Inside Clean Energy: Navigating the U.S. Solar Industry’s Spring of Discontent
Troy Van Beek is an optimist by nature, but he sounded dour this week.
His solar business, Ideal Energy in Fairfield, Iowa, is dealing with the blowback from a Department of Commerce investigation that could lead to retroactive tariffs on certain solar panels imported from Southeast Asia.
“We keep getting the rug pulled out from under us,” he said.
I reached out to Van Beek, whose company I profiled in a 2019 story, to get an idea of what the federal investigation looks like for solar companies. His business and the solar industry as a whole have been growing, but he explained that the government probe is the latest in a series of blows from policymakers and regulators that have undermined what should be a much larger economic success story.
The investigation has led to a spike in panel prices in anticipation of potential penalties, which is on top of existing supply chain problems that have made it difficult for solar installers to get the equipment they need.
Van Beek spends much of his time trying to chase down equipment and deciding how much he can pay at a time of volatile prices.
He is a former Navy SEAL who became an energy entrepreneur because he wanted to work toward a world in which access to affordable renewable energy would reduce global conflict. The business, which he co-founded and co-owns with his wife, Amy Van Beek, began in 2009 with small rooftop installations and now has grown to 22 employees and has a track record that includes residential, commercial and utility-scale projects.
“A lot of companies like ours have been giving to the industry, literally just giving our hearts and souls and everything to it because we believe in it,” Van Beek said.
He is frustrated because 2022 was supposed to be a year of recovery and prosperity as the pandemic faded into memory and the Biden administration’s policies accelerated the shift to renewable energy.
But almost none of the good things he hoped for have happened, and a bunch of bad things have.
The Commerce Department opened its investigation in response to a February legal filing by Auxin Solar, a small manufacturer in California, that said Chinese companies were circumventing the tariffs imposed in 2018 by the Trump administration. Auxin alleges that Chinese manufacturers avoided tariffs by sending equipment to nearby countries for minor assembly work before delivery to the United States. Since the 2018 tariffs, U.S. panel imports from China plummeted, largely replaced by imports from Cambodia, Malaysia, Thailand and Vietnam. Some panel manufacturers have opened plants in the United States, like Jinko Solar of China, which opened in Florida, but the new plants’ output remains small compared to what’s in Asia.
Investigators have a few months to determine if the conduct meets the legal definition of a circumvention of tariffs.
Solar industry groups reacted to the investigation with alarm. The Solar Energy Industries Association said that 24 gigawatts of projects that were projected for 2022 or 2023 would not happen in those years, a decrease of 46 percent compared to the prior forecasts, if the government orders retroactive tariffs. The trade group provided examples of projects that were on hold because of uncertainty about costs that may result from the investigation, and also warned that 100,000 jobs could be lost.
“It’s pretty bad,” said Jenny Chase, lead solar analyst for BloombergNEF, in an email.
She and her team have cut their forecast for U.S. solar development for 2022 “mainly due to the difficulty developers have in securing modules,” she said. The forecast now shows a small decrease in construction from 2021 to 2022, which is unusual at a time when demand for solar is high.
On Wednesday, the utility NiSource said that uncertainty related to the federal investigation means solar projects scheduled to go online in 2022 and 2023 are now going to be delayed by six to 18 months. Because of the delays, the company is pushing back the closing of the coal-fired Schahfer Generating Station in Indiana from 2023 to 2025. This is the kind of news that makes a clean energy advocate want to start kicking the walls.
Amid this gloom, it’s important to specify that solar power has been in a growth mode despite many challenges. Utility-scale solar arrays in the United States generated 114,678 gigawatt-hours in 2021, up 29 percent from the prior year. Parts shortages and tariffs have contributed to price increases and a slowdown in projects compared to what otherwise might have happened, but long-term forecasts indicate that solar will continue to grow into an essential part of the power system.
Van Beek said the anxiety described by trade groups is in line with what he is feeling. The investigation would be a major impediment to business any time, but it’s much worse coming on the heels of the pandemic and when the Biden administration’s clean energy agenda has largely been stalled, he said.
Biden’s Build Back Better proposal includes incentives for rooftop solar that would cut costs for customers by about 30 percent. That is just one of many clean energy and climate provisions in the legislation that are stuck in the U.S. Senate, where Democrats remain several votes short of what they need.
In addition, the Biden administration said in February that it was extending but revising the Trump administration tariffs on Chinese solar equipment, which otherwise were set to expire. The extended tariffs, which would last for four years, would be about 15 percent, with some new exceptions that should reduce the effects on buyers.
