The U.S. Department of Commerce recently announced that it will investigate whether Chinese solar companies are suspected of evading tariffs by using Southeast Asia’s “washing of origins”. The news aroused heated discussions in the market. Since the U.S. Department of Commerce only decided to give up the investigation in November last year, why it has changed its mind and launched an investigation again, the industry pointed out that the main reason is a report released by the U.S. Department of Energy on February 24 this year.
Looking back on last year, the White House issued the “US Supply Chain Executive Order” for the first time on February 24, clearly stating that “strengthening the local supply chain in the United States” will be the government’s top priority. The report not only analyzes the development of the solar energy industry, but also proposes that the government needs to cooperate across departments to legislate to support the development of the local solar energy industry.
The Department of Energy quoted the US government’s commitment at the beginning of the report, pointing out that in order to cope with current climate change, the US will reduce greenhouse gas emissions by 50-52% compared with 2005 in 2030, and further achieve net zero carbon emissions in 2050. Meet the energy transition plan.
However, the Department of Energy found in the survey that solar energy is of great importance to the United States and even the world. It is estimated that the annual installed capacity of the United States will reach more than 100GW in 2030, which will not only account for 40% of the electricity consumption in the United States, and there is no need to increase electricity prices. In the US domestic solar energy supply chain, only cadmium telluride modules and silicon wafer modules are left, and most of the other front-end products are in the hands of Chinese manufacturers, which is like being “choked by China”.
The Department of Energy is aware that a large number of solar cells imported by the United States today, which can be traced back to upstream polysilicon, silicon wafers, etc., are mostly produced by Chinese manufacturers. In addition, China has a record of human rights violations, which may pose a major risk to the US solar energy supply chain. A secure and resilient supply chain is therefore critical to today’s energy transition.
In this regard, the U.S. Department of Energy has made three proposals to the government. One is to legislate to provide tax breaks to support domestic solar manufacturing. For example, new production lines and continuous operations can be rewarded to maintain local competitive advantages and offset solar production. The cost is 30-40% higher than the impact of China.
The second is legislation to encourage the adoption and installation of US solar products. In order to support the certainty of domestic investment, it is also called for tax credits to be implemented for at least 10 years to foster long-term industrial development. Relief measures, effectively coordinated and implemented, and create fair production conditions for local U.S. industries and workers.
The Department of Energy hopes to rebuild the U.S. solar manufacturing industry through the implementation of three policies, not only to ensure that the future carbon reduction rate is on track, but also to form a safe and resilient supply chain that is not restricted by the external environment, consistent with the current government’s philosophy.
If you look back at the current situation in Taiwan, the government also provides a 6% subsidy for power generation to manufacturers who use domestic modules. However, in recent years, as the wholesale purchase rate has been reduced year by year, the price gap between domestic modules and modules imported from third places has also increased. The smaller it is, and the 6% power generation subsidy scope is not applicable if it is used for power generation by the industry, so domestic modules will naturally not be used.
The industry believes that as the global environment changes, supply chains no longer advocate globalization but localization. In addition, net-zero carbon emissions are imperative in the future. How the government ensures the energy transition plan has become a key point of contemporary and even future thinking.
