U.S. tariffs on Chinese solar cells may be halved after a Department of Commerce review, boosting manufacturer and installer margins with little consumer benefit.
The review of 2012 import tariffs recommended that the countervailing and anti-dumping duties levied on most Chinese solar manufacturers be reduced from a combined 31 percent to about 18 percent, the department's International Trade Administration said in its preliminary results released Jan. 2.
Manufacturers of solar panels, including JinkoSolar Holding and Canadian Solar, and customers, such as installers SolarCity and Vivint Solar, are likely to see "a substantial potential improvement to U.S. margins," Philip Shen, an analyst at Roth Capital Partners in Newport Beach said Tuesday in a research note.
Homeowners who want to install rooftop systems shouldn't expect lower prices, said Shayle Kann, an analyst at GTM Research in Boston, by email. That's because the cost of panels represents less than a third of the total cost.
Soft costs, like the costs to install, permit, inspect and finance systems, make up the rest. Panel prices will probably fall about 5 cents by late 2015 into early 2016, he said.
That makes a bigger difference for large utility-scale solar projects, where prices can be below $1.50 a watt, he said, compared with $4.40 average cost of residential systems installed in the U.S., according to a report by the country's National Renewable Energy Laboratory.
The U.S. and China are caught in a dispute over the role of government in aiding renewable energy companies that originated with a case brought by SolarWorld, a German solar manufacturer with a factory in Oregon. SolarWorld asked the Commerce Department in 2012 to apply tariffs to solar cells imported from China.
After the tariffs kicked in, imports of panels with cells made in Taiwan boomed, and SolarWorld said a year ago that Chinese makers had shifted production to skirt the duties.
The final determination is not expected until early May or June, said Kann. The biggest impact will be on new imports, with shipment cash deposit rates likely to drop to about 15 percent, Kann said.
Chinese solar companies are required to set aside a cash deposit equal to the percentage of duties owed on products being imported to the U.S. that will be refunded if the final determination rate is lower.
A World Trade Organization body said last month U.S. duties on panels made in China violated trade rules, reversing an earlier finding, in response to China's appeal of a WTO finding earlier this year.
The Obama administration said Dec. 17 that it will set duties on solar products from China and Taiwan that may exceed more than 200 percent combined. The Commerce Department also completed a plan to include in the tariffs any solar panels assembled in China, regardless of the origin of the cells.
The U.S. International Trade Commission must rule on this last step before the tariffs go into effect. A decision is due next month.