First Solar CEO says tariff exemptions threaten U.S. efforts to ramp up domestic solar manufacturing
A worker applies tape to a solar panel at First Solar in Perrysburg, Ohio July 8, 2022.
Megan Jelinger | Reuters
A flood of foreign solar components threatens efforts to build a domestic manufacturing base in the U.S. to support the clean energy transition, according to First Solar CEO Mark Widmar.
In an interview with CNBC, Widmar said the U.S. should close tariff exemptions that allow cheap components into the U.S. market. First Solar is the largest manufacturer of solar panels in the U.S., focused on large, utility-scale projects.
“All we want is to be able to compete on our own merits and to the extent there is dumping happening in the U.S. market, it should be addressed,” Widmar said. “Once it is addressed, we want it to be enforced.”
A common type of solar panel used in the U.S. is excluded from Section 201 tariffs designed to protect domestic solar manufacturing, and a moratorium on tariffs against solar components imported from several Southeast Asian nations is in place. While some industry stakeholders have supported these exemptions to help scale up solar power capacity in the U.S., Widmar said the carveouts are undermining the goals of the Inflation Reduction Act.
Exploiting a loophole
“The intent of what we’re trying to do – to create this domestic industry that can enable long-term energy independence and security to achieve climate change goals and to enable cycles of innovation by having domestic capabilities – is all at risk,” Widmar said. “It’s unfortunate but that’s largely what’s happening.”
The Biden administration in 2022 extended Section 201 tariffs originally imposed by the Trump administration, but imported bifacial solar panels, which absorb light on both sides, are excluded from the duties.
In an investigation concluded last August, the U.S. Commerce Department found that some Chinese companies were skirting anti-dumping protections in the U.S. by shipping solar cells and modules through countries such as Cambodia, Malaysia, Thailand and Vietnam.
But a decision by President Joe Biden in June 2022 to exempt those same Southeast Asian nations from solar tariffs for two years means penalties are not being enforced against some Chinese producers despite the Commerce Department’s conclusions.
Biden vetoed legislation last spring that would have imposed tariffs on solar components from Cambodia, Malaysia and Thailand. In his veto message, the president described the exemption as a “temporary bridge” that is needed to help expand solar capacity in the U.S.
Though the exemption expires this June, Widmar said 30 to 40 gigawatts of excess product has made its way in to the U.S. market, which is equivalent to almost a full year of consumption.
“What this is doing is it’s not allowing these domestic companies to scale,” Widmar said.
The First Solar CEO said he is also worried that Chinese companies will exploit IRA tax credits, particularly the 7 cents per watt for solar modules, to set up assembly plants in the U.S. that do not move the ball forward in terms of technological innovation.
“What you’ve done is you’ve given the Chinese the opportunity to exploit the Inflation Reduction Act,” Widmar said.
A White House spokesperson wasn’t immediately available to comment.
A buffer against volatility
First Solar is largely insulated from the current market dynamics because the company is booked solid through at least 2026, Widmar said. The company has intentionally overbooked to provide a buffer against the volatility in the solar market, he said.
While the residential solar sector has been walloped by high interest rates, First Solar has outperformed with its focus on utility-scale projects. The Invesco Solar ETF (TAN) has fallen than 18% this year, while First Solar’s stock is down just over 6%.
First Solar shares over the past year.
Electricity demand growth on the grid was largely flat up until 2020, but has now hit an inflection point with power needs expected to grow substantially through the end of this decade, Widmar said. Large data centers are using more power due to the emergence of artificial intelligence, and other factors such as cryptocurrencies, the electrification of vehicles, and the onshoring of manufacturing in the U.S. are contributing to demand growth, he said.
“That drives need for hundreds of megawatts for solar power plants,” Widmar said. “That means you need more utility-scale generation and you couple that with the continued ramp down of fossil fuels, coal power plants and even nuclear.”
First Solar operates three factories in Ohio with two more plants slated to open in Louisiana and Alabama. The company sources its material in the U.S. and is not dependent on Chinese supply chains, Widmar said.
The CEO said domestic manufacturing provides certainty in a world where supply chains are being disrupted by geopolitical tensions, such as those in the Red Sea, and uncertain trade policies.
“The best way I can provide them certainty is to manufacture in the U.S. with a U.S. supply chain,” he said.
Don’t miss these stories from CNBC PRO:
LiveWire, the electric motorcycle brand spun out of Harley-Davidson, has just announced its latest electric motorcycle model. The new LiveWire S2 Alpanista is built on the same platform as the brand’s last two models, leveraging the Arrow platform as a versatile foundation for several diverse bikes.
The Arrow platform first received its debut with the LiveWire S2 Del Mar, which was then followed by the S2 Mulholland.
LiveWire announced that a high-performance electric maxi-scooter would be produced on the Arrow platform, but not before the company rolled out the S2 Alpinista. “The Alpinista is LiveWire’s first sport standard,” explained the company, “equipped with 17” wheels and tires, blending the best of street, sport, and hyper-tourer characteristics.”
The recently unveiled S2 Alpinista is mechanically quite similar to the two previous models sharing the platform. The 10.5 kWh battery that serves as the main structure of the bike will offer a maximum range of 120 miles (193 km) per charge under city riding conditions. It can be recharged with a Level 2 charger from 20-80% in just 1 hour and 20 minutes.
The 433 lb (196 kg) bike can achieve a 0-60 mph (0-96 km/h) time of just 3.0 seconds, thanks to its powerful 63 kW (84 hp) motor. The S2 Alpinista can also reach an electronically limited top speed of 99 mph (159 km/h).
Priced at US $15,999 and already available at LiveWire dealerships in North America and Europe, the S2 Alpinista officially becomes the most affordable LiveWire electric motorcycle available to date, undercutting the $16,249 S2 Del Mar electric street tracker and the $16,499 Mulholland electric sport cruiser.
“Alpinista reimagines the S2 by combining the urban agility of a supermoto with the do-it-all nature of a touring bike, creating a practical and thrilling sport standard,” explained the brand.
The smaller 17″ wheels help reduce the seat height of the bike, and combined with the Dunlop Roadsmart IV tires, the street-optimized bike is ideal for “both daily commutes and spirited rides through winding roads.”
The S2 Alpinista comes with 6-axis IMU from Bosch providing cornering-enhanced antilock braking and cornering-enhanced traction control systems, in addition to four preset ride modes and two custom modes.
Now the third model launched on the Arrow platform, the S2 Alpanista underscores the versatility of LiveWire’s workhorse. The approach was intended to allow the e-motorcycle offshoot to quickly innovate with multiple styles of motorcycles all sharing key structural and drivetrain components. The move has largely been seen as an engineering success, with three models hitting the road in under three years. However, sales have yet to reach targets set by LiveWire as the more premium electric motorcycle industry has experienced a rocky few years.
As a LiveWire S2 Del Mar owner myself, I can attest to both the performance and enjoyable experience of bikes built on the platform, though I do find myself in a somewhat smaller community than LiveWire had likely hoped for. With the backing of its powerful older brother H-D, which retains a controlling stake in the company, LiveWire has enjoyed the relative freedom to cruise for its first few years and focus on motorcycle development and rollouts, with profitability hopefully coming over the horizon in due time.
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