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Department of Commerce

Understanding Energy Storage

by Seth B. Doughty | Dec 22, 2022 | Power Markets, Project Development and Finance, Renewables

One of the US Department of Commerce’s (Commerce) signature contributions to Power Africa has been the Understanding handbook series developed by its Office of the General Counsel’s Commercial Law Development Program (CLDP). This open-source and plain-language knowledge library now includes six handbooks explaining a range of essential topics in power project contracts, financing and procurement. In recent years, the Understanding series has expanded to focus on unique challenges in Africa’s energy market, such as the complex nature of private participation in transmission projects. With 65,000 copies in print and tens of thousands more copies downloaded online, the Understanding series has become a trusted resource in Africa’s power project community.

The most recent addition to the Understanding series, Understanding Energy Storage, comes at a critical time in both the development of the continent and the effort to combat climate change globally. The hope is that this handbook will contribute to Power Africa’s efforts to catalyze new energy storage investment as a core component of overall market development. This handbook supports the Commerce’s Renewable Energy and Energy Efficiency Advisory Committee’s recommendations on (1) Clean Tech Export Competitiveness Strategy, (2) Energy Equity and (3) Technology Risk Mitigation and Financing; and advances the US International Climate Finance Strategy.

This handbook is from Commerce’s Commercial Law Development Program and is co-authored by McDermott Associate Seth Doughty.

Access the eBook.

Key Takeaways | Update on the Solar Circumvention Proceeding and Discussion of Possible Comments in Response to Commerce’s Recent Memo

by Carl J. Fleming, Lynn G. Kamarck and Tyler Kimberly | May 18, 2022 | Featured, Project Development and Finance, Renewables

On May 17, 2022, Carl Fleming, Lynn Kamarck and Tyler Kimberly from McDermott’s Energy and Project Finance and International Trade teams hosted Solar Energy Industry Association (SEIA) General Counsel and Vice President of Market Strategy John Smirnow for a roundtable discussion that provided substantive arguments, best practices and other advocacy strategies for US solar developers who are preparing to submit collective and individual responses to the US Department of Commerce (Commerce) this week following Auxin Solar Inc.’s petition and Commerce’s subsequent memorandum.

Below are key takeaways from the discussion:

1. To reach an affirmative circumvention determination, Commerce must confirm that the processing occurring in the target countries (i.e., Cambodia, Malaysia, Thailand and Vietnam) is “minor or insignificant.” While Commerce’s precedent establishes that the processing required to make a wafer into a module (including cell production) is not “minor or insignificant,” it has suggested the opposite during this circumvention inquiry.

2. Commerce could terminate the circumvention proceeding on the basis that including cells or modules completed in the target countries within the scope of the existing Chinese orders would not be “appropriate.” However, there is no clear indication as to what “appropriate” means.

3. What developers need the most right now is certainty. Because of the uncertainty surrounding the amounts of cash deposits and the final assessment of import duties, some developers are unable to make key business decisions. While Commerce tried to provide some of this certainty in its May 2 proposal, it did not accomplish that goal.

4. Developers can share their views regarding the investigation by submitting comments to Commerce by 5:00 pm EDT on May 19, 2022. Comments can include discussion of any difficulties complying with Commerce’s proposed certifications and whether such certificates would be useful to the company, the treatment of cells or modules manufactured in non-targeted countries and inconsistencies between prior Commerce decisions and the investigation at hand.

5. SEIA is calling for a Public Interest Requirement in anti-circumvention investigations to prevent similar petitions from being filed and moving forward in the future.

McDermott is currently preparing comments for a number of US solar developers and also providing additional feedback on comments prepared by other US solar developers to ensure that they are putting their best foot forward during this critical period.

For more insight on this topic, please watch our recent webinar recording where our executive leadership panel discussed the commercial, legal and policy responses to Commerce’s anti-circumvention investigation.

