Energy Regulatory Commission (FERC) and the EPA wide latitude to interpret relevant statues during a dispute. Opponents of the Chevron doctrine argued that it gave too much license to federal agencies and not enough to judges.12
It’s a safe bet there will be many, many legal challenges to previous rulings and interpretations from FERC, the EPA, and other federal agencies. It’s not entirely clear yet if this will pose a threat to the IRA or how it might impact the industry as a whole. We’ll be watching this one closely.
"This is going to inject a heightened level of litigation in courts, extraordinary uncertainty in the coming years as to what is permissible and what is not as far as establishing rules and promulgating rules, and will likely hamstring an agency’s ability to move quickly."
UFLPA detentions of solar modules dropped to their lowest levels since the measure was enacted in June 2022.
Detentions rose month over month in January through March but then dropped significantly in April and never rebounded, dropping in June to their lowest levels since the UFLPA was enacted. But the amount of product detained in the first half of 2024 is still significant – nearly $1 billion, just shy of the $1.2 billion seized in all of 2023. Many buyers responded by altering their sourcing strategies to minimize supply chain risks.13
Solar incentive rate reform and storage incentives drove battery attachment rates to record levels in the residential sector.
In the first quarter of 2024, residential attachment rates rose to a record high 25%, four times what they were in the first quarter of 2020.14 Energy storage will likely make up the bulk of new US energy capacity in 2024.15 California accounted for roughly 60% of all paired installations in the US in the first quarter under the influence of NEM 3.0. The trend is likely to continue in smaller markets as well, like New York and Florida, where energy storage is strengthening grid reliability.16
Telsa’s battery division more than doubled its revenue year over year with its Megapack and Powerwall solutions, deploying 9.4GWh in Q2.17 In a groundbreaking new partnership, Tesla and Sunrun have teamed up in Texas to create a virtual power plant, using energy drawn from customers’ batteries as part of a new aggregated energy pilot program under ERCOT.18
High interest rates continued to drive third-party ownership up and residential installations down, but a surprise cut by the fed in September brings new hope.
Large national installers benefited the most from policy shifts encouraging energy storage; the complexity and expense of battery-attached systems makes third-party ownership more attractive to many customers. Tesla and Sunrun accounted for 50% of the solar-plus-storage market.19
Third-party ownership also maintained popularity due to high interest rates. PPA prices in California jumped by 15% in the fourth quarter of 2023, however PPA rates outside California are likely to continue their downward trend in the long term.20
Although the utility-scale solar sector has continued to grow under current market conditions, it’s been a tough year for residential solar. Higher interest rates and adverse policy shifts have contributed to a historic drop in rooftop solar installation rates, with California hit especially hard thanks to NEM 3.0 rules. As a result, more than 100 solar company bankruptcies have been announced. Key indicators do show stabilization in the residential market.21
There is some hope on the horizon, however. In September, the US Fed surprised everyone with a 50 basis point (0.5%) rate cut, double what analysts were anticipating.22 For capital-intensive industries, like solar, this is a big win. With further rate cuts expected, the solar industry is set to get a much-needed boost.23
Solar module prices stabilized in the residential market; the IRA boosted investments and jobs
Residential solar module prices declined in the first half of the year and then stabilized in Q3. Prices for both residential and commercial modules are expected to rise in coming quarters.
Residential module prices were lower in Q1 and Q2, relative to January 2024 and year-over-year averages, due to a continued oversupply of modules in the market,29 though prices appear to have stabilized in Q3. Commercial module prices, by contrast, rose year-over-year relative to the average PV price in 2023.30
Both residential and commercial module prices are expected to rise in the following months due to a combination of forces that will simultaneously improve demand (like increasing utility prices in key markets coupled with interest rate cuts) while decreasing supply (like trade investigations and new tariffs). Of course, the big question mark right now is what might change after the presidential election in November, regardless of which candidate makes it to office.
