US solar build tumbles in Q3 on supply issues as market awaits 2023 return to growth: SEIA

The US installed 4.6GW of new solar capacity on a direct current basis in the third quarter, a 17% decrease from a year earlier as the industry struggled with ongoing supply chain constraints and trade law enforcement actions, according to a new report by Wood Mackenzie (Woodmac) and Solar Energy Industries Association (SEIA).

Deployment of utility-scale solar, the largest of four segments tracked in the report, plummeted 36% to 2.5GW from a year earlier.

In the first three quarters, solar accounted for 45% of all new electricity-generating capacity added to the US grid, almost double wind (24%), followed by natural gas (21%), and other technologies (10%).

The ongoing disruptions to the industry will cause a 23% decline in solar additions to 18.6GW this year compared to 2021. Utility-scale installations will total 10.3 GW this year, a 40% drop from a year earlier.

“America’s clean energy economy [is] hindered by its own trade actions,” said SEIA president and CEO Abigail Ross Hopper. “The solar and storage industry is acting decisively to build an ethical supply chain, but unnecessary supply bottlenecks and trade restrictions are preventing manufacturers from getting the equipment they need to invest in US facilities.”

The landmark climate law signed by President Joe Biden in August includes long-term tax credits for development of both a domestic manufacturing supply chain and solar generation capacity. The US currently imports solar ingots, wafers, and cells.

UFLPA, which took effect in June, addresses alleged human rights abuses in China’s Xinjiang region, a major supply source for polysilicon, cells, and other critical components in solar panels.

US Customs began using so-called withhold-release orders (WROs) to detain products thought to contain polysilicon from Xinjiang. The agency later began asking for documentation that quartzite, a key ingredient of polysilicon, was not mined in the region.

While the presumption that any product using inputs from Xinjiang benefited from forced labor is rebuttable, the process for doing this can take weeks, even months, with “hundreds of solar equipment shipments still being detained,” according to the report.

“It has proven more difficult and time-consuming to provide the proper evidence to comply with the UFLPA, further delaying equipment delivery to the US,” said Michelle Davis of Woodmac and lead author of the report.

Separately, last week the US Department of Commerce (DoC) announced that it plans to press ahead with stiff tariffs on four Chinese solar manufacturers after finding they are circumventing duties here by routing PV cells and modules to assembly plants in Southeast Asia for “minor processing” before delivery to customers in the US.

Those collections will begin on 6 June 2024 unless the ongoing DoC probe that will now include in-person audits at plants in Southeast Asia does not verify the initial findings.

The DoC said 22 other companies in Malaysia, Thailand and Vietnam did not respond to its request for information in this investigation, and “consistent with longstanding practice, will be found to be circumventing.” The agency will issue a final determination on its findings on 1 May 2023.

In June, Biden in a controversial move preemptively waived for two years any anti-circumvention duties DoC could impose on solar panels through 5 June 2024. Woodmac said DoC’s decision presents “downside risk to future solar deployment.”

Woodmac is forecasting that once supply chain relief and “true impacts” of IRA arrive in 2024, US solar installations will consistently reach 30-40GW/yr. That outlook, however, does not consider potential new US tariffs on solar products supplied by Chinese companies through Southeast Asia.