Chinese face 14% US price hike: GTM
China-supplied modules would see an average price jump of 14% should the US follows through on its recent tariff ruling, although some large suppliers may find ways of staying below that, according to GTM Research.
If the duties are finalised later this summer, it is likely there will be a splintering of strategies among Chinese suppliers – in contrast to their near-uniform response to the previous round of US tariffs imposed in 2012.
In that case, Chinese PV manufacturers shifted to buying cells made in Taiwan for their modules – the loophole the US has now moved to close off, at the insistence of SolarWorld.
The average price for modules built using that strategy (Chinese wafers, Taiwanese cells, Chinese modules) was $0.72/W during the first quarter of the year, GTM says.
On average, that would jump to $0.94/W if the new duties are upheld.
Ironically, it would be cheaper for many companies to revert back to shipping all-Chinese modules and paying the 2012 duties – with an estimated average delivery price of $0.82/W – than to pay the new rates with Taiwanese cells.
Some Chinese manufacturers have moved quickly to book up overseas OEM capacity for cells and modules – in places like Poland, Mexico, South Korea and India – which could see them delivering into the US at around $0.76/W, or 5.5% above the Q1 level.
Such modules would still be competitive. But the OEM model will not be available to all suppliers.
Others may seek to build in-house overseas production capacity, which GTM believes would raise their delivery price to around $0.83/W.
“While the strategies vary, one constant remains across all scenarios: pricing for Chinese modules shipped to the US is highly likely to increase starting in July 2014,” says Shyam Mehta, GTM Research’s lead upstream analyst.
“Consequently, the primary competitive advantage of Chinese suppliers in the US market – lower pricing by as much as 25% historically – could be greatly diminished.”
That reality is already having an impact on the global PV sector – and in some cases sending US buyers into the arms of non-Chinese suppliers.
Two weeks ago SolarCity, the largest residential installer in the US, announced a deal to buy Singapore-made modules from REC Solar, before this week's blockbuster announcement that it may build its own module factory in the US.
On Wednesday, RGS Energy announced a supply deal for modules coming out of SolarWorld’s Oregon factory.
Other suppliers poised to benefit include US-based Suniva and Korea’s LG Solar in the distributed segment, and First Solar in the utility market, GTM believes.
Chinese suppliers accounted for 31% of the modules installed in the US last year, and fully half of the distributed solar market.