Two years post-IRA, new clean-energy investments and jobs continue to rise.
Since the IRA signing in August 2022, $86 billion has been invested in nearly 300 new solar, wind, and battery energy storage projects. The 170,000 jobs that now exist directly because of the IRA include roles in engineering, manufacturing, construction, business development, transportation, and more. An Intersolar report forecasts up to 1.5 million new jobs in clean energy before 2030.31
Source: Intersolar Report, One Year In: The Inflation Reduction Act in Review
Transmission and interconnection continued to be a bottleneck, but there was some positive news
Record-high prices at PJM's capacity auction highlighted concerns about interconnection.
In July, the PJM Interconnection announced capacity costs for the 2025-26 year were more than 6 times those of the previous year. PJM cited retiring power plants, higher loads, and new rules as reasons for the jump. The shocking financial outlook has lawmakers looking at new ways to bring new power generation sources online quickly.24
"PJM’s auction results have been a 'wake up call' for Maryland state lawmakers on related issues such as interconnection queue reform, reliability must-run contracts and transmission planning. It has all come to a head in this capacity auction."
New cooperation between companies brought about innovation that may speed up a critical part of the interconnection process.
There’s no magic fix for PJM or the rest of the US, but some new solutions were proposed recently that offer interesting potential. A partnership between Amazon and Duke Energy brought new technology into the market that allows power flow studies to be completed dramatically faster (hours instead of months).25 There are a lot of ways utilities can still slow interconnection, but this removes a big one.
FERC issued new transmission rules that require project developers to consider extreme weather and explore alternative transmission technologies.
In May, FERC issued a long-awaited transmission rule. New transmission projects will be required to factor in extreme weather events and look ahead by 20 years, among several other new considerations. It also requires transmission providers to consider alternative transmission technologies, like transmission switching and dynamic line ratings.26
Legislation was proposed to encourage Grid-Enhancing Technologies and redesign energy permitting.
Grid Enhancing Technologies (GETs) include a mix of sensors, controls, and software that make the grid more efficient. Countries that have deployed these technologies have seen 20-40% improvements in transmission capacity. Studies estimate the US could cut energy costs by $5 billion each year nationwide by employing GETs.27 In February, a group of US senators put forward the Advancing GETs Act in an effort to encourage energy project developers to employ more of these technologies. The Act would grant FERC the power to create an incentive program that would split the cost savings between the developer and ratepayers.
In June, the bipartisan Energy Permitting Reform Act of 2024 was proposed, which would axe the National Interest Electric Transmission Corridor designation process and give FERC power to approve transmission projects determined to be in the national interest.28
Longer routes and unexpected port closures drove up shipping rates
The Red Sea crisis and Key Bridge collapse factored into logistics prices, with more rate increases on the horizon.
The year opened with shipping carriers changing routes to avoid the crisis-engulfed Red Sea. Cargo prices continue to reflect the new, more expensive routes. Other shakeups, like the Francis Scott Key Bridge collapse in Baltimore, have caused shipping rates to increase. In July, the price to ship a 40-foot container hovered around USD$5,900 – a 286% year-over-year increase.32
In July, trucking rates rose for the first time in 2 years, marking the end of a years-long trucking recession, but recovery will be slow. There is currently an oversupply of trucks in the market and both manufacturing and consumer spending are down.33
In the warehousing market, storage rates jumped 20% year-over-year in 2023 to a record high. The market has cooled somewhat in 2024. In August, the national vacancy rate stood at 6.4% with the national average hovering around $8.15 per square foot (up 7.3% year over year). Notably, new warehouse construction dropped significantly compared to 2023.34
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As Kinect Solar’s content manager, Kate Wilcox is focused on keeping our partners and clients in the solar industry up to speed on policy and supply chain developments. She has been writing in the solar industry since 2017 and believes in a future powered by renewable energy. Kate loves living and hiking in the Rocky Mountains.
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