Key Takeaways | Commercial, Legal and Policy Responses to Commerce’s Anticircumvention Investigation

by Carl J. Fleming, Lynn G. Kamarck and Tyler Kimberly | Apr 6, 2022 | Power Markets, Project Development and Finance, Renewables

The US Department of Commerce (Commerce) recently initiated a circumvention investigation against solar cell and module imports from Cambodia, Malaysia, Thailand and Vietnam. This decision has the potential to profoundly impact the companies that import or rely on imported crystalline silicon photovoltaic cells (CSPs) in the United States. To help companies navigate this investigation, McDermott’s Carl Fleming, Lynn Kamarck and Tyler Kimberly were joined by Brett White, vice president of regulatory affairs for Pine Gate Renewables, for a fireside chat that covered, among other things, the specific issues Commerce will investigate, how to assess the risk of this decision across developer portfolios and the opportunities presented for improving current renewables legislation.

Below are key takeaways from the discussion:

1. Commerce’s decision to initiate a circumvention investigation into whether CSPs imported from Cambodia, Malaysia, Thailand or Vietnam are circumventing antidumping and countervailing duty orders on CSPs from China has generated market uncertainty for companies that import or rely on imported CSPs.

2. Whether any assessment of duties or penalties that result from the investigation will have retroactive effect is currently unclear. Applicable regulations do not require Commerce to apply duties retroactively, providing an opportunity for “interested parties” to offer feedback to Commerce as to why retroactive application would be unfair. (In this context, domestically, importers of record, businesses and trade associations and industrial users are generally recognized as interested parties.)

3. Major legal and factual issues may sway Commerce’s ultimate determination, while certain factual discrepancies in Auxin Solar Inc.’s petition to Commerce may lead to a preliminary decision by Commerce. (The deadline for the preliminary decision is August 29, 2022, and it’s unlikely that Commerce will act before this deadline.) Additionally, certain “country of origin” legal analyses are implicated in any ultimate determination Commerce makes.

4. Auxin’s petition and Commerce’s investigation have given more attention to the issue of importing CSPs and to the Build Back Better Plan (BBB), so there is optimism that this may push US Congress to act more quickly on the adoption of certain tax credits, domestic content credits and other incentives under the BBB.

To access past webinars in the Energy Transition series and to begin receiving Energy updates, including invitations to the webinar series, please click here.

Key Takeaways | How Solar Industry Leaders are Addressing and Overcoming the US–China Trade War

by Carl J. Fleming | Oct 7, 2021 | Renewables, Tax, U.S. Congress

The US-China trade war has caused a significant impact on the solar industry, and that impact is expected to grow. In this webinar, learn how solar industry leaders are handling the effects of the US–China trade war and how they are preparing for the future.

Our first webinar of this series featured McDermott Will & Emery partner Carl Fleming, Pine Gate Renewables Director of Regulatory Affairs Brett White, Vice President of Construction James Froelicher and Assistant General Counsel Jess Cheney.

Below are key takeaways from the webinar:

1. Withholding Release Order. The US Customs and Border Protection (CBP) issued a withholding release order (WRO) against Hoshine Silicon Industry Co. Ltd., a company located in China’s Xinjiang Uyghur Autonomous Region wherein all silica-based products made by Hoshine and its subsidiaries are to be detained at all US ports of entry. Because of this WRO, manufacturers have been moving outside of the Xinjiang Uyghur Autonomous Region in order to avoid being subject to it.

There have been numerous detentions of silica-based products at multiple ports across the United States, and it is expected that the detention of materials will continue. In order to combat this, suppliers and industry leaders are presenting documentation to show that the materials are not being produced from forced labor or Hoshine and its subsidiaries.

Although the WRO was expected to cause significant disruption, it is not having as large of an impact as feared because many suppliers had already left the Xinjiang Uyghur Autonomous Region.