The idea behind the Trump administration tariffs was that Chinese companies, which dominate the market, were engaging in unfair pricing that was hurting U.S. solar manufacturers. The Biden administration also has spoken about the need to have more solar panel manufacturing in the United States and fair competition.
But it takes years to build a substantial solar manufacturing infrastructure. U.S.-based solar panel manufacturers only have enough capacity to serve a small share of the market and their orders are fully booked through 2024, John Ketchum, CEO of NextEra Energy, one of the largest solar developers in the country, said in a call last month with analysts.
Despite talking about frustrating subjects, Van Beek was upbeat about the potential for things to get better. He’s still an optimist, just one whose industry is going through a rough patch.
“I believe in the industry. I believe in the opportunity,” he said.
Other stories about the energy transition to take note of this week:
Meet the Company at the Center of the Government’s Tariff Probe: Mamun Rashid, the CEO of Auxin Solar, says the solar industry is “fear mongering” with talk of dire consequences from an investigation his company has instigated. Rashid said the country’s climate goals can be reached even if the investigation leads to new tariffs being imposed on some imported solar equipment, as David Iaconangelo reports for E&E News. “If cheating is going on, then we’d like to see trade laws enforced,” Rashid said. Auxin is a tiny company, with manufacturing capacity of about 150 megawatts per year, a number so small that it could be described as “firmly in the category of artisanal solar boutique,” according to Eric Wesoff of Canary Media, who visited the company’s plant in San Jose, California. Wesoff notes that U.S. trade law allows for the possibility that a $10 million company like Auxin could shut down a $10 billion solar industry just by submitting a petition.
Supreme Court Leak Strikes Fear Among Environmental Lawyers: The Supreme Court may be poised to overturn Roe v. Wade, according to a leaked draft opinion, a possibility that is concerning for environmental advocates who see danger ahead as the court reviews the federal role in climate policy. The sharp turn on abortion may signal the court’s willingness to break from precedent on issues that have long been in the crosshairs of conservative legal scholars. The court’s forthcoming decision in West Virginia v. EPA could provide a vehicle to limit federal powers to regulate carbon emissions, as Maxine Joselow reports for The Washington Post. Advocates fear that the court will undermine the legal basis for federal emissions rules on power plants, which could slow the pace of the transition to cleaner energy. “The court’s dismissive attitude toward precedent … is really just another signal of a conservative majority that’s eager to roll up its sleeves and fix all the issues in the law that conservatives have complained about for years,” Dan Farber, a professor of law at the University of California at Berkeley, told Joselow.
Department of Energy Boosts Domestic Battery Supply Chain with Billions in Funding: The Biden administration has opened up billions of dollars in funding to build domestic supply chains for batteries. The Department of Energy said it will devote $3.1 billion to boost “the creation of new, retrofitted, and expanded commercial facilities” to process materials, make batteries and recycle them at the end of their lives, as Justine Calma reports for The Verge. The funding comes from the Bipartisan Infrastructure Law that Biden signed last year.
Ending the Sale of Gas Cars by 2030 Was a Radical Idea. What Changed?: In just a few years, the idea of ending the sale of gasoline cars has gone from the fringes to close to the mainstream of policy discussions. The shift is because of the expansion of the EV market, reduction in EV costs and shifting public attitudes, among other factors as Kate Yoder reports for Grist. “People are understanding that it’s coming fast,” said Larry Chretien, the executive director at the Green Energy Consumers Alliance. “They’re getting ready. They anticipate that they will be able to buy an electric car soon.”
The Flawed Math Behind Elon Musk’s Twitter Deal: Elon Musk’s plan to buy the social media company Twitter captures the absurdity of a financial era, according to a column from Steven Pearlstein for The Washington Post. “A cocky, publicity-seeking libertarian billionaire bets virtually all of his stock in his overvalued electric car company to finance a highly leveraged, $44 billion hostile takeover of an overvalued, money-losing social media platform, on which he boasts 84 million followers,” Pearlstein writes. In addition to questions about the deal itself, some analysts are raising concerns that Musk’s Twitter adventure could be bad for Tesla, as David Ferris reports for E&E News. “Not only does this acquisition threaten Musk’s reputation as a master of execution, but it also has the potential to cross-contaminate the positive reputations of his other successful brands, like Tesla,” Michelle Lyng, the president of Novitas Communications, a public relations firm, told Ferris.
Inside Clean Energy is ICN’s weekly bulletin of news and analysis about the energy transition. Send news tips and questions to [email protected].