Tiny, Slipshod Solar Company Threatens US Industry

May 25, 2022

Deutsche Welle:

The American solar industry is on its knees, and the unlikely culprit is one tiny, struggling company you’ve probably never heard of.

Auxin Solar is a solar panel manufacturer based in San Jose, California. It supplies just 2% of America’s solar modules.

Yet a petition filed by the company to the US Department of Commerce in February could be responsible for severe disruptions to future solar installations in the US — cutting them nearly in half this year and next, according to the biggest solar trade group in the country.

“The largest concern for the solar industry is uncertainty,” Marcelo Ortega, renewables analyst at Rystad Energy, told DW.

Auxin Solar’s petition prompted the department to launch a probe into whether US solar companies are skirting decade-old tariffs on Chinese solar imports. Solar installers, which compose much of the US industry, are threatened with tariffs up to 250%.

Critically, levies may be imposed retroactively on installers’ purchases — a possibility that is grinding the American solar industry to a halt.

Washington Post:

The first climate casualty emerged this week when an Indiana utility announced that it was extending the life of two coal-fired power plants because the solar energy needed to replace their electricity output will not be available. The utility placed the blame squarely on the Commerce investigation. California Gov. Gavin Newsom (D) warned in a letter to Raimondo that the sudden tumult created by the investigation is jeopardizing a state plan to quickly install enough new solar to power 2.5 million homes.

Canary Media:

The tariff circumvention inquiry that has brought U.S. solar installations to a shuddering halt is predicated at least in part on a misinterpretation of data, Canary Media has learned.

U.S. solar-panel manufacturer Auxin Solar relied heavily on research by BloombergNEF, a respected clean energy analysis firm, when it successfully petitioned the U.S. Commerce Department earlier this year to investigate potential circumvention of tariffs on solar cells and modules. Auxin cited BNEF solar-manufacturing research as it attempted to build a case that Chinese manufacturers are funneling components through factories in four Southeast Asian countries to get around U.S. solar import tariffs. It mentioned BNEF 38 times in its petition

And the Commerce Department, in its March memo initiating the inquiry, repeatedly noted Auxin’s use of BNEF research to build the case for the inquiry. The memo mentions BNEF 19 times. 

The problem: The authors of that research say Auxin misinterpreted it.

“We do not think Auxin’s use of our data accurately reflects our research and certainly does not reflect our house view,” BNEF solar analysts Jenny Chase and Pol Lezcano told Canary Media in an email Tuesday. 

The Commerce Department states in its memo, ​“Auxin notes that it does not have access to the confidential data of producers of solar cells and modules in the third [party] countries under consideration,” meaning Cambodia, Malaysia, Thailand and Vietnam. In lieu of direct evidence to support its claims, Auxin provided ​“industry publications” to demonstrate that the solar-cell manufacturing underway in those four countries is minor relative to the production of precursor materials in China. 

Many of those ​“industry publications” were authored by BNEF. 

Chase and Lezcano highlighted one example of their research being misused. From the Commerce Department’s memo (curly brackets are in the original): 

Auxin also points to a statement in the BloombergNEF Report that ​“the majority of goods the U.S. imports {i.e., solar panels} arrive from Southeast Asia post assembly,” but ​“70% of the actual value of that equipment {solar panels} accrues to China where key, pre-assembly steps in the making of the equipment take place, including production of solar-grade silicon, ingots, wafers and cells.” 

The BNEF researchers told Canary Media that the 70% data point refers to the ​“cash cost” of the components making up finished solar panels. It does not include the investment in and depreciation of factories that produce solar cells and modules in the four countries in question, not to mention the general and administrative expenses of operating them. 

“It still costs a lot of upfront capex to build a new factory, regardless of where you site it,” Chase and Lezcano noted.

In other words, the value of raw ingredients and components produced in China does not change the fact that manufacturers invested significant capital to build factories in the four other Asian countries. Those factories take materials that are incapable of turning sunlight into electricity and transform them into finished products that are capable of doing so.

In order for the Commerce Department to determine that circumvention of tariffs is happening, it must find, among other things, that work taking place in a third-party country be only ​“minor or insignificant.” Auxin used BNEF’s research to try to make that point. But with BNEF stating that its research does not support that conclusion, Auxin’s case looks weaker. Still, Auxin did succeed in kicking off the inquiry, and now it’s up to the Commerce Department to decide if it finds the company’s theory persuasive.

Canary Media ( which if you do not follow, you should) has been pursuing this story, and reporter Eric Wesoff has revealed that the tiny company at the center of the storm has a poor track record, unimpressive production and subpar products.

Canary Media:

Northern California solar installer Barry Cinnamon of Cinnamon Energy Systemswas previously an Auxin customer — but not a happy one. 

“They were our [original equipment] manufacturer at one point. Their quality was terrible,” he told Canary Media. There were ​“many module failures from their own manufacturing, and we were unable to get any warranty service. Broken glass, half output of panels, burn marks on the back. They sourced almost all of their components from overseas, some likely from China.”

Another solar installer reported similar complaints: ​“We are starting to get a couple of Auxin takedowns and reinstallations,” meaning the Auxin panels did not perform to expectations and had to be replaced. ​“We are also seeing some pretty heavy burn marks on the backs of the panels.”

Cinnamon shared photos of panels with burns visible on their backsheets

In recent weeks, I’ve made three visits to the site of Auxin’s factory in San Jose, California, all on weekdays during regular working hours. It did not come across as a bustling hive of industry.

Here’s the building’s parking lot one weekday afternoon at around 2:00 p.m.:

There was no action at the graffiti-covered loading dock:

Much more at that Canary Media page.


One Response to “Tiny, Slipshod Solar Company Threatens US Industry”

  1. rhymeswithgoalie Says:

    From Canary:

    Here’s the problem: Tariffs don’t work.

    As we’ve said before, import tariffs are a blunt instrument and have a track record littered with unintended consequences. Trump-era tariffs on Chinese modules (which the Biden administration opted to extend) have contributed to the U.S. having some of the world’s highest utility-scale solar costs, and there’s little evidence that the tariffs have ​“leveled the playing field” in any meaningful way or spurred domestic panel production.

    From the oil&gas industry’s perspective, those tarriffs have worked just fine.

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