2. Anti-Dumping and Countervailing Petition. Anti-Dumping and Countervailing Petitions filed in August 2021 requested that the US Department of Commerce (DOC) include additional tariffs against solar panel imports from Malaysia, Thailand and Vietnam. The petitioners requested additional tariffs ranging from 50% – 250%. The DOC has yet to decide whether to investigate based on the petition, however, the impacts of the petition are already being felt with disruptions to the supply chain. If the DOC were to investigate, the solar industry would likely see a severe slowing of projects in 2022 and 2023 as neither suppliers nor developers are willing to bear the economic risk of the potential tariffs.

3. The DOC and the Biden Administration. The DOC and the Biden administration are expected to make decisions regarding tariffs, as well as anti-dumping and countervailing duties, that will directly affect the solar materials supply chain.

The Biden administration hopes to increase the domestic supply of solar materials, however, domestic manufacturers currently only produce approximately 25% of the overall demand for solar materials. As a result, the solar industry cannot immediately divert to purchasing solar materials from domestic manufacturers as the supply simply is not available. As an incentive to increase domestic manufacturing, solar industry leaders hope tax credits can be offered to companies that manufacture solar materials.

The Biden administration is expected to decide whether the 18% tariff on imported solar panels [...]

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EPA Requests Comments on Regulatory Rollbacks

by McDermott Will & Emery | Apr 20, 2017 | Environmental

Last week, the US Environmental Protection Agency (EPA) published a request for comment asking for “input on regulations that may be appropriate for repeal, replacement, or modification.” EPA’s request is part of a federal government initiative under Executive Order 13777, “Enforcing the Regulatory Reform Agenda,” which established a federal policy “to alleviate unnecessary regulatory burdens” on the American people. The Executive Order directs federal agencies to establish a Regulatory Reform Task Force that will evaluate existing regulations and make recommendations on repeal, replacement and modification.

Pursuant to the Executive Order, the Task Force will identify regulations that:

Eliminate jobs, or inhibit job creation;
are outdated, unnecessary, or ineffective;
impose costs that exceed benefits;
create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies;
are inconsistent with the requirements of section 515 of the Treasury and General Government Appropriates Act, 2001 (44 U.S.C. 3516 note), or the guidance issued pursuant to that provision in particular those regulations that rely in whole or in part on data, information, or methods that are not publicly available or that are insufficiently transparent to meet the standard of reproducibility; or
derive from or implement Executive Orders or other Presidential directives that have been subsequently rescinded or substantially modified.

EPA’s request comes on the heels of the Department of Commerce’s request for comments from manufacturers asking what regulations the government could repeal to benefit domestic manufacturing. Commerce received approximately 170 responsive comments, nearly half of which targeted various environmental regulations for amendment or repeal.

EPA offices are conducting various outreach programs designed to engage the public. These include public teleconferences, public meetings and contact with key stakeholders. Outreach efforts will begin on April 24 with a public meeting via teleconference held by the Office of Air and Radiation. Other divisions of EPA, such as the Office of Small and Disadvantaged Business Utilization, Office of Water, Office of Chemical Safety and Pollution Prevention, and Office of Land and Emergency Management will hold scheduled outreach sessions through May 9. Comments are due to EPA by May 15.

International Trade Actions Complicate Global Market For Renewable Energy Businesses, Particularly Solar Sector

by McDermott Will & Emery | Mar 8, 2013 | Project Development and Finance, Renewables

by David J. Levine and Pamela D. Walther

The flurry of international trade disputes in the renewable energy field, particularly the solar sector, is complicating the business landscape for the renewable energy industry. In their BloombergBNA analysis piece, McDermott international trade lawyers David Levine and Pamela Walther provide a detailed account of renewable energy trade actions in the domestic and international arenas. As the long-term implications of these disputes raise serious strategic issues for providers, consumers and governments, those involved are well-advised to monitor developments and take an active role in proceedings to protect their interests.

To read the full article, click here.

