Recent updates to trade policy and the Inflation Reduction Act's (IRA) rules on domestic content tax incentives could notably affect solar trade and promote onshoring of solar manufacturing, RBC analysts said in a Wednesday note.
They believe that the most impactful change could come from the new anti-dumping and countervailing duty investigation targeting specific Southeast Asian countries.
“After accounting for continued declines in import prices, we estimate the net impact from the potential AD/CVD tariffs and removal of the bifacial module exemption could be a ~30% increase in prices to $0.37/w and would further incentivize onshoring solar manufacturing in the U.S.,” RBC analysts wrote.
The investment bank sees First Solar (NASDAQ:FSLR) as the largest beneficiary of the potential price hikes, while other names in the value chain, such as Enphase Energy (NASDAQ:ENPH), SolarEdge Technologies (NASDAQ:SEDG), Shoals Technologies Group Inc (NASDAQ:SHLS), Array Technologies Inc (NASDAQ:ARRY) and Nextracker Inc (NASDAQ:NXT), “could be negatively impacted by lower demand,” they added.
“An analysis of solar's competitiveness to alternative technologies highlights that adoption is price constrained, suggesting the ability to push prices higher could have negative implications for demand.”
Earlier this month, the Department of Commerce announced anti-dumping and countervailing duty investigations into crystalline silicon cells from Cambodia, Malaysia, Thailand, and Vietnam.
Alleged dumping margins range from approximately 70% to 271%, with subsidy rates above de minimis levels. If dumping or subsidization is confirmed and the International Trade Commission finds U.S. industry harm, substantial duties could be imposed.
According to RBC, tariffs could push average import prices from $0.29/w to over $0.50/w, though some manufacturers might qualify for lower rates.
While falling module prices might offset some tariff impacts, the firm still expects prices to rise to over $0.35/w. Without the investigation, prices could trend toward $0.20/w, the firm's analysts said.
A day later, the Biden Administration announced it had removed the bifacial module exemption under Section 201, subjecting these modules to a 14.25% tariff. Bifacial modules, making up nearly all U.S. solar imports, previously bypassed this tariff.
Moreover, the administration plans to raise the solar cell import quota by 7.5 GW to 12.5 GW if imports approach current levels.