In the first week of June, the U.S. Department of Commerce (DoC) announced its decision to levy tariffs ranging from 18.5-35% against Chinese solar manufacturers such as ReneSola, Suntech, Trina Solar, and Yingli as countervailing measures against Chinese subsidies for solar products. The DoC enacted the duty after deeming that such subsidies give Chinese solar manufacturers an undue advantage over competing domestic firms (such as SolarWorld).
From our team’s perspective, the trade tariff is most taxing for U.S. developers and investors who are trying to finance solar projects in Q3 and Q4 of 2014. Earlier this year, solar panels could be procured at a cost of $0.60-0.70/Watt, but now, panel prices are more likely to be procured at a cost of $0.70-0.80/Watt. The tariff falls hardest on (1) those who have projects with thin profit margins, and (2) those who have previously negotiated prices for Chinese panels, but who have not actually purchased the equipment. In addition to the cost impact, many project developers and EPC’s are now without a secure supply of modules and must now actively shop for them. This can wreak potential havoc for delivery risk with respect to project schedules.
We are currently working with a number of developer and investor clients to determine if projects can bear the increased panel costs, and deliberating on who can and will bear these increased costs. We are also working closely with clients to optimize their project values in other ways (procurement, design, etc.) to mitigate the impact of rising module prices. Solar developers interested in addressing these cost hurdles should contact our team for assistance.
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