Further price increases for residential and commercial projects, as well as a possible drop in module shipments and even more delays for large-scale projects are possible following actions taken by the Biden administration to address the allegations forced labor in China.
Price increases ranging from $ 0.005 to $ 0.02 per watt, a decline of several months in the volume of modules shipped to the United States, and other project delays and postponements could follow as a result of customs action. and US border patrols in response to what officials said were credible reports of forced labor in the solar supply chain in China’s Xinjiang region.
The actions taken on June 24 by the Biden administration included a “restraining release order” by Customs and Border Patrol (CBP) against Hoshine Silicon Industry Co. Ltd., a company located in the Xinjiang Uyghur Autonomous Region. in China. The detention-release order calls on staff at all US ports of entry to “immediately begin detaining shipments containing silica-based products” manufactured by Hoshine and its subsidiaries.
(Read “Ministry of Labor Updates Forced Labor List to Target Polysilicon in China Region.”)
The action could have a wide impact as Hoshine supplies much of China’s polysilicon industry, which in turn makes widely distributed wafers and solar modules.
Difficult to prove a negative
The administration’s action will challenge U.S. importers to prove to CBP that the imported goods do not contain material from Hoshine or its affiliates.
“It’s incredibly difficult to prove a negative outcome,” especially if an importer is operating with something less than a vertically integrated supply chain, said Richard Mojica, lawyer at Miller & Chevalier. He spoke at a webinar hosted by Roth Capital Partners.
The fact that the action was aimed at a specific entity and not the entire Chinese region was seen by many to indicate a measured response to calls for the administration to take action in response to the allegations of forced labor. In progress.
Despite this, Nathan Picarsic, co-founder of Horizon Advisory, said the action is a “pretty clear signal” that the CPB and the Biden administration are dealing with the forced labor issue strategically.
(Read “Border action ordered for solar components made by Chinese manufacturer.”)
Elise Shibles, a lawyer at Sandler, Travis & Rosenberg, said CBP has likely identified manufacturers they believe have a connection to Hoshine. These companies will need to document and verify their supply chain in order to refute any link. The execution measure took effect on June 23.
Taking its WRO action, CBP said it has identified around $ 150 million in imported goods to the United States over the past two years that have caught its attention. While this volume represents only a tiny percentage of the multi-billion dollar U.S. solar market, the reach could increase over time.
Mojica said CBP may undertake a business survey to get a better idea of the solar industry supply chain and may use data analysis to determine which products are subject to the WRO. Data analysis could be based on the Harmonized Commodity Description and Coding System, also known as the Harmonized System of Tariff Nomenclature, which is a system of names and numbers to classify traded products.
Less product in the USA?
Andy Klump, CEO and founder of Clean Energy Associates, told the webinar that he estimates the cost impact could range from half a cent to 2 cents per watt. Residential, commercial and industrial projects are expected to experience most of the expected price increase. And large-scale projects could experience further delays. Already this year, large-scale solar projects have been hit by price inflation for everything from steel to polysilicon.
Klump said that while the possible price increases “seem like a lot,” they are small compared to other recent price increases related to ocean freight rates and polysilicon. He said there might also be “less product coming into the United States” for a while, perhaps for several months. And he said small and medium importers are likely to have a harder time complying with CBP requirements.
Picarsic warned that if trade tensions persist, China could target a leading player in the US market to lead by example. He said the Chinese government considers the human rights review to be politically motivated, which shifts the dispute from an economic conflict to a geopolitical one. “It increases the risk of retaliation,” he said.
Some escalation may already be in play. Earlier in June, the Chinese government passed measures allowing it to punish companies that comply with US sanctions. This could create a legal danger for American businesses that must comply with customs and border patrol mandates.
“Nobody wants trouble with the government,” Klump said during the webinar. “Suppliers are in a difficult position.
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