Commerce Department Announces New Duties on Chinese Solar Panel Imports

by McDermott Will & Emery | Oct 19, 2012 | Project Development and Finance, Renewables

by Raymond Paretzky and William Friedman

The U.S. Department of Commerce (Commerce) published its final affirmative antidumping (AD) and countervailing duty (CVD) determinations on October 17, 2012, imposing new duties on Chinese solar panel producers and exporters. Commerce determined that Chinese producers/exporters sold solar photovoltaic cells in the United States at dumping margins ranging from 18.32 to 249.96 percent, and that Chinese producers/exporters have received countervailable subsidies of 14.78 to 15.97 percent.

Dumping occurs when a foreign company sells a product into the United States at less than fair value prices. Countervailable subsidization occurs when a governmental authority directly or indirectly conveys benefits that support production by specific companies or sectors, or are contingent upon export performance or the use of domestic goods over imported goods.

As a result of its determinations, Commerce will instruct U.S. Customs and Border Protection to collect cash deposits or bonds equal to these margins on imports. The cash deposit rates, however, will be reduced by 10.54 percent, the export subsidy rate. Additionally, Commerce found that “critical circumstances” exist in the CVD investigation for all companies and in the AD investigation for all companies except one, Wuxi Suntech. As a result, provisional duty deposits, which are normally collected as of the date of publication of Commerce’s preliminary determinations, will be collected 90 days prior to that date (except in the case of AD duty deposits for Wuxi Suntech).

For the early duty deposit collection to be maintained and the AD/CVD duties to stand, the International Trade Commission (ITC) must make an affirmative final determination that dumped and subsidized imports of solar cells from China “materially injure, or threaten material injury to,” the domestic solar panel industry. If the ITC makes a negative final injury determination, the investigations will be terminated and the duties will not be imposed. The ITC has tentatively scheduled its final determination vote for November 7, 2012.

Wind Energy Industry Will Be Affected by Recent Trade Decisions, Tax Policy

by McDermott Will & Emery | Aug 3, 2012 | Renewables, Tax

On August 2, 2012, the U.S. Department of Commerce (DOC) published in the Federal Register its preliminary determinations in the antidumping (AD) investigations of Wind Towers from China and Vietnam. DOC calculated preliminary AD margins for the Chinese mandatory and cooperative respondents ranging from 20.85 to 30.93 percent, while non-participating producers will face a margin of 72.69 percent. Pursuant to its non-market economy (NME) AD calculation methodology, in which DOC estimates the costs of producing subject merchandise in China based on costs in a comparable "surrogate" market economy, DOC preliminarily selected the country recommended by the foreign producers—Ukraine—as the surrogate, finding that it provides the most specific information to value steel plate, the most significant input in the manufacture of wind towers. For Vietnamese producers, DOC calculated preliminary AD margins ranging from 52.67 to 59.91 percent; India was selected as the surrogate country.

Importers of wind towers from China and Vietnam will be required to post cash deposits at the applicable rate calculated by DOC starting August 2, 2012. DOC has postponed the deadline for the final determination in both cases, as well as in the companion countervailing duty case affecting imports from China only, for the maximum allowable statutory amount, i.e., until 135 days after publication of the preliminary determination notices, or December 17, 2012.

Meanwhile, legislative incentives may also have a great impact on the industry. The wind industry has urged U.S. Congress to pass an extension of the production tax credit (PTC), which will expire at the end of this year. There have been several proposals in Congress to extend the PTC to wind facilities that are placed in service after December 31, 2012. Even though in years past the PTC and other provisions needing extensions to preserve the current tax treatment have often been extended in the waning moments of the Congress, it is more difficult than ever to predict whether such extensions will become law because of the impending election, the national debt debate and the current political environment.

For questions on the trade actions, contact David Levine or Raymond Paretzky.

For questions on the PTC, contact Martha Pugh.

ITC Will Decide on Duties for Solar Imports

by McDermott Will & Emery | Jun 14, 2012 | Environmental, Project Development and Finance, Renewables

by Raymond Paretzky and David J. Levine

The U.S. International Trade Commission (ITC) is now beginning its final phase “injury investigation,” which will result in a determination in November as to whether U.S. producers are harmed by imports of allegedly dumped and/or subsidized imports of Crystalline Silicon Photovoltaic Cells and Modules from China.

