How to Make Enemies in Solar Energy

Source: By Travis Hoium, Motley Fool • Posted: Monday, October 16, 2017

In the battle over solar tariffs proposed by bankrupt manufacturers Suniva and SolarWorld, nearly every solar company has come out against tariffs. One that’s breaking ranks is First Solar (NASDAQ:FSLR).

First Solar’s management said this week that it’s in favor of some kind of protective measure. But this may be a self-serving opinion, because First Solar itself isn’t under threat from solar tariffs.

First Solar utility scale plant in a desert with mountains in the background.

Image source: First Solar.

Going against the grain

In a statement to the International Trade Commission hearing the solar trade case, First Solar said it supports tariffs or other remedies that would be put on silicon-based solar imports. CEO Mark Widmar said, “For years, CSPV import prices have been anything but rational” and normal capital constraints wouldn’t have led to the oversupply of panels and low prices we have today.

The position shouldn’t be a surprise since First Solar’s U.S. manufacturing plant would benefit from tariffs. What’s more notable, however, is that First Solar’s own production in Vietnam and Malaysia won’t be subject to import duties. The fact that First Solar produces thin-film modules has most industry analysts expecting that its products will be exempt from any final tariff that might get imposed. That’s the case even though the company in recent years has shut down U.S. manufacturing and focused its production more in Asia.

Every company is acting in a self-serving manner in these trade discussions, but this is the first statement First Solar has made since the trade case was filed in April. The company is also no doubt making some enemies in the solar industry by supporting tariffs on everyone else’s solar panels.

Tesla takes a stand

It’s interesting that as First Solar was coming out for tariffs, Tesla (NASDAQ:TSLA) took the opposite view of tariffs on solar imports, despite owning what it says will be a 1 GW solar factory in Buffalo, New York. Tesla could potentially be a big beneficiary if it made cells and solar panels in New York. It’s not clear exactly how much of either Tesla has today, but if it had significant capacity domestically, it too could see a windfall from solar tariffs.

What could be happening at Tesla is that it planned to import Panasonic solar cells and then turn them into a solar panel in Buffalo. If that’s the case, it wouldn’t get around tariffs, meaning a statement against tariffs would also be serving its own self-interest.

First Solar is now on an island

Suniva, SolarWorld, and First Solar are now the only companies that are in favor of solar tariffs. Other manufacturers, installers, utilities, and everyone else in the solar industry have been against them. First Solar’s stance isn’t surprising, but it will rub a lot of people in solar energy the wrong way.