Solar complaint against China moves forward

A complaint accusing Chinese solar makers of flooding the U.S. market with unfairly low-priced goods cleared a hurdle to move forward Friday. The U.S. International Trade Commission voted six to zero that there is reasonable indication that U.S. manufacturers have been harmed from the alleged actions.

The commission’s decision is preliminary and sets the stage for more investigations into the case, which was filed by a coalition of seven silicon cell and panel makers in the U.S. in October. The U.S. arm of the Germany-based SolarWorld has been the public face of the Coalition for American Solar Manufacturing, which hasn’t divulged the identity of the rest of the six manufactures. The complaint kicked off a storm of opposition and a flurry of press release from both sides as they gained supporters and geared up for the fight.

The SolarWorld-led coalition contends Chinese solar cell and panel makers have set unfairly low prices in order to nudge competitors out of the way. The coalition also alleged the Chinese government’s hefty financial support for its solar manufacturers, something the government should’ve disclosed fully but didn’t, has hurt the U.S. industry. The coalition says it wants the U.S. government to impose duties on imported Chinese cells and panels to offset the impact of Chinese subsidies and the pricing practices of Chinese manufacturers.

The commission’s role is to determine whether the U.S. solar industry has indeed been harm by the alleged actions, and it will do so in preliminary and final phases of its investigation. The Friday vote was the preliminary one, and it cleared the way for the U.S. Commerce Department to review the case. The commerce department’s role is to determine whether there has been a dumping of unfairly priced Chinese solar cells and panels and what the penalties, in the form of the duties, should be imposed on Chinese goods.

The commerce department is scheduled to reach a preliminary vote on the two questions early next year, and if it finds there have been unfair practices, then it will continue to its final phase of the investigation. Both the commission and the commerce department have to find harm and determine there was anti-dumping in order to slap duties, Peg O’Laughlin, a spokeswoman for the commission, told us.

The coming battle

Both sides will have more opportunities to influence the decisions of both authorities. Ever since the coalition filed its complaint, it’s been touting the growing number of solar companies that have supported its cause. On Friday, it also trumpeted the number of federal lawmakers who have sided with them: There are 59 members of the House and Senate, all of them Democrats.

In response to the complaint, a group of 25 manufacturers and installers formed the Coalition for Affordable Solar Energy last month and argued  the complaint would stymie healthy competition and lead to higher solar energy prices and slow down market growth. It, too, has been lining up supporters. Among the 25 members are silicon producer MEMC Electronic Material and its project development arm, SunEdison, SolarCity, Sungevity, SunRun and Chinese solar panel makers Suntech Power, (s stp) Trina Solar (s tsl) and Yingli Green Energy. (s yge)

“The entire solar industry has worked extremely hard to reduce the costs in the last five years. (The complaint) will defeat all the advancements we’ve made in this industry,” said Lyndon Rive, CEO of SolarCity, during an interview this week.

The anger toward Chinese manufactures has grown this year as the global solar industry suffers from producing way too many goods than the market demands. The primary causes are changes in government incentives and the weak financial market in Europe: the largest solar market.  A buildup of unused solar panels in warehouses has caused prices to plummet by 30-40 percent, and that in turn prompted some manufacturers to sell at a loss.

The failing of Solyndra and the bankruptcies filed by SpectraWatt and Evergreen Solar earlier this year also have fanned resentment toward China, even though SolarWorld and its coalition began working on their petitions before Solyndra’s failing became known.

To complicate the dispute, China has weighed in. The Chinese government announced its own probe into whether U.S. policies and subsidies have “promoted trade barriers.” That, in turn, prompted some Chinese solar companies to emphasize that they really, really don’t want any trade war on either side of the Pacific.

Photo courtesy of Suntech Power