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Solar Energy Industries Association Proposes Compromise Plan for U.S. – China Solar Conflict

by Raymond Paretzky and Melissa Dorn

The Solar Energy Industries Association (SEIA) has announced a proposal to address the trade dispute between the United States and China regarding solar generating equipment.  Both China and the U.S. have imposed duties on imports of solar equipment: (i) the U.S. Commerce Department found that certain Chinese solar companies had benefited from government subsidies and “dumped” their products into the U.S. market at prices below fair value, and (ii) in July, China began imposing duties as high as 57 percent on imports of polysilicon, a main ingredient in solar cells, from the U.S.  SEIA’s proposal would result in the termination of current disputes, a prohibition on new trade actions, and the establishment of funds to support the U.S. solar industry.

The U.S. trade remedy orders on Chinese solar cells and modules have resulted in Chinese manufacturers attempting to circumvent the antidumping and countervailing duty (AD/CVD) orders by assembling third-country cells into modules in China and then legally importing those modules into the U.S. free of AD/CVD duties.  (See McDermott’s Energy Business Law blog post on the AD/CVD orders.)  SEIA contends that the U.S. and Chinese trade remedy orders currently in place are causing adverse effects in the global solar industry without ultimately addressing the causes of unfair trade competition.

SEIA has been actively involved in the trade proceedings both in the U.S. and in China, and through its proposal hopes to provide a solution that is a “win-win” for both countries, the industry and consumers.  The SEIA proposal would:

  • Establish a U.S. Solar Manufacturing Settlement Fund (Fund) and a U.S. Solar Development Institute (Institute), both funded by Chinese solar manufacturers.  The Fund would help finance the production of solar equipment in the U.S. through investments in capital equipment, facilities, research and development, worker training and other areas.  The Institute would work to expand the U.S. solar market and grow the U.S. solar manufacturing base. Money for the Fund and the Institute would come from Chinese companies contributing a percentage of the price premium they currently pay to third-country cell producers to avoid the U.S. AD/CVD orders.  The U.S. entered into a similar settlement arrangement regarding the Brazilian cotton industry.
  • Require both the U.S. and China to revoke all AD/CVD orders and terminate all regulatory and judicial proceedings related to U.S. imports of solar cells and modules from China and Chinese imports of polysilicon from the U.S.
  • Prohibit the initiation of any new trade remedy investigations or other actions between the U.S. and China regarding imports of polysilicon, solar cells, or modules for the five-year term of the proposed agreement plus 12 additional months thereafter.

While the proposal has not met with an entirely positive response from the U.S. solar manufacturing industry, certain U.S. Senators, including Senators Patty Murray and Maria Cantwell, have expressed support for the proposal.   In the meantime, China recently announced additional tax breaks, in the form of refunds of 50 percent [...]

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

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.

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Commerce Department Announces New Duties on Chinese Solar Panel Imports

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.

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Changes to the Feed-In Tariff Scheme for Non-Solar Photovoltaic Technologies in the UK

 by David Birchall and Caroline Lindsey

In April, we reported on changes to the feed-in tariff scheme for solar photovoltaic (PV) technology in the United Kingdom  Those changes were the outcome of Phase 1 of the Department of Energy and Climate Change’s (DECC) comprehensive review of the feed-in tariff scheme launched in February 2011 (the FIT Scheme).  In addition to solar PV technology, the FIT Scheme is available to hydro, wind, anaerobic digestion (AD) and micro-CHP technology.

The DECC then consulted on Phase 2B of its comprehensive review, which focused on feed-in tariffs for non-PV technologies and wider scheme administration issues (the Consultation). On July 20, 2012, the DECC published its response to the Consultation (the Response) and has confirmed that a number of changes will be made to the FIT Scheme. The changes will be introduced by way of amendments to the Standard Conditions of Electricity Supply Licences.  Most of the changes are expected to come into effect on December 1, 2012.

The key changes to the FIT Scheme to note are as follows.

1.  The generation tariffs for non-PV technologies will be reduced with effect from December 1, 2012, except that:

  • a new generation tariff will be introduced for hydro installations with a    capacity of between 100 and 500 kilowatts; and
  • the generation tariff for micro-CHP installations will be increased to 12.5p/kWh.

A full list of the generation tariffs to apply from December 1, 2012 is available at page 8 of the Response.  We note that the generation tariff for the largest capacity band of each technology is linked to the equivalent level of support available to that technology under the Renewables Obligation.  Consequently, the DECC has indicated that the tariffs applying to those bands will be amended to reflect the outcome of the DECC’s Renewables Obligation banding review.  The DECC announced the outcome of its current review on July 25, 2012, but is yet to confirm the corresponding amendments that will be made to those tariffs. 

2.  A preliminary accreditation process will be available to solar PV and wind installations with a capacity of more than 50 kilowatts, as well as all AD and hydro installations.  The criteria for preliminary accreditation will be similar to, but narrower than, the criteria to obtain preliminary accreditation as a renewable generator under the Renewables Obligation.  Among other things, installations for which a grid connection is required will need to produce evidence of a firm grid connection offer to receive preliminary accreditation.  Installations that receive preliminary accreditation will also benefit from a fixed tariff for a prescribed period.  

3.  A tariff degression mechanism will be introduced, under which generation tariffs for all non-PV technologies, with limited exceptions, will be decreased annually from April 1, 2014.  The baseline degression rate will start at 5 percent, and will be adjusted annually according to the level of deployment of the relevant technology.  As a result, the degression rate could be as [...]

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Changes to Feed-In Tariffs for Solar Photovoltaic Technology in the United Kingdom

by David Birchall and Caroline Lindsey

The UK feed-in tariff (FIT) scheme was introduced in the United Kingdom in April 2010, under the Energy Act 2008, to encourage households and businesses to operate small scale (less than 5MW) low carbon electricity generation facilities.  Under the scheme, eligible generators can receive a fixed generation tariff for each kWh of electricity generated and consumed on-site and an additional export tariff for each kWh of electricity that is exported to the grid, for a maximum of 25 years from the date an installation becomes eligible under the scheme.  FIT payments are paid to generators by suppliers and funded by electricity consumers.

Of the eligible technologies (biogas, hydro, micro-CHP and solar photovoltaic (PV)), solar PV has to date been by far the most popular technology.

To read the full article, click here.

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