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WASHINGTON — The solar energy industry has been thrown into a panic and projects are grinding to a halt after the Biden administration launched an investigation that some solar CEOs worry could tank the industry.
The Commerce Department launched the probe in March into whether four countries in Southeast Asia that supply about 80% of U.S. solar panels and parts — Cambodia, Malaysia, Thailand and Vietnam — are using components from China that should be subject to U.S. tariffs.
The fallout within the industry has been significant.
A survey in late April by the Solar Energy Industries Association, a nonprofit trade association, found 318 solar projects in the U.S. had already been delayed or canceled, and several CEOs told CNN they expect more to follow. Industry leaders fear the probe could also have a devastating impact on the solar workforce.
The Commerce Department has defended it as a transparent and necessary process, but several solar industry experts and executives told CNN it has also essentially frozen most solar imports into the U.S. because of the threat of steep, retroactive tariffs.
"With this administration and this much support, we're in a position where we're going to be laying off people in the renewables industry," George Hershman, CEO of utility solar contractor SOLV Energy, told CNN. "While you say all those things we agree with, we're getting crushed because we literally can't buy a module today. It's so frustrating."
The investigation was launched after one small U.S.-based company, Auxin Solar, filed a complaint in February. Auxin CEO Mamun Rashid told CNN that the complaint "was existential" for his company.
"When prices of finished panels from Southeast Asia come in below our bill of materials cost, American manufacturers cannot compete," Rashid said, adding that "if foreign producers are circumventing U.S. law and causing harm to U.S. producers like Auxin Solar, it needs to be addressed."
Rashid told CNN it's "lamentable" that frustration is aimed at his company, rather than the "foreign suppliers" that he says are circumventing U.S. law. Rashid also noted that Auxin is "here and can quickly scale up to meet needs of utilities within 2 to 3 quarters if we have the purchase order today."
Solar industry leaders have been communicating with the Commerce Department and have also communicated their concerns about the probe to Biden's top climate officials — including McCarthy and U.S. Climate Envoy John Kerry — a person familiar with the conversations said.
"The administration has been in touch with and is engaging with all kinds of solar stakeholders including the trade associations but also labor, communities, and NGOs," a White House official told CNN.
'The worst moment'
The Commerce probe comes on the heels of last year's ban on solar panels and parts that were suspected of having links to forced labor in China's Xinjiang Province.
The Department of Homeland Security directed U.S. Customs and Border Protection to issue a Withhold Release Order, which banned imports made by Chinese company Hoshine Silicon Industry, after the government alleged the company uses forced Uyghur labor.
"Obviously, the industry absolutely needed to address any concerns about forced labor, but the implementation of that (order) was far from smooth," Solar Energy Industries Association President Abigail Ross Hopper told CNN.
At ports around the country, CBP agents seized and detained any solar products they suspected had links to Hoshine, unless companies could prove they did not.
U.S. Customs and Border Protection statistics provided to CNN note the agency detained 734 shipments valued at $246 million, which the agency said is just 1.86% of the total value of all solar imports into the United States. But Hershman said the order ultimately led to a chilling effect across the industry, where companies withheld shipments for fear of being caught in an overly broad net at U.S. ports.
"If you have materials detained, you don't want to ship more," Hershman said.
Solar CEOs and industry analysts told CNN that while the CBP order was eventually resolved with a good outcome for the industry, the impact of the Commerce investigation is like whiplash.
"Solar is a big mess right now," said Marcelo Ortega, an analyst for Rystad. "This seems to be the worst moment for this to happen."
This year was supposed to be a banner year for U.S. solar growth. Independent energy research firm Rystad estimated the U.S. would add another 27 gigawatts of solar energy this year.
Now — between the Commerce Department probe, the border seizures, the high cost of solar components and no new legislation in Congress to grease the wheels for more renewable energy — Rystad estimates the U.S. might only add around 10 gigawatts in 2022.
Ortega said the backslide threatens Biden's own climate goal to slash planet-warming emissions in half by 2030. The U.S. would have to install around 50 gigawatts of solar photovoltaic capacity each year from 2022 to 2030 to keep Biden's goal on track, according to Ortega's analysis.
Ross Hopper told CNN that the industry is looking for certainty from the markets and from governments, but that it's getting none of that right now.
"There's certainly been this steady cadence of challenges that keep getting thrown our way right at these moments of opportunity," Ross Hopper told CNN.
Commerce defends the probe
At a recent hearing on Capitol Hill, Secretary of Commerce Gina Raimondo told lawmakers that strict trade laws required her department to initiate and complete an investigation. The department is expected to issue a preliminary finding on the investigation by late August, but a final determination could take as long as January 2023, a Commerce Department official told CNN.
"My hands are very tied here," Raimondo said at the hearing. "I'm required by statute to investigate a claim that companies operating in other countries are trying to circumvent the duties, and I'm required by statute to have a fulsome investigation."
The Commerce official stressed to CNN that circumvention laws are "completely removed from political considerations."
"We're committed to holding foreign producers accountable to playing by the rules," the official told CNN.
Nevertheless, Raimondo has been questioned and criticized by politicians in both parties. A bipartisan group of 19 senators wrote to Biden this week asking for an expedited preliminary decision on the investigation.
And at a recent hearing, Nevada Sen. Jacky Rosen, a Democrat, pressed Raimondo on her "very serious concerns" about the investigation.
"This will jeopardize tens of thousands of good-paying American solar jobs," Rosen said. "If we lose these jobs, they won't come back."
Democratic Gov. Gavin Newsom of California and Republican Gov. Eric Holcomb of Indiana also recently wrote to Raimondo expressing concern that the investigation could impact solar growth and jobs in their states.
Although solar CEOs and industry analysts welcome the idea of a domestic solar supply chain, those who spoke with CNN said the Commerce Department investigation won't be the catalyst — the industry needs Congress to incentivize it.
"If what we're talking about is incentivizing domestic manufacturing, this is not the way to do it," said Ben Catt, CEO of utility-scale solar company Pine Gate Renewables. "This is going to have not just a months but yearslong impact to the solar industry. We and the administration need to be looking at how we will double and triple the renewables deployment in this country. And what we're doing is moving in the opposite direction."