The parallel dumping and subsidy actions began with the filing of a petition by Solar World Industries America Inc., the U.S. subsidiary of a German parent company, in October 2011. In December, the ITC issued a unanimous affirmative preliminary injury determination, rejecting arguments by companies opposed to the action that price declines in the industry resulted not from Chinese imports but rather from plummeting silicon prices, reduced U.S. government incentives for the housing industry to use solar cells/panels, and limited U.S. demand. The ITC will revisit these arguments in its more expansive final phase investigation, in which importers, U.S. producers, purchasers and Chinese producers will be required to answer ITC questionnaires. All parties with interests at stake are well advised to make their positions and relevant facts known to the ITC.

If the ITC finds that the U.S. industry making these products is in fact injured (or threatened with injury) by the imports, the United States will impose tariffs on imports of these products. The amount of the tariffs will be determined by the U.S. Department of Commerce (DOC) in separate proceedings. DOC preliminarily found that subsidization was occurring in the range of 2.90 to 4.73 percent and dumping in the range of 31.14 to 249.96 percent, but DOC could change these rates in its final investigations, which are currently ongoing.

Key dates in the ITC investigation’s final phase are:

Questionnaire Responses Due Aug. 13 Confidential Staff Report Released Sept. 13 Requests to Appear at Hearing Due Sept. 19 Prehearing Briefs Due Sept. 20 Hearing Oct. 3 Posthearing Briefs Due Oct. 11 Final Comments on New Info. Due Nov. 1 ITC Vote (Proposed) Nov. 7

U.S. Department of Commerce Preliminarily Finds Chinese Solar Panel Manufacturers Received Subsidies from the Chinese Government

by McDermott Will & Emery | Mar 27, 2012 | Environmental, Project Development and Finance, Renewables

by David Levine, Raymond Paretzky and Melissa Dorn

The United States Department of Commerce (DOC) released its preliminary determination in the countervailing duty investigation on imports of silicon photovoltaic (PV) cells from China last week. The DOC preliminarily found subsidy rates for Chinese producers and exporters of PV cells ranging between 2.9 to 4.73 percent—rates that were lower than some industry members reportedly expected, and lower than the rates alleged by the Solar World Industries America Inc., the U.S. producer that petitioned for this countervailing duty investigation and the companion antidumping investigation. The DOC affirmed Solar World’s allegation of “critical circumstances,” resulting in retroactive application of the countervailing duty deposit requirement on imports of Chinese PV cells beginning in December 2011.

The DOC also clarified that the scope of the ongoing antidumping/countervailing duty investigations covers PV cells and modules produced in China as well as modules produced elsewhere with Chinese PV cells, but does not include modules produced in China from PV cells produced elsewhere.

Countervailable subsidies are receipts of financial assistance by producers and/or exporters from their local or national government that benefit the production or exportation of goods where such benefits are limited to specific enterprises or industries, or are contingent either upon export performance or upon the use of domestic goods over imported goods.

U.S. imports of Chinese solar panels in 2011 were valued at over $2.5 billion – a significant and growing share of the total U.S. market. The rapid growth of Chinese imports in fact supporting the “critical circumstances” finding noted above as well as the earlier preliminary determination by the U.S. International Trade Commission (ITC) that the U.S. industry is being injured by imports of PV cells from China.

Interested members of the solar industry will continue to watch these proceedings closely. The DOC is expected to announce its preliminary determination in the companion antidumping investigation in May. The final countervailing duty determination is due to be issued in June, and the ITC will issue its final injury determination in July, though these dates could be postponed. Interested parties also are closely monitoring the U.S. and global market implications of these investigations, including in the large solar market in Europe, where reports indicate similar trade relief actions against Chinese exports might be under consideration.

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