Realizing how active the clean energy industry is at the moment, I get why the imminent Auxin final determination might be slightly lost in the background (and perhaps any doomsday scenarios I imagine are me over-reacting). I also recognize that the industry is going on 12+ years of having to navigate within an uncertain market due to tariffs, so perhaps fatigue is at play, and all of this is just normal course of business. We are now within 1 week of seeing the river card, where at this point, any and all arguments have been made, decisions are likely established at this point, and we brace ourselves. Similar to 100% of all past tariff events, the downside magnitude greatly outweighs any benefits for the US market, should tariffs be implemented. It would be highly unfortunate timing for the US market, as we've only recently achieved reasonably stable conditions post-pandemic, where polysilicon is below $10/kg down from $40/kg+, and the US market is potentially poised to benefit from a global oversupply condition, should SE Asia remain accessible. I'll also note that the IRA was passed about 6 months after the filing of the Auxin petition, where I hope those decision makers are willing to take into consideration the industry as it stands currently, as opposed to pre-IRA. In less than 1 year since the IRA was passed, the US now has visibility towards potential 50 – 75 GW new module capacity and more importantly, an onshoring of polysilicon -> wafer -> cell. It’s a vastly different market, even Auxin can see that. To oversimplify the situation, I assume a $0.15/w cost gap between US and SE Asia manufactured modules, where the IRA provides $0.07/w for module assembly and Domestic Content value of approximately $0.05/w - $0.10/w - math suggests it shold work out. I might argue that Auxin is better off foregoing new tariffs (thus preserving their access to upstream components) and simply leveraging the the current opportunity, where I could easily cases where domestic modules achieve an ASP of ~$0.55/w for the next few years and be able to find willing and committed buyers. If a US manufacturer can’t make these market conditions work, well, might not be an industry/market problem . . .
Very well put as always, Joe.
Joe, don't forget that this is an AD/CVD case. So this is just the first of what will be an annual preliminary/final determination process.
This is an honest picture of modules for US projects, Joe. One significant change to this cost stabilization, post-pandemic, is that PPA prices are back to low escalation/flattening after a 2 year inflation run, with the exception of a few lagging index REC contracts. In other words, raising the price as before, certainly sells far less modules, to projects that could have penciled. Windfall US manufactures recognize what they must achieve, instead of just strangling the industry on principle, converse to their own survival. FSLR is certainly leading without much competition yet. And of course, the IRA is supportive to domestic silicon modules reaching competitiveness, in the foreseeable future. I only beg to differ that the cost gap has never been higher on a percentage basis, currently $0.25/W, which essentially requires domestic manufacturers to utilize imported ingot, wafers, or cells, in the near term. Until all of the BoS commitments are realized, in the out years (2026+), even the leading US manufacturing rely on imported components to have projects to sell to at all. We are told that modules will then be back to $0.30/W from China, India, and SE Asia, when domestic modules can achieve this with the help of the IRA.
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1yThis misses the bigger point. The bigger point is that the US solar manufacturing industry has been completely taken over by China, with the governments help. And for those US manufacturers willing to actually stay and fight, the Feds will still throw them under the bus - even when the DOJ proves what China did was illegal. The message is clear: to hell with you US manufacturer. You don’t matter. Kudos to Auxin, they’re in the right. Too bad the industry they’re fighting for doesn’t support them…nor does their own damn government.