SolarWorld Wins Trade Case, But Faces Sliding Stock, Faulty Lug Recall, and More
Here's a roundup of SolarWorld's tumultuous summer.
Winning trade battles
In June, the Department of Commerce found in favor of petitioner SolarWorld in that company's trade case against Chinese solar module makers. The preliminary decision imposed significant tariffs on Chinese solar modules in the anti-dumping portion of this case. The decision also closed what SolarWorld called a "loophole" which allowed Chinese module manufacturers to use Taiwanese cells in their modules, thereby circumventing U.S. trade duties.
SolarWorld has prevailed at pretty much every step of this case, despite opposing efforts from the Coalition for Affordable Solar Energy (CASE) and other trade organizations.
June's preliminary decision on dumping:
- Trina Solar and ReneSola/Jinko received preliminary dumping margins of 26.33 percent and 58.87 percent, respectively.
- 42 other exporters were hit with a rate of 42.33 percent.
- In the Taiwan investigation, "mandatory respondents Gintech and Motech received preliminary dumping margins of 27.59 percent and 44.18 percent, respectively. All other producers/exporters in Taiwan received a preliminary dumping margin of 35.89 percent."
July's preliminary decision on unfair subsidies:
- Commerce found for SolarWorld again, and imposed preliminary duties of 35.21 percent on imports of solar panels made by Suntech, 18.56 percent on imports from Trina Solar, and 26.89 percent on imports from most other Chinese producers.
SolarWorld commended the U.S. Department of Commerce’s determination and noted that most of the firms will pay combined duties of about 47 percent, effective immediately.
In 2013, imports of crystalline silicon photovoltaic products from China and Taiwan were valued at an estimated $1.5 billion and $656.8 million, respectively. Chinese companies supplied 31 percent of the modules installed in the U.S. in 2013, and more than 50 percent in the distributed solar market, according to GTM Research.
Non-Chinese suppliers are likely to gain share as a result of the erosion of Chinese price advantage in the U.S. market. Likely beneficiaries include REC, SolarWorld, Suniva and LG Solar in the distributed solar market, and First Solar in the utility market.
Shyam Mehta, Lead Upstream Analyst at GTM Research and co-author of a recent report on the topic, had this to say: “While the strategies vary, one constant remains across all scenarios: pricing for Chinese modules shipped to the U.S. is highly likely to increase starting in July 2014. Consequently, the primary competitive advantage of Chinese suppliers in the U.S. market -- lower pricing by as much as 25 percent historically -- could be greatly diminished.”
Writing letters to SEIA
As Stephen Lacey reported, SolarWorld President Mukesh Dulani penned an open letter to Solar Energy Industries Association President Rhone Resch, claiming that the organization is biased toward Chinese manufacturers. He called SEIA leadership "divisive" and said the organization encouraged some Chinese members to "break U.S. laws."
Although that wasn't the first time SolarWorld fired shots at SEIA, it was perhaps the most hostile attack to date. It's also the first time SolarWorld has publicly declared its support for a diplomatic settlement with China -- assuming certain demands are met.
Below is the full letter from SolarWorld:
I am writing to address troubling comments and positions that you and SEIA have made and taken in regard to the anti-dumping and countervailing duty cases which SolarWorld has filed on behalf of U.S. solar manufacturers to counter the unfair trade practices of Chinese and Taiwanese solar manufacturers.
First, I wish to express my concern about SEIA’s decision to “condemn” the U.S. Department of Commerce’s recent preliminary determination on anti-dumping duties on solar imports from China and Taiwan. SEIA used this term twice in its media statement. To condemn the Commerce Department determination -- the ninth consecutive U.S. government finding of unfair trade practices by the Chinese solar industry -- is both inappropriate and wrong.
As SEIA is well aware, all countries and all industries are subject to international trade rules. Such rules ensure that nations and their producers do not create improper barriers to trade and use the false advantages of export dumping or illegal, export-oriented subsidies to prey on the producers of their trade partners. That you sanction the actions of some of your Chinese members to break U.S. laws and World Trade Organization rules raises serious questions about the interests and intentions of SEIA, a trade association that pledged in 2011 to remain neutral in this dispute.
I also want to affirm SolarWorld’s openness to alternative remedies in light of your ongoing calls for talks among the U.S. and Chinese governments, SolarWorld and China’s manufacturers. As you know, despite protestations from some Chinese manufacturers and their American allies to the contrary, SolarWorld has never closed the door on negotiations as long as they include two very basic conditions. First, any agreement or negotiated solution must eliminate China's unfair trade practices. Second, it must be enforceable. The Chinese manufacturers have yet to embrace these core conditions. Moreover, the Chinese record of compliance to suspension agreements hardly inspires confidence.
Lastly, based on our reading of the Commerce Department’s memo regarding the preliminary dumping and countervailing duties decisions, SolarWorld believes that there is a way forward toward a negotiated settlement. However, the SEIA proposal from September 2013 is not it. On top of its rejection by SolarWorld and other U.S. parties, the preliminary anti-dumping tariffs announced in the July 25 Commerce Department decision leaves little incentive for the Chinese manufacturers to source from Taiwan.
If SEIA wishes to reformulate and resubmit its proposal, I would gladly review it and respond. If we can discuss any new version before you leave for China starting Aug. 8, 2014, for your consultations with Chinese industry and government officials, I believe it would be useful.
It is my goal that both sides will pursue an amicable solution, and I request your support toward this end. In particular, I ask that you cease your improper, divisive rhetoric and advocacy of obsolete proposals, both of which can only thwart progress toward a viable and lasting agreement.
I look forward to your response.
SEIA said the letter was "surprising," given the organization's work "behind the scenes to facilitate a meaningful, productive dialogue between SolarWorld and Chinese manufacturers."
Panel installation impacted by faulty lugs
This week, SolarWorld had to issue a warning on 1.5 million U.S.- built solar panels because the PV panels came with unclear part numbers for grounding lugs, which if copper, can cause galvanic corrosion between the lug and aluminum frame. This can result in a faulty ground circuit, posing "an electric shock, electrocution or fire hazard," according to the U.S. Consumer Product Safety Commission.
SolarWorld has revised its installation instructions to call for tin-coated lugs and will replace copper lugs for the proper parts at no cost to the consumer. SolarWorld said that it has received one report of corrosion related to the bare copper lugs. No injuries have been reported.
Selling solar modules at prices near cost?
SolarWorld has been quoting module prices this quarter as low as 68 cents per watt, with typical quotes ranging from 71 cents per watt to 77 cents per watt, according to a number of sources close to the company, This is significantly lower than the prices the company has quoted in the past. This price point, by the estimates of many, is below SolarWorld's manufacturing cost, and is significantly lower than its pricing in other regions (EU, Mexico).
Diminishing shareholder value
The recent three-month decline in SolarWorld AG's stock price has left the company with a market cap of $186.2 million.
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Prior to joining Greentech Media, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields. He also was the publisher of the Venture Power newsletter, a ...
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