US Solar Installations to Fall 23 Percent This Year Due to Ban on Chinese Goods: Report

An aerial image shows vehicles driving on California Highway 14 as solar panels, part of an electricity generation plant, stand in Kern County near Mojave, Calif., on June 18, 2021. Photo by Patrick T. Fallon/AFP via Getty Images

New solar power installations in the United States are expected to fall by nearly a quarter this year due to a ban on parts from China.

Solar equipment imports have been curbed by a ban on goods from the Xinjiang region of China over allegations over the forced labor of Uighur conscripts, according to a recent quarterly report by the Solar Energy Industries Association (SEIA) and the research firm Wood Mackenzie, on Dec. 13.

The Uyghur Forced Labor Prevention Act (UFLPA), which was passed by Congress, is being blamed by Wood Mackenzie for depressing solar panel instillations.

Overall panel installations throughout the United States are expected to fall 23 percent from 2021, to 18.6 gigawatts (GW), according to the SEIA.

The United States installed 4.6 GW of solar in the third quarter of 2022, the same amount it installed in the previous quarter, but less than what it installed one year ago.

Ban on Forced Labor Affects Supply of Solar Panels

Due to lack of supplies from China, domestic solar companies have not been able to take advantage of the generous subsidies provided by the Biden administration’s Inflation Reduction Act, thus delay the effects of its passage, the report said.

The new law provides federal subsidies to U.S.-based companies to install green energy sources like solar power as part of the White House’s efforts to fight climate change.

Large-scale projects for utilities and other major customers make up the largest part of the domestic solar market.

Installations of utility-scale projects are expected to contract by 40 percent from 2021, to 10.3 GWs this year, according to the report.

Commercial and neighborhood installations are expected to see declines, but the residential market is forecast to surge by 37 percent.

Since the UFLPA came into effect in June, more than 1,000 shipments of solar energy imports worth hundreds of millions of dollars have piled up at U.S. ports due to the restrictions.

The halting of new shipments by U.S. Customs hss caused many manufacturers to fear that additional solar imports will be seized.

Supply constraints are expected to last until the second half of 2023.

The UFLPA requires that producers provide documentation that any imported solar equipment must be traced to the original source before they can be cleared for entry.

Anti-Dumping Tariffs May Cause Further Delays

The Department of Commerce’s suggestion that anti-circumvention tariffs be applied to companies that produce solar products in Southeast Asia is causing further concern in the industry.

Earlier this year, the Commerce Department announced that it would investigate whether certain manufacturers were illegally circumventing anti-dumping tariffs via third-party countries.

The Biden administration had postponed imposing tariffs back in June, to “ensure the U.S. has access to a sufficient supply of solar modules to meet electricity generation needs while domestic manufacturing scales up.”

The department is expected to release its final report determining which companies were in violation by May 1, 2023.

The SEIA has said that task has proven more difficult than solar companies expected, leading to a logjam.

“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 U.S. facilities.”

“In the aftermath of the Inflation Reduction Act, we cannot afford to waste time tinkering with trade laws as the climate threat looms,” Hopper continued.

The report expects the market to return to growth next year, with annual increases of 21 percent, on average, between 2023 and 2027.

Despite constraints on the supply chain, solar has accounted for 45 percent of all new power-generating installations through the third quarter, the most of any electric source.