According to First Solar CEO Mark Widmar, the United States’ efforts to establish a domestic manufacturing base for clean energy are facing a significant challenge due to an influx of foreign solar components.
In an interview with CNBC, Widmar emphasized the need to eliminate tariff exemptions that permit the entry of inexpensive components into the U.S. market. First Solar, being the largest producer of solar panels in the U.S., primarily focuses on large utility-scale projects.
Widmar stressed the importance of fair competition and urged for the resolution of any dumping activities affecting the U.S. market. He stated, “All we want is to be able to compete on our own merits, and to the extent there is dumping happening in the U.S. market, it should be addressed. Once it is addressed, we want it to be enforced.”
Certain solar panels commonly used in the U.S. are excluded from Section 201 tariffs, which are intended to safeguard domestic solar manufacturing. Additionally, there exists a moratorium on tariffs targeting solar components imported from various Southeast Asian nations.
While some industry stakeholders support these exemptions to facilitate the expansion of solar power capacity in the U.S., Widmar argued that they are undermining the objectives of the Inflation Reduction Act.
Mark Widmar expressed concerns about the exploitation of a loophole jeopardizing the core objectives of establishing a domestic solar industry in the U.S. He highlighted the risk posed to long-term energy independence, security, climate change mitigation efforts, and fostering cycles of innovation through domestic capabilities.
The Biden administration’s extension of Section 201 tariffs imposed during the Trump era did not cover imported bifacial solar panels, which absorb light on both sides. This omission created an opening for certain Chinese companies to bypass anti-dumping protections by routing solar cells and modules through countries like Cambodia, Malaysia, Thailand, and Vietnam, as revealed in a U.S. Commerce Department investigation concluded last August.
Despite the Commerce Department’s findings, President Biden’s decision in June 2022 to exempt these Southeast Asian nations from solar tariffs for two years effectively halted penalties against some Chinese producers.
President Biden vetoed legislation in the spring of that year that sought to impose tariffs on solar components from Cambodia, Malaysia, and Thailand. He justified the exemption as a necessary measure to bolster solar capacity expansion in the U.S., describing it as a “temporary bridge.”
Although this exemption is set to expire in June, Widmar noted that an estimated 30 to 40 gigawatts of excess product has flooded the U.S. market, equivalent to nearly a full year of consumption. This surge in imports hampers the ability of domestic companies to scale up their operations.
Widmar also voiced apprehension regarding the potential for Chinese companies to exploit tax credits provided by the Inflation Reduction Act (IRA), particularly the 7 cents per watt credit for solar modules. He cautioned that this could lead to the establishment of assembly plants in the U.S. by Chinese firms that fail to advance technological innovation.
Widmar’s concerns were underscored by the absence of immediate comment from a White House spokesperson.
According to Mark Widmar, First Solar is well-positioned amidst current market dynamics, as the company’s bookings are solidified until at least 2026. Widmar noted that First Solar deliberately overbooked to create a buffer against the inherent volatility of the solar market.
While the residential solar sector grapples with challenges like high-interest rates, First Solar has maintained resilience by prioritizing utility-scale projects. Despite the Invesco Solar ETF (TAN) experiencing an 18% decline this year, First Solar’s stock has only decreased by just over 6%.
Widmar emphasized that electricity demand growth on the grid has reached an inflection point, with projections indicating substantial growth until the end of the decade. Factors such as increased power usage by large data centers driven by artificial intelligence, cryptocurrency operations, the electrification of vehicles, and the reshoring of manufacturing in the U.S. are contributing to this heightened demand.
He stated, “That drives the need for hundreds of megawatts for solar power plants. That means you need more utility-scale generation, coupled with the continued decline of fossil fuels, coal power plants, and even nuclear.”
First Solar currently operates three factories in Ohio, with plans to open two additional plants in Louisiana and Alabama. Widmar highlighted that the company sources its materials within the U.S. and is not reliant on Chinese supply chains.
The CEO stressed the importance of domestic manufacturing in providing certainty amid global disruptions in supply chains, driven by geopolitical tensions and uncertain trade policies. He asserted, “The best way I can provide them certainty is to manufacture in the U.S. with a U.S. supply chain.”
