With AD/CVD evasion tariffs on Chinese solar module imports now out of the question by the Commerce Department, the greater potential disruption to the US solar industry attributable to the effects of the Withhold Release Order (WRO) stands out. silicon-based products made by Hoshine Silicon Industry Co., located in China’s Xinjiang Province.
US Customs and Border Protection (CBP) released the WRO in June 2021 in response to allegations of companies in the Xinjiang region using forced labor. In particular, Hoshine makes industrial silicon that other Chinese polysilicon companies use to make solar grade polysilicon. The WRO banned any solar panel product containing Hoshine materials from entering the United States. It is estimated that about 80% of the world’s polysilicon supply comes from China, and almost half comes from Xinjiang Province.
Initially, solar regulatory experts estimated little effect on U.S. solar business. CBP identified about $6 million in direct imports of Hoshine material to the United States in the past year and about $150 million related to other solar equipment that uses Hoshine material. Meanwhile, the United States imported more than $8 billion worth of solar cells and modules in 2020.
But the reality of the past six months was different.
Roth Capital Partners indicated in August that solar panels from JinkoSolar, Canadian Solar and Trina Solar have been held by the Dutch DPA. All three companies have major panel manufacturing operations in China and supply the U.S. utility market. LONGI, the world’s largest supplier of solar panels, said: earlier this month that 40 MW of modules was retained at the end of October, even though the company claimed to have put in place a product sourcing mechanism last year and not use Hoshine materials.
Even “minor” detentions of imported modules subsequently found not to use Hoshine materials disrupt supply chains and the global installation market. Rystad Energy predicts supply chain problems will threaten 50 GW — or 56% — of global utility PV developments slated for 2022. Utility-scale solar installers have stated in past press conferences that U.S. solar projects are already experiencing delays, either because of less module input due to unknown tariff results or because module suppliers are afraid of the WRO detentions.
Perhaps there is now more clarity. CBP has an updated WRO Frequently Asked Questions on November 10, which refers to more lenient requirements, easing the burden on importers. It is now explicitly stated that “an importer can lower its risk of exclusions under the Hoshine WRO if it sources polysilicon from outside Xinjiang.” This will likely make importing easier for companies like LONGI who have their own materials traceability guidelines in place.
Since the WRO is not a ruling to be discussed by a convening council, it will be in effect until the Biden administration removes it.