leasing activity has ramped up dramatically, with six more auctions planned between 2022 and 2024. Nevertheless, supply chain constraints are limiting the deployment of these projects. The Jones Act, a World War I era law, requires goods shipped between US ports to be transported by vessels built, owned, and operated by the US – thus creating a major hurdle for offshore wind farms. For the purpose of this law,
the location of an offshore wind farm is considered a port and implies that any wind turbine installation vessel would have to be built domestically, leaving the industry unable to tap into existing European ships. The US has only one such vessel under construction which is set to create a bottleneck once all permitted projects start construction. For this reason. Rystad Energy estimates the US will end this decade with an offshore wind capacity close to the 22 GWAC mark.
Policy adds pressure
Figure 4. US interconnection request mix by ISO. Storage includes standalone battery, pumped-hydro, and other forms of renewable storage. Hybrid includes all storage that is co-located with generation. Other includes non-renewable capacity such as gas, coal, and methane.
Figure 5. US PV panel imports by country of origin.
While not impervious to supply chain constraints and policy, wind and storage could be in for above-average years in the short-term. Solar, however, less so. Delays due to supply chain constraints amid high commodity prices and shipping rates, as well as unfavourable policy have effectively shut down an entire industry in a matter of months. On the 25 March 2022, the US department of commerce (DOC) decided to investigate a petition by a domestic PV manufacturer concerning composite silicon (cSi) solar PV panels sourced from Malaysia, Vietnam, Thailand, and Cambodia. The investigation claims that Chinese panel manufacturers are circumventing anti-dumping and countervailing (ADCV) rules by offshoring cell and panel assembly processes to the four countries while still using cheap Chinese raw materials. The looming sanctions risk undermining the US solar industry since 84.9% of 2021’s and 99.4% of January and February 2022’s panel imports were sourced from these four countries. The DOC is scheduled to declare a preliminary judgement on the issue in August, with results due by January 2023. Historically, ADCV tariffs have been applied at different rates to different Chinese suppliers. In the 2012 investigation, the most applied rate was 30.66%, with some rates going as low as 24% and others as high as 250%. If the DOC determines a tariff extension will be imposed because of the latest probe, equipment imported after the announcement of the investigation would be allowed, but tariffs could be applied on imports dating as far back as November 2021. From November 2021 to February 2022, US buyers imported US$1.46 billion worth of panels from the four Southeast Asian countries under investigation. Depending on how the tariffs are applied, Chinese suppliers could be collectively liable to pay between US$365 million and US$3.6 billion in additional tariffs. Chinese panel manufacturers are unwilling to risk such prohibitively high fines so have opted to halt panel exports to the US. According to an industry survey by the Solar Energy Industry Association (SEIA), approximately 80% of respondents said their supply deals have been cancelled in the last month.
Anti-dumping probe and Xinjiang ban
Figure 6. Polysilicon capacity by country of origin in 2021.
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ENERGY GLOBAL SUMMER 2022
The US PV industry began 2022 in a tough situation even prior to this latest probe. At end-2021, some 7.35 GWAC of solar PV was delayed by more than six months due to rising commodity prices, uncertainty over US federal tax credit extensions, and unfavourable policies. This included the US government’s decision in December 2021 to ban imports containing goods from China’s northwest region of Xinjiang due to human rights abuses committed against the Uyghur ethnic minority. With 40% of the world’s silicon production based in Xinjiang, this policy almost halves the number of panels that can be imported into the US, making it highly disruptive, though less so than the ADCV probe.
