Solar stocks move in different directions on Biden decision

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The costs of solar panels have increased worldwide.

Andreas Rentz/Getty Images

President Biden decided on friday to extend its predecessor’s solar tariffs, but changed them to allow more panels to enter the country duty-free.

Overall, the decision should benefit some U.S. solar companies, such as


sunrun

(ticker: RUN) while hurting others, such as


First Solar

(FSLR).

The US solar industry is divided between companies that benefit from cheap imported modules, like solar installers, and those that want to keep those modules out, like solar manufacturers. Former President Trump instituted tariffs on imported modules in 2018 on the grounds that they would spur domestic manufacturing.

Biden’s decision appears to be better for the installers. Biden refused to follow the advice of the International Trade Commission, a US organization, to keep the tariffs with fewer exceptions. Stocks of rooftop solar developers and installers


sunrun

and


Sunnova Energy International

(


NOVA

) rose more than 4% on Friday, while


Sun Power

(SPWR) increased by 2%. Manufacturers First Solar was down 3%, while


Maxeon Solar Technologies

(MAXN) was flat.

Biden doubled the amount of solar modules that can enter the country duty-free and exempted certain types of panels, including so-called “bifacial” ones that can absorb solar energy from both sides. This exemption in particular is problematic for First Solar, the largest US manufacturer whose patented solar technology competes with bifacial modules.

“First Solar is deeply disappointed with the decision to expand Section 201 safeguard rights while maintaining the bifacial panel exclusion,” First Solar said in a statement responding to the president’s decision. “Quite simply, extending the Section 201 warranty to the exclusion of bifacial panels is no warranty at all.”

First Solar believes that China subsidizes bifacial modules, giving them an “artificial advantage over other types of panels.”

US solar installers, however, like cheap panels because it keeps their costs down. Currently, installers are struggling as costs have increased worldwide, due to supply chain issues, inflation of materials and tariffs. Biden’s decision should also help utility companies buying and installing solar panels.

Biden could have simply let the tariffs expire, which would have been even more advantageous for solar installers. But the administration said it wanted to boost U.S. manufacturing more, rather than rely on panels from Asia.

In the long term, the United States needs to increase its manufacturing capacity so that installers are not dependent on companies from other countries to meet demand. In his decision, Biden noted that “domestic industry has begun to positively adapt to import competition, as evidenced by increases in domestic module production capacity, production and market share.” . He wrote that he would consider changing the tariffs in the future depending on whether domestic manufacturers adapt well to the changes.

Write to Avi Salzman at avi.salzman@barrons.com

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