Supply Chain Research

U.S. clean energy investment increased 6% on a year earlier according to Bloomberg New Energy Finance figures. That came despite renewable energy policy being a considerable state of flux. Support for investment via tax credits is currently secure through 2021, but may be captured by a potential tax reform. The process of tax reform may start with the new 2018 budget, Reuters reports.

Panjiva data shows uncertainty regarding the Trump administration’s renewable energy policy has been most keenly felt in the solar power sector. Imports fell 26.3% on a year earlier in June, having fallen every month since November. Wind power meanwhile has had something of a renaissance recently, with a jump of 98.5% in June. That partly reflects wind-farm projects being utility-scale, and longer term investments by nature. Solar by contrast tends to be smaller-scale and – at least for now – has a higher cost per unit of power produced.

Chart compares U.S. imports of solar power equipment and wind turbine supplies’ shipments, lower panel adds both together. Source: Panjiva

Another challenge for exporters of solar power equipment to the U.S. is the “section 201” review of the industry brought at the behest of Suniva. A decision on that case is due no later than November 13, as outlined in Panjiva research of May 24. While only launched recently, it may identify the longer term trend within U.S. imports that has seen production from China replaced by exports from Malaysia, and more recently Vietnam and Thailand. Malaysia accounted for 50.4% of imports in the quarter to May 31, while Vietnam and Thailand were 20.6%.

Chart segments U.S. imports of solar power generating equipment by country of origin Source: Panjiva

The success of shifting production to other locations can be seen by the performance of Trina Solar, the fastest growing of the overseas suppliers. While its imports in the second quarter were 43.4% lower than a year earlier, they were 2.5x their first quarter level. That was the result of increased exports from Vietnamese and Malaysian operations. It also meant it has almost caught back up with Hanwha Q-Cells, which increased shipments 71.3% on a year earlier in the second quarter from its South Korean operations.

U.S. imports of solar energy equipment segmented by company name including known subsidiaries Source: Panjiva

China’s manufacturers have bigger problems than just the United States, however. Exports fell 11.4% in May, the 14th straight decline. The only significant growth market currently is India, where shipments increased 102% on a year earlier. Shipments to South Korea and Japan – other large markets with funding for renewables but lower trade barriers than the U.S. or EU – fell 28.2% and 26.0% respectively. Major manufacturers including Trina Solar and Solarfun will need to renew their search for new target markets.

Chart shows Chinese exports of solar panels and modules, segmented by destination. Lower panel shows change in total. Source: Panjiva

One potential target market may be Mexico. Investment has been minimal so far, IEA PVPS data shows, with just 320MW of installed capacity vs. 40,300 MW in the United States. Imports have yet to take off with a 4.3% rise in shipments on a year earlier in the 12 months to May 30, despite a 9.0% rise in May. Even here though Chinese manufacturers may be falling behind, with U.S. suppliers including Sunpower increased volumes 19.1% in the quarter to May 31, whereas those from China fell 2.4%.

Chart segments Mexican imports of solar cells, modules and panels by country of origin Source: Panjiva