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Commerce Department Delays Critical Decision On Solar Panel Tariffs

The U.S. Commerce Department has delayed a critical decision on imposing additional tariffs on solar panel imports—a decision which could make or break the industry, U.S. solar developers fear.

Reuters reports that the department had asked a group of U.S. solar panel developers for additional information before it makes the decision, which would cover panel imports from three Southeast Asian countries—Vietnam, Malaysia, and Thailand.

U.S. solar farm developers' dependence on cheap imported panels has come to the fore recently amid supply chain disruptions and the continued tensions between Washington and Beijing. However, the sector has been vocal against the imposition of tariffs that would reduce their dependence on imports but expose them to the higher prices of locally produced panels.

The output of local panels is also smaller, so tariffs may well serve as a wrench in the works of the Biden administration's energy transition plans that envisage boosting the share of solar power in the energy mix from 4 percent now to as much as 45 percent, which would mean the addition of more than a thousand gigawatts of capacity.

According to solar farm builders, tariffs on Vietnamese, Malaysian, and Thai panels would spook the foreign producers on which they rely, crippling the solar industry. Panel manufacturers, on the other hand, have accused Chinese panel producers of moving their manufacturing activity to these three countries to skirt U.S. tariffs on Chinese-made panels, introduced by the previous administration.

According to industry body Solar Energy Industries Association, if tariffs are imposed on imported panels, this would compromise the commercial viability of some 18 GW of new solar projects over the next two years.

At the same time, the developers themselves admit they are dependent on international supply chains, which makes them quite vulnerable to disruptions. Reuters notes that solar panel shipments to the United States were down 11 percent on the year last month because panel makers were afraid of getting hit with new tariffs.

"We are getting hit right now pretty hard," one solar developer said this week. "We are completely dependent on a global supply chain, so we are a little bit more vulnerable."

By Irina Slav for Oilprice.com

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